Written By: Emma Websdale
A campaign persuading investors to divest their money out of the fossil fuel industry is increasing faster than any previous divestment campaign, potentially causing substantial damage to fossil fuel companies, warns a new study.
The study, released today by Oxford University’s Stranded Assets Programme, which investigated the risk to fossil fuel assets from the current divestment campaign, concluded that its effects including reputational damage to fossil fuel companies, could result in major financial consequences.
The divestment campaign, started in July 2012 by an article written by prominent environmentalist Bill McKibben in the Rolling Stone magazine, pledged for companies and colleges to divest from fossil fuel companies in order to have an 80% chance of keeping global warming below 2C.
To date, his campaign has been regarded as one of ‘fastest growing student movement in decades’ leading to over 300 college campuses engaging in active campaigns, with six of these (Unity, Sterling, Green Mountain, Hampshire, College of the Atlantic and San Francisco State) already divested. Meanwhile, city governments from San Francisco to Seattle have announced commitment to divesting their fossil fuel stocks.
“This divestment campaign is just one front in the climate fight, but of all the actions people can take to bring about structural change, it’s probably the easiest“, said Bill McKibben.
“Severing our ties with the guys digging up the carbon won’t bankrupt them–but it will start to politically bankrupt them, and make their job of dominating the planet’s politics that much harder.”
The new report says the divestment campaign has already passed the first wave in getting colleges and smaller businesses to divest and is now in its second phase of getting larger bodies such as pension funds to also divest from the industry.
Pension funds, that have 2-5% of their assets in fossil fuels, together with colleges, collectively have $12 trillion in fossil fuel assets under management. The report estimates that between $240 billion to $600 billion of this could ultimately be divested.
The report warns that fossil fuel companies should not ignore the trend towards divestment, as actions taken from the campaign including reputational damage could significantly slow down the fossil fuel industry.
The report particularly cautions the coal industry, suggesting that they “should view their near-term cash flows as an opportunity to transition or diversify away from the assets and activities most at risk” as cleaner energy alternatives are harder to find in the coal industry compared to that of gas and oil.
The study follows April’s report backed by climate economist Lord Stern, which warned that at least two thirds of the fossil fuels listed as assets by the world’s fossil fuel companies would have to remain unburned in order to remain below the danger threshold of a 2C warming.
Moreover, the recent release of the UN’s Intergovernmental Panel on Climate Change (IPCC) fifth report, also reached a similar conclusion, warning that global temperatures are likely to surpass the 2C danger threshold this century if greenhouse gas emissions released by burning fossil fuels are not aggressively reduced.
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