Rack up some more wins for divestment: the University of Hawaii System, the University of Edinburgh, and the Norwegian wealth fund have all within the last week answered the growing global call for institutions to cut ties with the fossil fuel industry.
It is very difficult to explain to some how divestment works. People are scared they are going to lose pensions, savings and even their homes! Patience, tolerance, some have left financial planning up to Vanguard, Unions and other third parties but they will see with things like the Clean Water regulations and Organic, Non-Gmo’s our water is priceless therefore fossil fuels and war are coming to a grinding halt. Peace
Mostly I don’t see how divestment works because it does not reduce consumption of fossil fuels by a single drop. An oil company will continue to find ways to drill and refine to meet demand regardless of the going price of their stock.
One small step for Universities et al, but perhaps the start of a giant leap for humanity’s survival!
BDS. BDS! BDS!
Divestment means that the pool of investment money dries up for coal. New money won’t come to coal from nowhere. So, in the short term the price per share of coal companies drops.
Stock managers have to show a profit. They can either tell their investors that a stock is going up, so the investors should hang on to the stock and the manager will be smart enough to sell at the top (that’s usually a lie because even among money managers, somebody always has to be stupider than the other people). Or, they can tell their investors to hang in there because the stock is going to make some long-term money. In the short term, coal and other fossil fuel stocks are dropping, so that argument fails. In the long term, the world is going to cut off its subsides of the fossil fuel industry. Then the world is going to tax carbon. Then the fossil fuel industries are going to lose all of their shareholder value, leaving the shareholders with worthless paper.
So, a little divestment can cause a run for the exits. At this point, fossil fuel companies can’t justify any shareholder reason to invest in them. There’s no bubble now and there’s no future later.
Leave it to Harvard to be stuck with the worthless paper. Maybe they could recoup their losses with a good football team.
see PaulK below for a partial answer.
Divestment is one of a multi-pronged strategy to get off fossil fuels.
Yes, many are so conditioned to think only in terms of self-interest and maximizing financial gain while minimizing risk of financial loss, but more importantly, that investing in fossil fuels is one of the best ways to to do this. This is the point of view of many financial planners, but it is changing. Doing the math and realizing that 80% of the already discovered fossil fuels must stay in the ground to keep global temperatures from increasing more than 2 degrees C, dramatically increases the financial risks of investing in what will hopefully turn into stranded assets. the divestment movement is really bringing that point home to more and more people.
For those worried about their pensions etc., several studies have shown that people don’t have to take a financial hit when divesting from fossil fuels, and if I can find the references I will post them.
Of course, considering the larger picture, many people need to expand their understanding and belief in the definition of value beyond the strictly monetary version. Thriving societies where there is equity of power and opportunity is valuable. People’s health is valuable. Positive social relationships are valuable. Thriving ecosystems are valuable. It’s not just about the money thing. It’s not about selfishness.
So would I. The USA won’t allow the Palestinians to have a state. They won’t let Hawaii secede even if there are Native Hawaiians that want to.