[Graeme]

Divesting From Fossil Fuels

TO THE EDITOR:

Re “Old Tactic in New Climate Campaign” (By Degrees, July 9): Higher education’s mission is to go beyond mere careerism to inculcate a responsibility to ensure a better future for all. While fossil fuels may be profitable, colleges and universities investing in them are voting with their dollars for a future of devastating climate change. Student campaigns for divestiture are environmentally, morally and economically sensible. As in the long campaign against apartheid, it is the voices of youth which express the better angels of human nature.

Warren Senders

West Medford, Mass.

nytimes

[Graeme]

11 Reasons to Divest from the Fossil Fuel Industry

There is a robust debate happening in university halls, around religious congregations, and at individual kitchen tables nationwide. The driving question: Should we divest from the fossil fuel industry?

Whether you are a college student, a trustee of a religious or educational institution, or an individual with a retirement fund, this is a relevant question for you.

Earlier this year, several community organizations in Boston, including the Institute for Policy Studies’ Jamaica Plain Forum, held a community forum in Boston to discuss the moral and practical issues of divesting from fossil fuel companies as a strategy to combat climate change.

The forum, viewable here, brought together those with expertise in finance, community organizing, social justice, and policy to address questions surrounding the basic nature of fossil fuel divestment as well as its implications for our investments and our world. Some of the questions we debated were: Is divestment meaningful? Can we exert leverage over energy companies by retaining the leverage of ownership? Would divestment reduce the investment returns required to sustain our institutions and income needs?

Our view is that our current economy, based on insatiable extraction and consumption, is simply unsustainable – for the planet as well as for us. Powerful fossil fuel corporations exercise an undue influence on environmental and economic policy, thwarting our ability to adopt sane and far-sighted energy policies. Here's what we found:
1. We Did the Climate Change Math: Now We Must Act
2. Time to Choose Sides: We Must Raise the Cost of Extracting and Burning Carbon
3. We Are All Responsible for Carbon Pollution, But the Fossil Fuel Industry Has a Disproportionate Responsibility for Climate Change
4. Fossil Fuel Profitability is Based on Rigging Our Political Systems
5. Investment Returns in Fossil Fuels Will Inevitably Decline
6. Divesting from Fossil Fuels Will Not Negatively Impact Return
7. The Fossil Fuel Sector Will Not Reform Itself
8. Support the Movement and an 'Outside Strategy'
9. Engaged Shareholder: You Can Still Work the "Inside Strategy" If You Want
10. The Moral Question Is Why Should Any Institution or Individual Stay Invested: This Is an Abolitionist Cause
11. We Can Divest from Fossil Fuels and Invest in the New Economy

commondreams

[Graeme]

Why It Makes More Sense to Dump Your Fossil Fuel Stocks

Sure, fossil fuel companies such as ExxonMobil (XOM_), Chevron (CVX_) and Royal Dutch Shell (RDS.A_) have been smart investments for decades -- even for environmental groups who treat them like a secret addiction. But climate change is going to change that too.

In fact, it's divestment from fossil fuels that's the far smarter, safer move, according to a growing number of experts.

Late last month, Forbes featured an article that supported divestment in fossil fuel stocks not just as a viable financial strategy, but a necessary one. That's because though we have more than enough fossil fuel reserves worldwide to depend on for some time, it would come with a huge environmental cost.

Divestment hit the mainstream late last year when the environmental nonprofit 350.org, headed by writer and activist Bill McKibben, began advocating for it as a main angle of its climate campaign. In particular, 350.org touts divestment as a powerful tactic in urging fossil fuel companies to begin scaling back on extraction and replace their product with sustainable alternatives such as solar and wind power.

The scientific consensus is that we have to leave untouched 80% of our coal, oil and gas reserves to keep average global temperatures from rising more than 2 degrees Celsius (3.6 degrees Fahrenheit) -- the threshold for maintaining a stable climate. Yet according to the International Energy Agency, our emissions are already on a path that will increase average global temperatures between 3.6 and 5.3 Celsius (6.5 to 9.5 Fahrenheit) by the end of the century.



