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Raj Thamotheram: the fossil fuel divestment debate: Is there a consensus way forward?

Raj Thamotheram: the fossil fuel divestment debate: Is there a consensus way forward?

First in a trilogy of articles examining the growing divestment campaign and where it could lead.

Pic credit: Facebook/GU fossil free

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There is now a vigorous debate about fossil fuel divestment as a strategy for addressing climate change and this heightened attention to the role of fossil fuel companies and their investors is clearly healthy. But in this increasingly heated debate about pros and cons, we observe that protagonists on both sides sometimes miss critical questions, fail to consider contradictory factual data and gloss over important connections. We believe that exploring this grey zone will uncover hidden common ground that could become the basis for coordinated action. Our recommendations will be outlined in the third article but first we need to revisit where the divestment debate is today.

Even those who oppose divestment as a strategy cannot deny the campaigners have some very powerful arguments.
First, in order to limit global warming, the world has to stop using the “dirty carbon” energy reserves – coal, gas, oil and “unconventionals” (e.g. fracked oil) – that we have already found. At this system level, it makes little sense to further invest in companies that are committed to extracting even more greenhouse gas pollutants. Yet as the Carbon Tracker Initiative has documented, “the top 200 oil and gas and mining companies have allocated up to $674bn in the last year for finding and developing more reserves and new ways of extracting them”. Even sceptical economists – like Paul Krugman – are revisiting their position on renewables. (1)

Second, our current generation of decision-makers, opinion-shapers and voters/consumers have been actively duped and dulled into torpor (2), and this is as true of finance as it is of politics. So we have to rely on younger people and there is little doubt that divestment is a motivating rallying call for this age group.(3) Finally, the campaign has picked up support from unusual players including Bevis Longstreth, a well-respected former SEC Commissioner (4) and also has some powerful advocates including Desmond Tutu (5), Bill McKibben (6) and Naomi Klein (7).

More generally, and making the analogy with how the AIDS epidemic was tackled, the President of the World Bank has called for a similar coalition of campaigners and experts.(8) The divestment campaign has already had impact on popular debate; more than its supporters hoped for, and certainly more than its critics predicted. For all their good work, existing environmental NGOs have been unable to fire up the public. The divestment campaign has been very successful because it has chosen to “make climate change a deeply moral issue” and reduce the complexity to a simple message: divest! The campaign actively references the anti-apartheid campaign where divestment was also a powerful organising strategy. Given that fossil fuel companies already have a poor reputation, the campaign is on track to create a high profile and media friendly debate with, for example, more than 100 members of the Harvard faculty supporting the divestment call. (9)

Third, it is undoubtedly the case that fossil fuel companies – and the vast majority of their mainstream investors – have adopted, at best, a tokenistic approach to something that seriously threatens human civilisation; and this despite many years of constructive dialogue by scientists, governments and NGOs. In the same way that some argue that the divestment campaign lacks integrity – in that the leaders know it can’t work – the same could be said for (ESG) investors who assert that the current market-led approach is working. The fact that carbon price is actually down to 5 Euros per tonne (10) and that the amount invested in clean energy in the last year was only half of that invested in exploration and mining in fossil fuels in the same period (11) are just two hard indicators of how dysfunctional today’s approach is. More generally, leaving market professionals in charge of how climate change is managed is to accept – inevitably – a strategy of “profiting off disaster”. Given that “the hardest truth about climate change is that it is not equally bad for everyone”, this strategy is almost certain to deliver outcomes which will be unjust, if not dystopian, for many of the world’s “99%”.(12) Fourth, and even though it is not explicitly stated, the strategy of the campaign is to force political and financial leaders to choose whether to


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