Fossil Fuel Divestment Movement Making Gains With Investors

What started out as fossil fuel divestment campus protests five years ago is now exceeding $5 trillion in stock market value.

According to a report by investment firm Arabella Advisors, the more than $5 trillion in investment funds leaving fossil fuel stocks is double the market valuation it had reached just 15 months ago.

Ryan Strode, the director of Arabella Advisors, said that the report does not claim that $5 trillion worth of fossil fuel investments have been sold off. The $5 trillion represents the total dollar value of all the investments held by parties who have sold some or all of their fossil fuel investments. It speaks to the measure of influence these investors are having on financial markets, he said.

What started out in 2011 on several university campuses has expanded greatly. The Arabella Advisors report says that 688 institutions and nearly 60,000 people in 76 countries have sold off some or all of their holdings in fossil fuel companies.

“It’s a stunning number,” said Ellen Dorsey, executive director of the Wallace Global Fund. “This movement began as an ethical concern, was quickly matched with financial concerns, and I think it’s now being increasingly recognized as a fiduciary duty,” Dorsey says.

Wallace Global Fund has played a role in promoting fossil fuel divestment and clean energy investment as part of its philanthropy. Investment firms are working closely with clients to evaluate the financial risks of pulling out of fossil fuel stocks like oil companies and moving funds over renewable energy and cleantech.

Universities may have started it, but it’s found serious backing from corporations, institutions, pension funds, insurance companies, and religious organizations. As the chart below shows, faith-based organizations and philanthropic organizations have been taking the lead, followed by investments made by local governments, educational institutions, and pension funds.

Divesting institutions

Global firms are joining into the divestment movement, but it does have its doubters. Harvard president Drew Faust has opposed that the Harvard endowment, the largest of any U.S. university fund, should be removed from fossil fuel investments.

“The endowment is a resource, not an instrument to impel social or political change,” Faust said.

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Dorsey challenged incoming president Donald Trump to look at fossil fuel divestment with hard-headed business rationale.

“[He] should focus on the explosive industries where manufacturing jobs are being created,” she said.

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