The collective effort to divest has been aided by a flurry of reports outlining an appropriate and financially beneficial way to go about divestment. These include The Aperio Group's report, Building A Carbon Free Portfolio, Joshua Humphrey's article, Institutional Pathways to Fossil-Free Investing: Endowment Management in a Warming World and Resilient Portfolios and Fossil-Free Pensions, a joint effort of HIP Investor and 350.org.

All three not only outline methods for long-term divestment, but also offer suggestions for reinvestment in renewable energy and other solutions for coping with climate change, which they all conclude is a necessary component of any successful divestment strategy.

The Aperio Group reported in January that carbon divestment carries very little risk -- much less than 1% (from 0.01 to 0.0006). At the same time, the World Economic Forum found that about $700 billion would be needed annually to address and limit the global impacts of climate change.

thestreet

[Graeme]

Silicon Valley water district may drop its investments in fossil fuel companies

In the 1980s, hundreds of American cities, states and universities sold their investments in South African companies as part of a protest against that country's former apartheid government.

Now, environmental groups are trying to duplicate that effort, but with global warming polluters in the role of villain. And, just as with South African divestment a generation ago, the Bay Area is at the head of the parade again, prompting cheers from environmentalists and jeers from skeptics who say the whole effort amounts to little more than empty symbolism.

On Tuesday night, the Santa Clara Valley Water District, a government agency based in San Jose, is scheduled to vote to drop its investments in fossil fuel companies. If the measure passes, as expected, the water district will become the first Silicon Valley governmental agency to join the movement. It also will join Berkeley, San Francisco and Richmond -- along with Seattle, Portland and other cities -- among a small, but growing group of local governments that have taken similar stands in recent months.

"I think we can set an example. Water districts are so affected by climate change -- from declining snow pack to the increased water usage we're going to face as temperatures continue to rise," said Brian Schmidt, the water district board member who is leading the effort. "I see no reason why we should fund the same corporations that are making these problems even worse."

dailydemocrat

[Graeme]

A New Divestment Focus on Campus: Fossil Fuels

In the 1980s, it was South Africa. In the 1990s, it was tobacco.

Now fossil fuels have become the focus of those who would change the world through the power of investing.

A student movement has gathered momentum at more than 300 campuses over the last year. Members have encouraged college and university endowments to divest themselves of their holdings of companies in the fossil fuel business to avoid profiting from the release of carbon associated with the risk of global warming.

While the efforts have gained some traction, they have also met strong opposition from critics who favor the traditional proxy-voting process of engagement, in which institutional investors try to prod corporations to change their practices, with divestiture a last resort.

The push also comes as some big institutional investors are paying more attention to broader programs devoted to environmental, social and corporate governance issues.

For example, the California Public Employees’ Retirement System has a sprawling program that includes 111 initiatives. They include proxy voting, investing in funds devoted to green energy or to urban and rural areas “underserved” by investment capital, and an annual list of underperforming companies. Calpers is working to integrate such issues throughout its $264 billion fund, including research to determine how such factors affect risk and return.

In July, Harvard’s endowment, the nation’s largest at $31 billion, hired the leader of that research initiative, Jameela Pedicini, as vice president for sustainable investing, becoming only the second top college after Stanford to have full-time endowment employees devoted to such issues.

Ms. Pedicini’s appointment was seen in part as a response to two student groups that have been calling for more action. The Responsible Investment at Harvard coalition has been pushing for “more transparent and comprehensive” environmental, social and governance efforts throughout the endowment. The other, Divest Harvard, said in April, “By sponsoring climate change through our investments, our university is threatening our generation’s future.”

The campus divestiture campaigns have been spurred by a group led by the environmental activist William McKibben, who has also battled the Keystone XL oil pipeline. The McKibben group has urged the sale of the 200 companies with biggest carbon reserves globally, including Exxon Mobil and Chevron.

nytimes

[Graeme]

Campaign against fossil fuel growing, says study

A campaign to persuade investors to take their money out of the fossil fuel sector is growing faster than any previous divestment campaign and could cause significant damage to coal, oil and gas companies, according to a study from the University of Oxford.

The report compares the current fossil fuel divestment campaign, which has attracted 41 institutions since 2010, with those against tobacco, apartheid in South Africa, armaments, gambling and pornography. It concludes that the direct financial impact of such campaigns on share prices or the ability to raise funds is small but the reputational damage can still have major financial consequences.

