The global fossil fuel divestment movement has reached $US11 trillion ($A16 trillion) in funds moved out of fossil fuel industries, becoming one of the fastest divestment movements in history, a new report as found.
But campaigners have renewed calls on institutional investors and businesses to eliminate their exposure to companies profiting from the fossil fuel industry.
The milestone was acknowledged at a Financing the Future summit held in Cape Town, South Africa earlier this month, which brought together more than 300 campaigners from faith-based organisations, environmental groups and social justice advocates drawn from 44 different countries.
A joint report from 350.org and Divest Invest has estimated that the total value of funds divested from fossil fuel companies has now exceeded US$11 trillion, following divestment commitments of more than 1,000 organisations worldwide.
“These numbers are strong indicators that people power is winning. We would not have smashed our divestment targets without the thousands of local groups who have pressured their representatives to pull out of fossil fuels,” Ahmed Mokgopo, divestment campaigner for 350.org said.
The divestment milestone highlights the ongoing emergence of the climate change emergency as both an environmental and financial crisis, with summit attendees pledging a statement calling on institutional investors, including superannuation funds, to join the divestment movement.
The fossil fuel divestment movement first emerged around 2011, with the first calls for divestment coming initially from university students who saw the opportunity to pressure universities to divest sizeable endowment funds out of industries involved in fossil fuel industries.
Since 2011 the divestment movement has expanded dramatically, and has involved faith-based communities, governments, academia, as well as environmentally conscious investors.
Divestment has been a crucial tool used by campaigns against industries that are morally questionable, and have been used to shine a light on the practices within these industries and compel investors to reconsider the ethics of profiting from such practices.
Notable fossil fuel divestment pledges have been made by organisations like Universities, faith-based organisations as well as local-governments and sovereign wealth funds. Earlier this year, Norway’s Government Pension Fund Global, which has accumulated more than $1trillion in funds from oil royalties, announced that it would sell off its companies that undertook exploration for new oil and gas reserves.
The fossil fuel divestment movement has been fuelled by both the moral considerations of fossil fuel’s contributions to climate change, as well as the emerging view that fossil fuels represent an unacceptable financial risk for investors as the world continues a dramatic shift to cleaner and cheaper sources of energy.
“The struggle for climate justice is a struggle for fundamental human rights. Every person facing deeper levels of drought, stronger hurricanes or conflict has been wronged by these fossil fuel companies. Their rights to health, water, food, housing, and even life have been harmed,” Kumi Naidoo, secretary general of Amnesty International and former head of Greenpeace, said.
“This ensures that human rights and working towards clean renewable energy for all is at the forefront of the climate justice conversation.”
The summit of divestment campaigners issued a joint statment calling on investment managers to re-deploy funds previously invested in the fossil fuel sector into emerging clean energy technologies, including renewables, as a meaningful way of accelerating global action on climate change.
“This summit was a real rallying call for us to pick up the pace on investments in renewable energy. There was a sense of power in the room, with multi-faith leaders, scientists, campaigners, investors, and economists working together to drive the impact we need to see if we are to keep the rise in global temperatures below 2 degrees,” Vibhuti Garg, an energy economist with International Energy Economics and Financial Analysis (IEEFA) said.
“But there was also a real sense of urgency, from hearing the testimonials of the long battles against fossil fuel expansion, battles clearly being fought for survival. We can no longer afford to consider further investments in fossil fuels.”
The summit recognised the role of the Climate Action 100+ initiative, which represents a collective of some of the world’s largest investment managers, with a combined $34 trillion of funds under management, using their combined holdings to pressure the largest and most emissions intensive companies, to reduce their emissions and expand their climate change risk disclosures.
The divestment summit called on the members of the Climate Action 100+ initiative to accelerate their divestment on fossil fuels and use their market power to further pressure companies to align their businesses with scenarios consistent with limiting global warming under the Paris Agreement.
“Institutional investors literally have the power to make or break the future. Money lies behind every decision to expand or contract the fossil fuel industry, to slow or accelerate the clean energy transition,” Clara Vondrich, director of Divest Invest said.
“There is no more time for shareholder engagement with the fossil fuel industry that is digging and burning us past climate tipping points of no return. It’s time to divest.”
Climate change risks have received increased attention from financial regulators, who see a growing necessity for company directors and boards to actively assess and disclose the risks that climate change poses to their ongoing business.
In August, the Australian Securities and Investments Commission (ASIC) issued an updated guidance to company directors, stating that if directors wished to mitigate the risk that they may be the target of future legal action from investors, that companies must identify and prepare plans to mitigate the risks posed by climate change to their businesses.