The United Nations is now calling for investors to validate the financial risk posed by unburnable carbon and climate change by divesting portfolios of fossil fuel stocks. Christina Figueres, the Executive Secretary of the UN Framework Convention on Climate Change, encouraged investors to unwind positions in fossil fuel investments, saying “Institutional investors who ignore the risk face being increasingly seen as blatantly in breach of their fiduciary duty to their beneficial owners…”
Divestment from high risk, carbon-intensive investments provides a means for institutions to protect the value of their portfolios, thereby honoring obligations to stakeholders, members, and beneficiaries. Risk can be further reduced by redirecting assets into carbon-free investment opportunities, which allow investors to maintain exposure to the energy sector but with companies that are designed to flourish in a carbon-constrained environment.
The heirs of Standard Oil tycoon John D. Rockefeller recently announced they are joining the growing movement to divest from fossil fuels. Watch the press conference here, as hosted by Democracy Now!
In 2011, As You Sow published White Paper: Financial Risks of Investments in Coal, the first paper of its kind offering an in-depth analysis of the market trends threatening the financial viability of the coal industry. With the momentum of the White Paper, As You Sow convened a coalition of organizations to address the fact that investments in coal-based companies faced serious and increasing financial risks. This coalition began to develop resources for university endowments seeking to eliminate that risk from their portfolios, and a campaign encouraging divestment from coal assets was launched at two campuses during the fall of 2011. By early 2012, student interest sprouted at six more campuses, catching the attention of Bill McKibben and 350.org, who joined and broadened the divestment focus from coal to all fossil fuels. Through a pivotal Rolling Stone article and “Do the Math” speaking tour, the movement took fire, spreading to hundreds of universities. The movement has now spread to cities, foundations, states, faith based organizations and corporations, with over two billion dollars’ worth of divestment commitments thus far.
As You Sow continues to support students and stakeholders pressing their institutions to evaluate the carbon asset risk of their portfolios and to divest those fossil fuel assets which contain unmanageable, systemic risk. The national divestment discussion bolsters shareholder advocacy activities with fossil fuel companies by advancing climate change mitigation as a national imperative, encouraging a constant, public evaluation of carbon asset risk.