Divestment

Today is Thursday, April 25, 2013. 

A couple of days ago, I wrote about reducing carbon emissions into the atmosphere to achieve balance at 350 parts per million (ppm).  I talked about ways to get the fossil fuel industry to  reduce emissions, and I talked about putting more of our attention on cleaner sources of fuel, such as wind power and solar energy. What I didn't talk about was divestment.

Individuals and organizations such as companies, universities and colleges, religious institutions, pension funds, and state and local governments invest their money in the stock market to generate income.  Divestment is the opposite of investment.  It means getting rid of our investments that are unethical or morally ambiguous.  Since the fossil fuel industry directly harms the planet, environmental groups are creating a movement to call on individuals and institutions to divest from oil and coal companies. 

Has this tactic ever worked before.  Yes.  In the mid-1980s, 155 institutions of higher learning, 26 state governments, 22 counties, and 90 cities divested from multinational companies who were doing business in South Africa in order to protest Apartheid, South Africa's formal policy of racial segregation and discrimination.  Divestment led to the weakening of the Apartheid government, which resulted in the establishment of a more democratic government, the release of Nelson Mandela in 1990, and the end of racial discrimination.  

Specifically, environmentalists are asking investors to do two things: 

1) immediately freeze any new investments in fossil fuel companies
2) divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within five years.

These measures may not make much of an impact at first, but the more individuals and institutions that divest, the more uncertain the fossil fuel industry will be about maintaining current business models. It's important to remember, though, that certain institutions have been investing heavily in coal, oil and gas: the top 500 college and university endowments are now investing to the tune of nearly $400 billion.  When you add the value of investments by state pension funds and investments by churches, synagogues and mosques, the amount of money is enough to make big companies like Exxon Mobil, Shell and Peabody sit up and notice.

The hope is that these same individuals and institutions who divest from the fossil fuel companies will then invest their money in clean energy, such as wind and solar power.  Think of it this way. If only 1% of the funds from college and university endowments ($400 billion) were to be invested in clean energy, that would be an investment of $4 billion.  That's still a lot.

Who is driving this initiative on college campuses?  The students, of course.  They are the ones who are inheriting a poisoned planet from us, and they – and their children and grandchildren – will have to live in it.  They are tired of hearing people say that Exxon Mobil, Shell and others are "too big to fail."  They are ready to stand up and be counted.  Not only are they mounting protests, student governments are calling for talks with university administration officials to convince them to divest.  University administrations are listening, and a number of educational institutions have already agreed to divest.  The movement is picking up steam.  Students in bigger universities such as Brown, Cornell and Harvard have been calling on their schools to divest, and the president of Brown has promised to recommend a specific divestment strategy to their governing board in May.  Recently, there has been an article in the Harvard Political Review regarding divestment, indicating that an ongoing dialogue there.  These students know that even if the administrators themselves don't know where the money is being invested, their money managers do, and the money managers have to take direction from the administration of the school.  Students are also lobbying for more transparency on the part of their schools with respect to investments.

A lot of the students who go to these prestigious schools come from wealthy families, and some of them are potentially wealthy in their own right.  These young men and women are the individual investors of tomorrow.  Some of these young people will hold leadership positions in government, business, and religious institutions, and many of them will encourage future divestment from fossil fuels. 

If you're not a college student, how can you help?  

If you are a member of a church, synagogue or mosque, you can find out what your religious institution is investing in and get together with others to encourage the leadership to divest from fossil fuels.  

Public and private employees should find out what investments are being made on behalf of their pension funds and work with others, particularly your unions, to call for divestment from oil, coal and gas industries.

Find out what your city, county or state government is investing in and join in with other concerned citizens to demand divestment.

Do you have to be a financial expert to do this?  No.  Organizations such as 350.org have a divestment toolkit that you can download.  They also have a crew of people on board who can answer questions.

Specifically, the top five coal companies to divest from include 

1. Severstal JSC
2. Anglo American PLC
3. BHP Billiton
4. Shanxi Coking Co. Ltd.
5. Exxaro Resources Ltd.

The top five oil and gas companies to target are 

1. Lukoil Holdings
2. Exxon Mobil Corp.
3. BP PLC
4. Gazprom OAO
5. Chevron Corp.

For a full list of companies, click here.  For resources (PDF files) that you can download, print out and distribute to people, go to the following links:  Carbon Tracker Initiative and NRDC Fuel Facts.

What if you are an individual investor?  Right now, the only broad-based mutual funds that are fossil-free are Green Century Balanced Fund and Portfolio 21 Global Equity Mutual Fund.   Here is a list of financial planners and asset managers that can help you divest, if you wish to do this.

What if you have no investments, but would like to help?  Check out 350.org and Go Fossil Free for more information.  :-)