"Stigmatisation poses a far-reaching threat to fossil fuel companies – any direct impacts of divestment pale in comparison," said Ben Caldecott, a research fellow at the University of Oxford's Smith School of Enterprise and the Environment, and an author of the report. "In every case we reviewed, divestment campaigns were successful in lobbying for restrictive legislation."

The report is part of a new research programme on stranded assets backed by Aviva Investors, HSBC, Standard & Poor's and others. It found: "The fossil fuel campaign has achieved a lot in the relatively short time since its inception."

Some major investors, such as the $74bn Scandinavian asset manager Storebrand, have already pulled their funds from coal stocks. But the researchers found that even if the maximum possible capital was divested by university endowments and public pension funds, the total was relatively small compared to the market capitalisation of traded fossil fuel companies and the size of state-owned enterprises.

However, the team concluded: "The outcome of the stigmatisation process, which the fossil fuel divestment campaign has now triggered, poses the most far-reaching threat to fossil fuel companies and the vast energy value chain."

theguardian

[Synapsid]

Drew Faust, Harvard's president, said four days ago that Harvard will not divest its investments in fossil fuels.

"The endowment is a resource, not an instrument to impel social or political change."

[Graeme]

Harvard President Drew Faust’s decision not to divest the school’s endowment from fossil fuel companies late last week has prompted interesting reactions both in support and in protest in the days since.

A student-led movement at dozens of campuses has demanded that their university endowment funds sell off investments in coal, oil and gas companies to make a statement about climate change. In an open letter to the community Thursday, Faust rejected the demands of Harvard’s students, calling the strategy neither “warranted or wise.” She offered several reasons both practical—Harvard’s holdings are so minor, they wouldn’t impact the industry, but might instead just hurt the endowment—and philosophical—she sees the endowment as “a resource, not an instrument to impel social or political change.”


For some, though, climate change has to be seen as a moral crusade, and there’s no neutrality in a fight like that. Tim DeChristopher, newly arrived at Harvard Divinity School and featured in our magazine last month, criticized Faust in a blog post at The Nation, writing in part:

She says that Harvard’s endowment shouldn’t take a political position, and yet it invests in an industry that spends countless millions on corrupting our political system. In a world of corporate personhood, if she doesn’t want that money to be political, she should put it under her mattress.

bostonmagazine

[ralfy]

Related, from 2009:

"San Francisco peak oil task force report"

http://www.resilience.org/stories/2009- ... rce-report

[ROCKMAN]

Fossil Fuel Divestment Campaign Spreads to Europe From:
http://www.huffingtonpost.com/jamie-hen ... 15961.html

"Europe is the next front in the growing movement. Home to some of the largest stock exchanges and corporations in the world, making progress in Europe will be key if the divestment effort wants to pose a serious threat to the fossil fuel industry." It's fine IMHO to make such decisions based upon one moral philosophy. But it does seem odd to do with some sense of self-satisfaction that doing so does any damage to the companies. First, and above else, to divest means transferring ownership of the stock to another party. No more...no less. It doesn't effect a company's revenue, budget or operations. At most it might put some downward pressure on stock price. I haven't seen any indication that such efforts have had any measurable impact. But assume it might. This could allow a company the opportunity to repurchase its stock at a artificially low price. This has been a more common move by companies lately which has been criticized by a variety of folks. Owner more of their stock reduces dividend payments leaving more capital for drilling. Which I doubt is one of the goals of folks taking what might seem as taking the moral high ground.

Them dang unintentional consequences.

[Graeme]

Investors Ask Fossil Fuel Companies to Assess How Business Plans Fare in Low-Carbon Future

A group of 70 global investors managing more than $3 trillion of collective assets today launched the first-ever coordinated effort to spur 45 of the world’s top oil and gas, coal and electric power companies to assess the financial risks that climate change poses to their business plans.

Recent studies by the Intergovernmental Panel on Climate Change and the International Energy Agency have suggested that, in order to achieve the international goal of limiting global warming to 2˚C, the world will need to live within a set carbon budget, and a significant portion of proven global fossil fuel reserves will need to be left in the ground.

The world is currently, however, on a path toward global warming of 4˚C or more, which the World Bank warned must be avoided in order to prevent catastrophic climate change impacts.

