DIVESTMENT BASICS

Frequently Asked Questions

 

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 Go fossil free!      

 

350NYC is working to get NYC and NY State to divest their public pension funds from the fossil fuel industry.   History of Campaign

 

Why we need to divest:  The Climate Math

We can only burn 565 more gigatons of carbon dioxide and stay below 2°C of warming — anything more than that risks catastrophe for life on earth. Fossil fuel corporations now have 2,795 gigatons in their coal, oil and gas reserves, five times the safe amount. These companies must keep 80% of their fossil fuels underground. We need to stop investing in planetary destruction.

What is divestment?

Divestment is the opposite of an investment — it simply means getting rid of stocks, bonds, or investment funds that are unethical or morally ambiguous. Fossil Fuel investments are a risk for investors and the planet -– that’s why we’re calling on institutions, such as unions and city pension funds- to divest from these companies.

There have been a handful of successful divestment campaigns in recent history, including Darfur, Tobacco, and others, but the largest and most impactful one came to a head around the issue of South African Apartheid. The South African divestment campaign helped break the back of the Apartheid government and usher in an era of democracy and equality.

What are we asking for, and who are we asking?

We want institutional leaders to immediately freeze any new investment in fossil fuel companies, and divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within 5 years.  200 publicly-traded companies hold the vast majority of listed coal, oil, and gas reserves. Those are the companies we’re asking our institutions to divest from.

Why divestment? Shouldn’t we just focus on stopping fossil fuel projects like offshore drilling, tar sands pipelines, coal power plants and hydrofracking wells?

Stopping fossil fuel infrastructure projects are important. Coal plants cause asthma and dump mercury into the air and water; fracking fluid can leak into groundwater and make people sick; pipelines can leak, and so on. But, we can’t stop global warming one pipeline well at a time. We need to loosen the grip that coal, oil, and gas companies have on our government and financial markets so that we have a chance of living on a planet that looks something like the one we live on now. It’s time to go right to the root of the problem – the fossil fuel companies themselves – and make sure they hear us in terms they understand, like their share price.

How can divesting the funds from a few institutions like universities & pensions make an impact?

Divestment isn’t primarily an economic strategy, but a moral and political one. Just like in the struggle for Civil Rights in the U.S. or the fight to end Apartheid in South Africa, the more we can make climate change a deeply moral issue, the more we will push society towards action. We need to make it clear that if it’s wrong to wreck the planet, then it’s also wrong to profit from that wreckage.

At the same time, there are certain economic impacts. The top 500 or so university endowments hold nearly $400 billion. That’s a huge number. Add in the big state pension funds and church, synagogue, and mosque investments, and we’re well on our way to making ExxonMobil, Shell, and Peabody sweat.While sale of stock might not have an immediate impact on a fossil fuel company, especially one as gigantic as Exxon, what it does do is start to sow uncertainty about the viability of the fossil fuel industry’s business model.

Here’s why: in order to keep warming below 2°C, a target that the United States and nearly every other country on Earth has agreed to, the International Energy Agency calculates that the fossil fuel industry will need to leave approximately 80% of their reserves of coal, oil, and gas unburned. Those reserves may be below ground physically, but they’re already above ground economically and factored into the share price of every fossil fuel company. Globally, the value of those reserves is around $20 trillion, money that will have to be written off when governments finally decide to regulate carbon dioxide as a pollutant. By divesting from fossil fuels, universities not only build the case for government action, they also start this important discussion about the fossil fuel industry’s “stranded assets.”

On the flip side of that coin, divestment also starts to build momentum for moving money into clean energy, community development, and other more sustainable investments. Let’s say our campaign succeeds in moving just 1% of the $400 billion in university endowments towards sustainable alternatives. That’s roughly $4 billion worth of new investments in things like solar bonds, revolving loan funds, and advanced energy industries. More importantly, when other investors, be they individuals or pension funds, see the nation’s leading universities begin to move in this direction, they’re more likely to follow suit. University endowments won’t be enough to fuel a clean energy revolution – that’s why we’re still pushing for government action – but they build the case for investment in important ways.

Which companies are the worst offenders?

We’re all complicit in fossil fuel consumption, and we should do all that we can to reduce our own use, but the real culprits — the ones who are rigging the system — are the fossil fuel companies. The largest 200 coal, oil, and gas companies own reserves that represent a significant percentage of the entire global market (1). These companies, incidentally, are also the largest political contributors around the world — they’re the ones writing laws and getting billions in government handouts each year (2).

(1)http://fossilfreeindexes.com/the-carbon-underground-2014/
(2) http://endfossilfuelsubsidies.org/files/2012/05/fossilfuelsubsidies_report-nrdc.pdf

Divestment sounds complicated. Do I have to be an expert to start a divestment campaign?

Nope — none of us at 350.org are experts on financial markets, but we’ve talked to a lot of divestment experts and they’ve given us a few tips. It’s useful to have the phone number or email address from a local economist, broker, or financial analyst, but it’s not necessary. We have a whole crew of folks at 350.org Headquarters happy to answer your questions and help you along — you can reach us at divest@350.org.

Can we still make a reasonable return without investing in Exxon or Peabody Coal?

While it’s true that fossil fuel companies are extremely profitable (In 2011, the top five oil companies made $137 billion in profit — that’s $375 million per day), they’re also very risky investments (1). Coal, oil, and gas companies’ business models rest on emitting five times more carbon into the atmosphere than civilization can handle, which makes their share price five times higher than it should be in reality. In addition, disasters like Exxon Valdez, the BP oil spill, along with massive fluctuations in supply and demand of coal, oil, and gas, make energy markets particularly volatile, and therefore risky.

Report after report has shown that investing in clean energy, efficiency, and other sustainable technologies can be even more profitable than fossil fuels (2). It’s a growing market, with over $260 billion invested globally in 2011, and a safe place for your institution to invest (3).

There are also a number of ways to re-invest locally that help build your community and stimulate good jobs. Projects like energy efficiency and rooftop solar have high up-front and labor costs, but save institutions money in the long run because electricity, heating, and other costs are reduced significantly.

(1) http://www.ceres.org/resources/reports/sustainable-extraction-an-analysis-of-sec-disclosure-by-major-oil-gas-companies-on-climate-risk-and-deepwater-drilling-risk/view

(2) http://www.forbes.com/sites/mindylubber/2012/03/20/investors-are-making-money-on-renewable-energy/

(3) http://www.reuters.com/article/2012/01/12/us-clean-tech-investment-idUSTRE80B1NX20120112

 

Divestment Resources from 350NYC Campaigns

 

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