The global fossil fuel divestment movement has doubled over the past 15 months, with institutions and individuals controlling nearly USD 5.2 trillion in assets now pledging to divest, says a new report.
According to new analysis by Arabella Advisors, 688 institutions and 58,399 individuals across 76 countries are now committed to divest from fossil fuels. Together they control nearly USD 5.2 trillion in assets, a figure that has doubled over the past 15 months. Universities, foundations and faith-based organisations account for 54 per cent of the new commitments.
Outgoing UN Secretary-General Ban Ki-moon welcomed the findings. “One year after the adoption of the historic Paris Climate Agreement, it’s clear the transition to a clean energy future is inevitable, beneficial and well underway, and that investors have a key role to play,” he said.
“Investments in clean energy are the right thing to do — and the smart way to build prosperity for all, while protecting our planet and ensuring no one is left behind.”
According to the analysis, support for the divestment movement among early adopters is now increasingly being met by support from profit-driven institutions such as large pension funds, private insurers and banks, which represent USD 4.5 trillion in assets. Their main motivation: climate risks to their investment portfolios.
The growing – and increasingly mainstream – movement towards divestment is also putting the fossil fuel industry under greater scrutiny, which has been struggling in recent years from reduced profits, increased borrowing and lower renewable energy costs.
“The prudent fiduciary is acting now to reduce the risk to their portfolios. Divestment is speeding up the clock on the final accounting that will show fossil fuels are out and clean energy is in,” said Lou Allstadt, a former top Mobil Oil executive who helped implement the Exxon-Mobil merger.
Faith-based organisations are also embracing the divestment movement, in part fuelled by Pope Francis’ ‘Laudato Si’ encyclical in which he established a moral imperative to act on climate change.
But commitments within the faith sector go beyond any one particular religion: a recent interfaith statement calling for divestment was signed by 303 faith leaders from 58 countries, writes DivestInvest, which is spearheading the movement.
“At the one-year anniversary of Paris, and after a historic election in the U.S., divestment is needed more than ever,” said Ellen Dorsey, executive director of the Wallace Global Fund and leader of DivestInvest Philanthropy.
“When governments fall short, people step up. From Apartheid South Africa to the climate frontlines, finance is a proven lever for change. Governments should keep their promises, but investors must move their money.”