The investors, most of them based in the United States and Europe, sent letters to the fossil fuel companies last month, requesting detailed responses before their annual shareholder meetings in early 2014. Investors signing the letters include California’s two largest public pension funds, the New York State and New York City Comptrollers, F&C Asset Management and the Scottish Widows Investment Partnership.

The investor effort, called the Carbon Asset Risk (CAR) initiative, is being coordinated by Ceres and the Carbon Tracker initiative, with support from the Global Investor Coalition on Climate Change.

3blmedia

[Graeme]

UK universities urged to pull cash from fossil fuel giants

An international campaign to urge large institutions to dump fossil fuel investments reaches the UK this week, following rapid success in the US.

The year-old divestment campaign, Fossil Free, has grown even faster than similar efforts that once targeted apartheid, tobacco and arms manufacturers. It now aims to focus attention on the £5bn invested in coal, oil and gas by the endowment funds of UK universities. The move comes as financial giants such as HSBC, Deutsche Bank and Goldman Sachs are starting to take seriously the prospect that global action to reduce carbon emissions could leave two-thirds of the world's proven fossil fuel reserves unburnable and worthless.

"The divestment campaign will start politically to bankrupt the fossil fuel industry and throw into stronger relief that it is a rogue industry, committed to burning more carbon than any government on Earth thinks it would be safe to burn," said Bill McKibben, a prominent US climate campaigner and figurehead of the Fossil Free campaign. "One reason we are losing the battle against climate change – the most important challenge humans have faced – is the power of the fossil fuel industry to block change," he told the Observer. "It is the richest industry in the history of human enterprise."

The US campaign has already led to more than 40 institutions, including the city of Seattle, universities and churches, pulling out of fossil fuel investments. Addressing the political debate in the UK over rising energy bills, McKibben said: "England has been burning fossil fuels since James Watt: there is no way you get to transition [to low-carbon energy] for free. But as economist Lord Nicholas Stern has said over and over again, the cost of not doing it is orders of magnitude higher than doing it."

Student divestment campaigns have sprung up at 20 UK universities, including the three with the largest investments: Cambridge, Oxford and Edinburgh. UK universities have more than £5bn – £2,000 per student – invested in fossil fuels, according to student group People & Planet and the 350.org campaign, which McKibben co-founded.

"Investing in fossil fuel companies, which harm communities and destroy the climate, is not OK," said Miriam Dobson, from People & Planet at Edinburgh University, where the campaign tour begins on Wednesday before visiting Birmingham and London.

theguardian

[Graeme]

The Financial Case for Divestment of Fossil Fuel Companies by Endowment Fiduciaries

1. Background. Rising temperatures around the globe are a reality, and so too is the primary cause: Energy-related CO2 emissions caused by human-beings. Long term energy analysis by the highly respected International Energy Agency (IEA) shows the world traveling down an unsustainable track. Very unsustainable. In 2012, CO2 emissions grew by 1.4 percent to a record high. Looking ahead, in its 'business as usual' scenario, the IEA shows energy-related CO2 emissions growing 1/3rd by 2035 and doubling by 2050, while global temperatures increase by up to 5.3 degrees Centigrade to 2100.

Recent disasters around the globe illustrate the growing problem with a warming planet: rising sea levels, changing rainfall patterns, more droughts, floods and heat waves, all adversely affecting ecosystems, food production and water resources. All costing immense sums of money. Consider, e. g., Hurricanes Sandy and Katrina; the wild fires and colossal floods in Colorado; the die-off of pine trees across the Rocky Mountains; the historic floods across the Midwest; deepening droughts in New Mexico, Texas and Oklahoma; and record heat waves in Alaska.

Unless large restrictions on carbon emissions are established around the globe, but particularly in the world's two top emitters, China and the US, scientists predict ocean level rises of three to six feet in this century, triggering massive evacuations. What's worse, we know scientists systematically understate the case -repeatedly discovering the globe's climate system is more, not less, sensitive to man-made assault, whose impacts are being experienced at ever-increasing rates.

This paper argues for divestment by fiduciaries of fossil fuel companies held in their endowments. It does so solely on financial grounds, expressed within a considered legal context, leaving for others to advance arguments on the basis of global urgency, morality, chartered purpose or other worthy grounds.

