I’m sure many of us come across the campaign to divest from fossil fuels, or perhaps are part of it, encouraging the institutions we’re involved with to sell their shareholdings in the fossil fuel industry and invest more ethically. Fossil Free Indexes publish a list of 200 publically listed companies with the highest levels of coal, oil and gas reserves and this is used by campaign groups to define targets for divestment. The list is ranked by potential emissions if burnt unabated and is topped by companies such as Gazprom, Coal India and Adani.
So, should I as someone who wants to have a positive influence on mitigating climate change, make sure my investments are not in these companies and campaign for my pension fund, church, and other institutions I’m connected with to divest from these targets? My initial thought would be yes, how could I support these companies financially, we need to reduce emissions as fast as reasonably practicable and these guys are digging and drilling for carbon as fast as they can. After all I’m careful not to invest in other areas I consider unethical, such as tobacco, another industry that for many years sought to kid us that their product caused no harm.
But I’m not so sure it’s as simple as that, and here’s why:
Firstly, if I were to divest and campaign for others to do so I’d feel more than slightly hypocritical when I filled up my car, got on a train or switched my central heating on. The first action of any campaign against something is to stop using the product yourself first, only when you have rid yourself of it can you campaign for the end of its production. I would be in the same position as a chain smoker asking others not to buy shares in Imperial Tobacco.
Secondly, whilst my lifestyle and the society I live in is still critically dependent on fossil fuels, I want the companies delivering them to be run as ethically as possible. When I travel or heat my home I’m imploring the fossil industry to go and find some more gas and oil for me to burn. In fact I actually give them some money to explore, produce, refine and deliver carbon to me in a form that I can most easily oxidise. I will take the responsibility for the burning, but I want them to minimise the destruction of the environment in those upsteam activities, and actively find other ways to deliver my energy with my money. It seems to me that if I have a vote at their shareholder meetings, or better still work for them, I have much more power to influence how they spend my money than if I am just a disconnected customer. The shareholder motion calling for tougher targets at Shell’s annual meeting hit the news in May for being so strongly supported. Unfortunately it was defeated, perhaps if less ethically-minded shareholders had divested the outcome could have been different.
Thirdly I don’t think it’ll make any difference! So what if a proportion (even a large proportion) of the population don’t hold shares in oil majors? Say half the population and institutions sign up to the divestment agenda and sell their fossil equities. They will sell to the half who are indifferent because shareholding is a zero sum game. Share prices may dip slightly during the process but as this is being done over a long timescale (campaign groups seem to recommend 5 year plans to divest) then the effect will be small. The pool of indifferent investors will be smart enough to realise that although the pro-divestment investors have sold out they will still be buying fossil fuels giving them a good return on investment for many years to come.
Finally it’s not the extraction of fossil fuels that is the major problem (although there are GHG releases that need tackling), nor is it their burning, but the release of the CO2 into the atmosphere as if it were an infinite sink. If we could extract and burn fossil fuel without releasing the GHGs there would be no effect on climate change. Tackling climate change is going to need all the help it can get and all avenues should be explored until proven unviable, damaging to the environment or inordinately expensive. There’s a lot of evidence that without Carbon Capture and Storage we are going to fail to meet our agreed targets or else place a huge burden on the energy user, especially the fuel poor. We need to impress upon the fossil fuel industry that it is their responsibility to work with governmental institutions to demonstrate this technology.
So it seems to me that I can divest myself of any internal influence over the production of fossil fuels whilst booing from the petrol pump, or I can get involved with like-minded stakeholders to influence the fossil industry from the inside as well as a customer. I don’t want to fall into the trap of buying the divestment ticket and thinking I have absolved myself of the responsibility that I have of for buying and burning carboniferous fuels and then dumping the waste product in our shared atmosphere. Minimising these activities has to be my first priority, investing for influence my second.