Divesting of Fossil Fuel Investments is Rational Behavior Now

by S. Tom Bond on June 6, 2019

Divestment March at University of Toronto

The case for divestment for your consideration

Essay by Carl Bucholt, Manchester Journal, May 31, 2019

The word “divestment” appears frequently in the news, often in the context of climate change. I’d like to explain what divestment means and make a case for why it’s important.

To “divest” is to get rid of something. The current global divestment movement is trying to convince universities, hospitals, governments, and churches to eliminate fossil fuel stocks from their endowment portfolios and (state government) pension plan funds.

Why should a school, or an individual, sell off their fossil fuel stocks?

Reason 1: To make a public statement and take a moral stand: that they no longer want to be associated with an industry that habitually lies to the public and which puts short-term profits above the long-term health of our planet and the people who live on it. (Case in point: EXXON’s own scientists knew in 1987 that burning oil would result in global warming, but the executives not only failed to make that knowledge public, they began a systematic campaign to confuse the public as to the cause of global warming.)

Reason 2: It is financially responsible to sell off fossil fuel stocks now because they will plummet in value as the world transitions to cheaper and cleaner renewable energy sources, and as electric cars replace vehicles with internal combustion engines. (Case in point: Xcel supplies electricity to people in 10 states in the middle of the US; they announced earlier this year that in the near future the electricity they supply to their customers will come 100 percent from renewables because it is cheaper than buying from existing coal and gas plants.

The major oil companies’ monetary worth is predicated on extracting all of their known oil reserves. However, if you do the math (as Bill McKibben did), you discover that to burn that amount of fossil fuel would result in the warming of the planet by 6 degrees Celsius – four times as much as scientists tell us is safe to sustain life as we know it on Earth. Logic dictates that we simply can not extract and burn all the oil and gas reserves that are carried on the books as Assets. When those reserves become “stranded assets”, there will be a rapid decline in the value of fossil fuel stocks.

Reason 3: Selling off fossil fuel stocks frees up money to be re-invested in the green economy. Jobs in the renewable energy sector are growing much faster than the fossil fuel sector and many of those jobs pay better and reinvigorate the local economy, as opposed to the profits leaving the region/state.

Reason 4: Divestment works to erode the enormous political power that the fossil fuel industry has on Congress and state governments. The oil, gas, and coal industries donate millions of dollars in campaign contributions and assault Congress critters with hoards of lobbyists, thereby ensuring favorable legislation. (Case in point: We have no idea what chemicals are poisoning our land and water through fracking because the industry got Congress to grant them an exemption from reporting that information. Also, we the people are subsidizing the fossil fuel industry by giving them billions of dollars in tax breaks and by granting leases to our public lands at well-below market value.)

Ask your financial advisor or portfolio manager how you can join governments, universities and individuals all around the world who have divested from fossil fuel stocks. It’s easy, you’ll feel good about helping the planet and your grandchildren, and your stock portfolio will ultimately be safer and more profitable.

>>> Carl Bucholt of Manchester is a member of Transition Town Manchester and Earth Matters, two local environmental groups dedicated to fostering resilience, weaning ourselves off fossil fuels and pesticides, and improving the quality of life for all of Earth’s inhabitants.


Commentary by Tom Bond, June 5, 2019

Climate change is the inevitable result of adding gases to the atmosphere connected with burning fossil fuels. It is reasonable to expect improvements with renewable technology and electrical storage, such as the recent announcement by China of a better, cheaper way to recover the critical mineral, lithium. The conventional energy industry has no incentive to reduce it’s money flow, so it must be done by others. Starving it of investment funds is easier to accomplish, because it is disperse and away from the enabling legislation fossil fuels command.


See Also: Oil And Gas Giants Spend Millions Lobbying To Block Climate Change Policies [Infographic]

{ 2 comments… read them below or add one }

Jim Cramer (CNBC) February 1, 2020 at 10:35 am

‘They’re Done’: CNBC’s Jim Cramer Says Fossil Fuel Industry ‘In the Death Knell Phase’ | DeSmog, February 1, 2020

By Andrea Germanos, Common Dreams. Originally published on Common Dreams under CC BY-SA 3.0 US.

Climate campaigners drew attention to CNBC’s Jim Cramer’s comments on Friday, January 31 that he’s “done with fossil fuels” because they’re “in the death knell phase.”

Cramer added that “the world’s turned on” the industry as they did with tobacco.

“They’re done,” Cramer said of fossil fuels on the network’s “Squawk Box.” “We’re starting to see divestment all over the world. We’re starting to see … big pension funds saying, ‘We not going to own them anymore.”

“The world’s changed,” Cramer continued. While companies like BP still mark profits, “nobody cares,” because “new money managers want to appease younger people who believe that you can’t ever make a fossil fuel company sustainable.”

“You can tell that the world’s turned on them, and it’s actually kind of happening very quickly,” said Cramer. “You’re seeing divestiture by a lot of different funds. It’s going to be a parade … that says look, ‘These are tobacco, and we’re not going to own them.’”



Nick Cunningham February 4, 2020 at 10:07 am

‘Uninsurable and Unhedgeable’: Central Banks Warn of Financial Crisis from Climate Change | DeSmog, Nick Cunningham, January 31, 2020

A future climate disaster, or “green swan” event, could bring down the global financial system, according to a new report from the Bank for International Settlements (BIS), an international financial organization that serves as a bank for central banks around the world.

Like black swan events, “green swan” events will be very difficult to predict and will hit with little warning. The potential for a cascading series of crises stemming from climate change threatens global financial stability, and the world’s central banks are not equipped to respond to them, or even predict what exactly might unfold, the 100-page BIS report said.

Risk in the Time of Climate Change

The financial risk from climate change is typically put into two categories: physical risk and transition risk. The former refers to natural disasters or some other climate-related calamity that imposes steep costs on society from physical damage, such as a drought or a hurricane.

Transition risk refers to the repricing of assets as the global economy shifts towards cleaner energy, such as an oil company losing much of its value following the passage of a painful carbon tax.



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