This Holiday season, don't give, instead, take away. Divest
2013 December Green Guru Spotlight: This Holiday season, don't give, instead, take away. Divest.
Looking for an idea for a good gift this holiday season? Don’t give, instead, take away. Divest. That’s what colleges, cities, churches and other organizations across the US and the world have been doing this year.
A unanimous vote on Oct. 23, 2013, made Foothill-De Anza Foundation (SF Bay Area, California) the first community college foundation in the nation to commit to divesting from fossil fuels. The main motivation was the Foundation’s commitment to environmental sustainability and a well organized divestment campaign led by the students.
Other colleges that have divested are Unity College (read their well articulated reasons here), Hampshire College, and San Francisco State University Foundation (1st public university) among others. Hampshire College was the first college in the US to divest from fossil fuels (December 2011); back in 1977, they were also the first school to divest from apartheid South Africa.
Cities such as San Francisco (CA), Seattle (WA), Boulder (CO) and Santa Fe (NM) were among those in April 2013 to commit to divesting from fossil fuels, as a result of a campaign led by the Mayors Innovation Project and 350.org. Foundations such as the Wallace Global Fund and the Sierra Club Foundation have divested, as have organizations such as the Santa Clara Water District, and numerous churches. For a full list of organizations committed to divesting from Fossil fuel click here.
According to 350.org which initiated the national divestment movement, Fossil Free campaigns are now under way in more than 300 colleges and universities and in over 100 cities, counties and states across the country to encourage divestment from 200 fossil fuel companies that control the majority of the world’s carbon reserves. 350.org sees divestment as a way to pressure fossil fuel companies to meet their demands: the companies must stop exploring for new fossil fuel resources, cease their political lobbying, and agree to leave 80 percent of their current reserves in the ground.
Although fossil fuels pose a social and environmental harm, that is outweighed by the harm their boycott would cause to the global economy and communities.
Financial managers have a legal responsibility to maximize return on investment for the beneficiaries of the funds they manage; investments for social and environmental objectives are only allowed if returns are not compromised.
It’s hypocritical and unproductive to divest with one hand and buy fossil fuels with the other hand to run cars and heat homes and campuses.
All those in favor say…
Divestment from fossil fuels is consistent with objectives of social good and environmental sustainability.
Divesting ensures safer investment and better returns over the long run since the risk associated with “stranded assets” of fossil fuel companies is eliminated. According to Go Fossil Free, analysis by top scientists and groups such as the International Energy Agency show that nearly 80 percent of reserves held by fossil fuel companies must go unburned for the world to keep global warming below 2°C, a target the United States and most other counties have agreed to meet, making those reserves “stranded assets” or assets that cannot be monetized. According to new research from Carbon Tracker and the Association of Chartered Certified Accountants, “extractive companies do not present the full picture of risks.”
An economic study called “Risky Business”, funded by leaders in the financial community, to be published in summer 2014 is expected to show that the economic risks of carbon emissions will “eventually blow away” any short term costs of curbing them.
Divesting sends an important message – it is widely believed that the international divestment strategy in South Africa helped move that country away from apartheid. And let’s not forget that Mahatma Gandhi’s non-cooperation movement and “Buy Indian, Boycott British” campaign was initially considered merely symbolic by many but ultimately made it untenable for the British to rule India.
Some colleges (such as Unity college), have reported an increase in donations after divesting.
Performance of divested portfolios match, and in some cases, exceed the performance of portfolios that include fossil fuel investments. Read more about the financial case for divestment written by Bevis Longstreth, a former SEC commissioner.
Shareholder activism involving fossil fuel companies has not resulted in significant changes in behavior, however economic pressures such as divestment succeed where other measures don’t.
Most of the divestment decisions have been a result of divestment campaigns led by a variety of groups – students in the case of Foothill-De Anza Foundation, a coalition of students from Brown University and members of the local Sierra Club chapter as in the case of Providence (RI) and local climate activists and volunteers from 350.org in other cases.
You can start a conversation at your company, city, college, University, organization to find out if retirement funds or other funds and endowments are invested in fossil fuels. Arm yourself with economic and business rationale: Financial case by former SEC chief, Bloomberg-Steyer-Paulson initiative, and risk of stranded assets.
To help you in your personal divestment, Green Century Funds, Trillium Asset Management, and 350.org have published a report, “Extracting Fossil Fuels from your Portfolio: A Guide to Personal Divestment and Reinvestment.”