When you invest your money, you might buy stocks, bonds or other investments that generate income for you. Universities, alongside many other institutions, put billions in these kinds of investments to generate income to help run their institutions. 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 to divest from these companies.
Instead we call for our institutions to invest their money in a socially-responsible and ethical way. Divestment is not just a negative; it aims to actively encourage sustainable business models and supports those that already exist.
The Ethical Case
The Carbon Tracker Initiative has calculated that in order to prevent global temperature from rising by 2 degrees above the pre-industrial average with 80% certainty, we can emit a further 565 gigatons of carbon dioxide. However, proven fossil fuels are calculated to contain 2795 gigatons, and the top 200 coal, oil and gas companies spent almost $700billion in the last 12 months finding and developing more reserves.
This makes the fossil fuel industry a rogue industry whose business plan is incompatible with a liveable planet. Hence, in the absence of effective carbon dioxide regulation (which is partly due to the political power of the fossil fuel industry) we believe that University investments in fossil fuel companies are not socially responsible.
According to a recent Smith School report, the largest impact divestment campaigns have is stigmatisation of industries, which creates the expectation that regulation will be introduced to prevent unethical activities continuing.
The Financial Case
According to the IPCC, in order to avoid dangerous climate tipping points, 80% of known fossil fuel reserves must remain underground. They are “unburnable” assets from a climate perspective. Stock markets, however, continue to overvalue these “unburnable” fossil fuel assets, thereby further inflating an environmentally and financially hazardous “carbon bubble”.
On average, around 5% of university endowments are invested in fossil fuels. If effective carbon dioxide regulation is introduced to prevent dangerous global warming, up to 80% of those fossil fuel assets will become stranded, placing investments at risk of devaluation. We believe that the University should take account of this emerging risk to its investments, whilst also considering the strong ethical case for divestment.
“The looming choice may be either stranding those [Fossil Fuel] assets or stranding the planet.” – OECD Secretary General Angela Gurria
“Smart investors can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision.” – Professor Lord Stern
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. By the mid-1980s, 155 campuses—including some of the most famous in the country—had divested from companies doing business in South Africa. 26 state governments, 22 counties, and 90 cities, including some of the nation’s biggest, took their money from multinationals that did business in the country. The South African divestment campaign helped break the back of the Apartheid government, and usher in an era of democracy and equality.
To read about our campaign so far, click here!