rss
12

Fossil fuel divestments now add up to $5.2 trillion

Print Friendly

Climate Central

Investing heavy weights are moving their assets and funds out of fossil fuels at a record pace.

A network of local governments, pension funds, faith organizations, philanthropies and wealthy individuals representing $5.2 trillion in assets have committed to — and in some cases already started — divesting from fossil fuel companies, according to a report released on Monday.

coal-dig

That’s a huge sum of money for a movement that started just four years ago on U.S. college campuses and its growth is likely to continue as the world strives to reach its climate goals.

“It’s pretty clear that the growth trajectory is enormous,” said Ellen Dorsey, the executive director of the Wallace Global Fund.

In the past 15 months alone, the assets represented by the fossil fuel divestment movement have doubled. As of December 2016, there are 688 institutions and 58,400 individuals across 76 countries who are on board with divesting from fossil fuels, according to the report. The analysis was completed by Arabella Advisors, a philanthropy services firm.

Those divesting include Norway’s sovereign wealth fund, Germany-based financial services giant Allianz, and Amalgamated Bank, which in September became the first U.S bank to divest. Private businesses represent $4.6 trillion in assets being divested, nearly 90 percent of the overall total.

Dorsey said that the Paris Agreement, which was finalized one year ago on Monday and went into effect last month, raises the stakes of divestment and also sends a message that more money will need to flow into clean energy if the world is to stay below the 2°C threshold. That’s led firms representing $1.2 trillion in assets in the report to move toward a divest-invest strategy of taking the money they’re pulling out fossil fuels and putting it into clean energy.

Last year, renewable investments set a record, reaching $288 billion. That equalled about 70 percent of all investments into electric power generation worldwide.

More recently, Google announced that it would purchase the equivalent of 100 percent of its energy needs from renewables in 2017. The company is already the largest private buyer of renewable energy in the world in large part because it makes economic sense.

And on Sunday, a group of investors worth $170 billion led by Microsoft co-founder Bill Gates announced a $1 billion fund dedicated to investing in clean energy innovation. Similar to Google, the main driver for the new fund, dubbed Breakthrough Energy Ventures, is dollars and cents.

“It’s such a big market that the value if you’re really providing a big portion of the world’s energy, the value of that will be super, super big,” Gates told Quartz.

This article was originally published on Climate Central. Republished here with permission.  

RenewEconomy Free Daily Newsletter

Share this:

  • I don’t pretend to understand financial markets and don’t have any money to invest myself, but surely for all the divestment going on, there is an equal amount of investment by someone else? Sure it reduces the standed assets etc risk for those doing the divestment, but in the overall scheme of things, how does it help?

    • john

      When the worlds biggest fund Norway’s sovereign wealth fund divests it is because they do not want to wind up with the value of the investment being worthless for the countries citizens this is responsible action.
      One would expect any of the Nordic countries to have a good sense of civic values and do the right thing by the citizens.
      For individuals who wish to stick with their assets so be it.
      Perhaps an analogy, i would not invest in a trots whip maker, if I were you considering they have been banned in Australia.
      No fossil fuels are not going to be banned, perhaps the user of diesel vehicles will be banned in some areas and for very good reason, so the writing is very clear on the wall get out of fossils before you lose your shirt.

    • trackdaze

      You dont want to be the last one holding the shares or bonds when the music stops.

      If you have a pension fund or superannuation you are potentially exposed. You could Call the fund tell them you want out of fossil fuels or a renewable bias.

      • Oh I have no exposure to FF shares, with Aust Ethical Super, and I have lived off-grid on solar and wind power since 1991 because I hated the filthy way electricity was produced here in NSW. However my point was whether a pension fund holds the shares, or an individual (with no sense of where we are headed) holds shares, what difference does it make in the grand scheme of things – someone still has the shares! The sh1t is approaching the fan, and I can’t see that the name on the share certificate makes any difference to the fan-approaching poo.

        • trackdaze

          Like i said you dont want to be the one holding it when it tanks.

          Additionally, companys may be forced to buyback shares to inflate demand. This drains reserves which leaves the company less able to borrow against the lower market equity held.

          Individual actions matter.

        • neroden

          Oh, yeah, this is basically telling pension funds, municipalities, and university endowments to get out of fossil fuels, because we don’t want them to go bust.

          Stupid rich people can then buy the fossil fuels and go bankrupt. That’s OK.

    • Barri Mundee

      Someone might buy the assets at a seemingly attractive price but the risk/return equation might not be favourable. Divestment is a signal that future earnings and price may tank.

      • Indeed, but clearly that isn’t stopping people from buying the shares, and meanwhile, the FFs keep on burning.

    • George Darroch

      You might not have any direct investments, but your super fund almost certainly does. Take a good look and switch sooner rather than later.

    • Farmer Dave

      Gordon, the intended effect is not financial, but moral. The divestment movement understood from the start that other people and institutions could purchase the divested shares without much of a financial impact on the fossil fuel companies. What they want is to strip away the legitimacy of fossil fuels as an investment class, so that investment in fossil fuels is seen the same as as is investment in asbestos and tobacco. In other words, the divestment movement is an attack on the social licence of fossil fuels.

      I don’t remember the details, but I understand that there was a divestment push away from South African companies during the apartheid era which was judged to have been very influential.

      • Thanks Dave, that makes sense, although many of these huge multinationals don’t seem to be concerned by the moral aspects of their operations either.
        How dare the people get in the way of their massive profits! As an example see the recent RE article about Gina and co. suing the Vic govt over the CSG ban.

  • john

    Here is an example of the kind of Topsy Turvey world we are in Rex Tillerson widely rumored to be the new Secretary of State of America has been anointed by the Donald.
    Previously with Exxon Mobil, who have more oil leases in Russian territory than anywhere else in the world, now that would not present any conflict of interest would it?
    The Russian government are happy even before this because they got $11.5 billion for the share of the joint company they had invested in these leases.
    Yes i know this has nothing to do with divestment but perhaps the Russian Government has foresight.