What is divestment? And is your council funding climate change?
Local campaigners have scored big successes this year in getting their local authority’s pension fund to take their investments out of fossil fuels.
We were told it couldn’t be done. But campaigners in Haringey, Waltham Forest and South Yorkshire have all persuaded their council to move their money out of the coal, oil and gas companies whose actions are fuelling climate change.
We’d like you to join the growing thousands of people worldwide asking institutions to pull their investments out of climate-wrecking companies - to “divest” from fossil fuels.
So what’s the story here – why would ordinary people want to get involved in divestment? Read on…
What is divestment?
Divestment means moving money out of morally-compromised companies – the most famous example being divestment from companies associated with the apartheid regime in South Africa.
Pension funds and fossil fuels
Do you pay into a pension? Most of us do, these days.
We hand over our cash for it to be invested on our behalf. We do it so we can have some security in the future.
But there is a conflict in our pensions – because it turns out that large amounts of our pension cash are invested in fossil fuel companies.
These companies’ investments in new oil, coal and gas drilling will make climate change much worse.
It’s ironic that the money we put aside for our future is being used to make that future worse.
How much do councils invest in fossil fuels?
Local authority pension investments in fossil fuels are a whopping £14 billion.
That’s over £200 for every man, woman and child in the UK.
Shell knows the scale of the threat from climate change, and knows that to prevent it most existing reserves of coal, oil and gas are unburnable. Yet it continues to explore for new sources of fossil fuels. Its actions are as morally bankrupt as the worst tobacco and arms companies – and worse in that the scale of the impacts facing civilisation is so much higher.
So calling for divestment on fossil fuel companies is a moral issue. It’s a way for people to say “we don’t want our money invested in companies who behave like this”.
But divestment is also a pragmatic way to get real change.
Governments do too little on climate change because the pressure from the fossil fuel companies for inaction is intense, and the public calls for the opposite are not strong enough.
Calls for divestment are a new front in ratcheting up pressure on oil companies, and governments.
Every decision by every institution to divest is a reputational blow to the fossil fuel industry. It’s a visible rejection of those businesses by ordinary people concerned about their future.
It can be a force for changing government policy: it can provide the impetus for progressive legislation, as happened with divestment campaigning aimed at apartheid South Africa. And the more divestment there is, the more uncertainty it will create about the future of fossil fuel companies among the financial sector.
There are also other arguments for divestment – the financial risks of having your money in a sector which is overvalued because it won’t be able to use all its assets. The Bank of England is assessing the extent of the risks from this potential “carbon bubble”, and these issues are covered in a previous blog.
Local authorities can lead the way
When divestment campaigning started, it was easy to dismiss. But it is becoming a global juggernaut.
So far, institutions with a value of over $3.4 trillion dollars have made divestment commitments.
Local authorities were at the forefront of challenging apartheid through their divestment campaigns.
We’re calling on local authorities to lead the way again, and divest again, but this time from fossil fuels.
Everyone deserves a pension that isn’t wrecking their future.
The divestment juggernaut is really starting to gain speed. Find out where the local divestment campaign is in your area, and please join in.
This is an updated version of a blog first published on 25 September 2015.
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