2. The Financial Case. The future prospects for fossil fuel companies are suffering, and in coming years, increasingly, will suffer from at least four rapidly evolving developments triggered by growing global awareness of the existential threat that climate change poses for the planet:

(a) Governmental restrictions on carbon release, leading to the stranding of carbon-bearing fossil fuel assets carried on the balance sheets of fossil fuel companies.

(b) Advances in alternative sources of energy for power, electricity and transportation, resulting in a lessening demand for coal, gas and oil.

(c) A rising tide of public action at the grass-roots level, including actions by stockholder groups, against fossil fuel companies, demanding such obvious steps as cessation of CAPEX on exploration and development of more fossil fuel.

(d) Growing reputational effects from the foregoing, turning fossil fuel companies into pariahs, with adverse consequences for hiring, employee morale and motivation, stockholder satisfaction and equity valuations.

(a) Stranded Assets. Persuasive findings and analysis by the Carbon Tracker Initiative and others indicate that, if action is not taken soon to curb carbon emissions, global temperatures will rise beyond levels where they can be reversed, with devastating consequences around the world. There is expert concurrence that the danger threshold is a rise of 2 degrees Centigrade from pre-industrial temperatures. Yet, from year to year, the world is still increasing carbon emissions rather than taking the necessary steps drastically to reduce them. Without swift action, we will blow past the 2 degree red line and perhaps reach increases of 3, 4 or even 5 degrees.

huffingtonpost

[Plantagenet]

Isn't this just another example of fuzzy illogical thinking.

Lets look at the facts----San Francisco will continue to use fossil fuels for cars, trucks and buses. Airplanes using fossil fuel to fly will continue to use SFO. Food grown using fossil fuels will continue to be sold in San Francisco groceries, and fish caught from boats using fossil fuel will still be for sale at Fisherman's Wharf. The Chevron Headquarters building will still stand on Market Street.

But after selling stock in energy companies SF will pretend that it doesn't support the use of fossil fuels?? What kind of logic is that?

[Graeme]

Smart people in San Francisco are going to divest in fossil fuels and invest in a renewable energy future:

Ironically, while fossil fuel investments may be among the most profitable around today, divestment could be the best financial choice any investor can make long-term. The business models of fossil fuel companies rely upon the ability to emit endless amounts of carbon into the air without financial penalty, but the global growth of carbon markets may soon flip that equation upside down.

A report issued last week identified trillions of dollars at risk in international stock markets that inflate the value of fossil fuels. These resources must remain in the ground to avoid the worst effects of climate change and represent a “carbon bubble” that could plunge the world into another financial crisis if it bursts.

In fact, HSBC warns 40-60% of total oil and gas industry market capitalization is at risk from the carbon bubble. “Business as usual is not a viable option for the fossil fuel industry,” said HSBC oil & gas analyst Paul Spedding. “Management should already be looking to new business models that reduce the risk of stranded assets destroying shareholder value.”

Now compare the outlook for fossil fuels to clean energy forecasts. New analysis from Bloomberg New Energy Finance predicts renewables will account for up to 74% of all new power capacity added worldwide by 2030 and could represent a $630 billion annual market. Talk about a growth opportunity.

[Plantagenet]

Smart people in San Francisco are going to divest in fossil fuels and invest in a renewable energy future.... Talk about a growth opportunity.

Maybe.

Unfortunately, green renewable energy companies are one of the most specuative parts of the market. These companies have had a distressing habit of going bankrupt once government subsidies are withdrawn, and even the ones that don't go bankrupt see their stock prices fluctuate wildly.

I certainly wish SF luck with their renewable energy future investing strategy and I hope they choose their investments wisely.


Wishful thinking is not an indicator of future performance

[Graeme]

Your plot is out of date (2011 vs 2013). See this thread "Renewable Energy Outshining Big Oil in 2013".

[Plantagenet]

Stocks go up and stocks go down, including alternative energy stocks.

The current high valuations of alternative energy stocks are a good thing if you bought in at the lows a year ago, but investing in these highly valued stocks NOW can be highly dangerous.

The best plan is always BUY LOW SELL HIGH.

Good luck!

[Graeme]

Here are 6 Benefits of Renewable Energy Use

Here are Ten Economic Risks of Fossil Fuels

Good luck!