Capital fleeing coal and oil is worth $6 trillion
Environment — di Valentina Neri
Born as a grassroots movement, the drive to divest from coal and oil has now grown into something major. In total, $6 trillion has been withdrawn.
Capital fleeing coal and oil is worth $6 trillion
Born as a grassroots movement, the drive to divest from coal and oil has now grown into something major. In total, $6 trillion has been withdrawn.
There are almost one thousand institutional investors (that is, pension funds, insurance companies and so on) that have committed to divesting from coal and oil. For a total of six trillion dollars, just over five trillion euros, which have already been withdrawn or will be shortly. And which will therefore no longer go towards financing those energy sources that contribute so heavily to climate change, with all the consequences this entails for the health of our planet and of those who inhabit it. This is shown by a report by Arabella Advisors.
Fossil fuel divestment has become a global phenomenon. A new report was released, shows that close to 1000 institutional investors with $6.24 trillion in assets have committed to divest from fossil fuels. #divestinvest #fossilfree bit.ly/2Mh0DBq
Sovereign funds, insurance companies, pension funds: all set to divest from coal and oil
To be precise, the figure now stands at $6.240 trillion, but the previous edition of the same report (dating back to 2016) arrived at an overall estimate of $5 trillion. Going back a further four years, the figure was just $52 billion. This means that, in such a short space of time, an increase of 11,900 per cent has been recorded.
But who do we have to thank for such dizzying progress? First and foremost, insurance companies, which alone account for roughly half of this figure. According to the NGO coalition Unfriend Coal, 15 insurers have already abandoned coal or removed it from the options for their future investments. The best known are France's Axa and Britain's Lloyd's of London, but Zurich Insurance Group, Swiss Reinsurance Company, SCOR Se, Storebrand and California's State Compensation Insurance Fund have also taken this path.
Sovereign funds are also doing their part. The decision by Ireland to divest all of its investments in fossil fuels made headlines. Its sovereign fund is very small compared to others, with assets totalling 8.9 billion euros, but it was nonetheless the first country in the world to make such a clear-cut decision. The world's largest sovereign fund, the Norwegian one, owes its fortune to oil, yet has decided that the most prudent course of action from a purely economic standpoint is to divest from it (it had already made the same choice with coal back in 2015).
Since 2016, the Arabella Advisors report continues, no fewer than 61 pension funds have pledged to go "fossil free". At the start of 2018, Bill de Blasio, mayor of New York, committed to divesting the city's pension fund from fossil fuels.
Philanthropic bodies, religious organisations and universities continue to prove highly active and determined: they account for as much as 60 per cent of all new announcements over the past two years. After all, this movement took its first steps on American university campuses. Seven years on, it now involves 37 countries across the world.
The big oil and coal companies can no longer turn a blind eye
The movement to divest from coal and oil, then, started from the grassroots and found its strength in the support of the public, which over these years has not hesitated to take to the streets. Having reached this point, it has become impossible to ignore.
As the Arabella Advisors report highlights, Shell's latest annual report states in no uncertain terms that this trend could hinder the development of new projects, reduce demand for fossil fuels and complicate access to capital. A similar admission comes from Chevron, which raises the risk of having to radically overhaul its business model.
Their shareholder meetings have, for this very reason, become increasingly fraught. In some cases, combative. The Guardian cites, for example, data from As You Sow, a coalition of activist investors: between 2012 and 2018, no fewer than 160 resolutions relating to climate change were tabled at the shareholder meetings of 24 major US energy companies.
The energy transition, in short, is under way. And its economic and financial implications are real and tangible.