M10 Lesson 1 - Divesting

One of the issues that you may have heard about (probably more likely if you're lucky enough to own stocks and bonds) is the whole issue of divestment. What that means is saying, “hey, I'm going to sell my stock in oil companies, in coal companies, in fossil gas companies -- basically, anything in the existing energy infrastructure -- because I don't want to contribute to the economic well-being of those companies.” Many universities are divesting as well as individual people.

This has been going on for a number of years. It was quite an effective tool, for example, against apartheid in the fight for racial equality in South Africa. There was a global divestment campaign to go after companies that were active in South Africa. It is a little bit different in the way that divestment is being used in the context of climate change because in this case, it's not just intended to be symbolic, although it is symbolic in a significant way.

The idea now is can we weaken these companies. Can we weaken companies by divesting from them? If enough people divested, would that make their stock price go down? And if their stock price went down, maybe they would think more about climate change. That's on a number of different storylines here.

What we're tending to see, though, is a real complicating factor. Companies are starting to sell off some of their high carbon infrastructure, some of their high carbon resources. This way, they look better, they look greener. But just as in the case of divesting your stocks and bonds, when a company divests or sells a part of the business with a high carbon footprint so that they can report that their carbon footprint. Is declining -- well, someone else is going to buy those assets.

The same goes with stocks and bonds. So what tends to happen is that it's sort of like moving deck chairs around on the Titanic. It's a lot harder to make a fundamental difference to these companies and to these sectors simply by divestment.

This holds for individuals, it holds for universities, it holds for companies selling off their high carbon assets. Like many of the other things that we have talked about -- e.g. your carbon footprint, your vote -- it’s certainly not a bad thing to do. In most cases, it's not going to do you any harm. However, there is some interesting discussion of whether you are giving up some financial return by divesting out of one sector and going to another sector?

It's a complicated question in terms of the relative returns from different sector. In the end, if you want to divest, fine -- but don't assume that in and of itself is going to have a significant impact on climate outcomes or on climate breakdown.