Scale of funds ditching assets enters trillions of dollars smashing expectations as private firms lead charge, study says
Pic: Light Brigading/Flickr
By Alex Pashley
A campaign to blacklist fossil fuel investments has grown exponentially on a year earlier as pension funds and foundations joined en masse, a report claimed on Tuesday.
Coal, tar sands and other polluting assets in funds representing $2.6 trillion have been now flagged for divestment by 430 institutions and 2,040 individuals, according to US consultancy, Arabella Advisors.
That is a 50-fold increase on pledges made by last September at a high-profile climate summit in New York, the Washington DC-based group, which advises philanthropists on social investments said. Campaigners had hoped it might triple.
The grass-roots movement hatched on American university campuses in 2011 has broadened from faith-based groups and NGOs to wealthy private corporations, driving the surge.
Norway’s colossal sovereign wealth fund, which pledged to ditch $8 billion of coal holdings in June, has been joined recently by California’s state pension funds and the Canadian Medical Association.
Actor and environmentalist Leonardo DiCaprio became the latest to re-route his charitable foundation’s assets into green projects.
(Credit: Arabella Advisors)
“If these numbers tell us anything, it’s that the divestment movement is catching fire,” said May Boeve, executive director of campaigners 350.org.
“Since starting on the campuses of a few colleges in the U.S., this movement has struck a chord with people across the world who care about climate change, and convinced some of the largest and most influential institutions in the world to begin pulling their money out of climate destruction.”
Low-carbon transition
To cap global warming low-carbon technologies need to be deployed on an enormous scale.
Up to a $1 trillion a year is needed to achieve this, according to the UN’s top climate official, Christiana Figueres.
More capital is flowing to climate-fighting projects, said the study. Institutions and individuals worth $785 bn in assets have pledged to re-route divested funds into clean energy.
Those investments offered “one of the clearest, no regret choices ever presented to human progress,” said Figueres, who will steer a December summit in Paris to get a climate pact between 196 nations.
She was speaking at Climate Week in New York, which had set a series of announcements to spur progress towards the crunch conference in the French capital.
The idea of fossil fuel assets posing a risk to companies’ portfolios as oil rigs and gas fields become uneconomic as emissions are capped is catching on.
“This extraordinary figure shows the Divestment campaign is hugely successful in putting the issue of unburnable carbon on the agenda of investment institutions,” said Anthony Hobley, chief executive of research outfit the Carbon Tracker Initiative.
“However, most investment mandates would not permit exclusion of a sector on purely ethical grounds. We need to give them a financial basis to act, that is Carbon tracker’s role. However, foundations and endowments who can take such action send an important signal and may find there is a financial benefit to boot.”
The report cited analyses from financial institutions such as HSBC, Citigroup and the Bank of England regarding so-called ‘stranded assets’.