Riding the Wave of Divestment

Divestment is essentially the opposite of investment. The climate action group gofossilfree.org describes it as “getting rid of stocks, bonds, or investment funds that are unethical or morally ambiguous.” Generally speaking, institutions divest when they stop financially supporting specific entities because of the means by which those entities generate revenue. Divestment has been used as an advocacy device for many years, as a means of tackling the tobacco industry, sweat shops, and even apartheid in South Africa.

divestmentarialDivestment of fossil fuels began in 2012 with Bill McKibben’s climate change movement 350.org. Since launching this campaign against traditional fossil fuels, hundreds of organizations – beginning with universities and faith-based organizations, and expanding to municipalities, pension funds, and foundations – have committed to divesting from fossil fuels. In the last month the movement has reached a landmark $2.6 trillion divested. According to one study, 436 institutions and 2,040 individuals across 43 countries, together representing $2.6 trillion in assets, have committed to divest from fossil fuel companies.

Many types of investors have embraced fossil fuel divestment, both on the institutional and the individual level. High profile individuals have been particularly active in the divestment from fossil fuels. Specifically, actors like Leonardo DiCaprio and Mark Ruffalo have led the movement to cease investments in traditional fossil fuel companies. Their announcements have served as a means to show legislatures and CEOs alike that United States citizens are taking climate change seriously.

divestmentprotestRather than these red carpet personalities, universities have traditionally been at the forefront of divestiture movements. We continue this trend in Vermont, with many colleges and universities (including VLS) committing resources to exploring divestment opportunities. This has been an important method of expressing students’ and citizens’ dissatisfaction with traditional energy investments. It has also lent support to Vermont’s support of broader energy and climate change goals.

Some studies show that divestiture is not actually effective as an economic driver because it does not force major fossil fuel companies out of business or necessarily compel them to change their practices. Nevertheless, divestment may, in fact, be a smart financial decision, since other recent reports have warned of the negative financial consequences of holding large portfolios of fossil fuels. Additionally, it can have an important impact in terms of shaping national discourse. By bringing climate change issues into the media spotlight, the divestment movement helps to put pressure on the negotiating parties at COP21 in December.