February 13/14 is Global Divestment Day. The campaign, spearheaded by Bill McKibben’s 350.org campaign group, will see groups around the world enact flash-mobs, vigils, sit-ins and other forms of protest to urge banks, pension funds and university endowments to pull out of fossil fuels. It comes as divestment activity shows no sign of abating (see related news round-up) with the likes of Sydney University announcing a carbon reduction strategy of its listed equity portfolio and the London School of Economics launching a review of the fossil fuel risks of its investments. Responsible Investor speaks to McKibben about his hopes for the initiative, recent divestments, and the decision by Shell to advocate a climate change resolution from shareholders.
RI: What do you hope to achieve from divestment day?
This campaign has spread with wildfire speed around the world—this is a day to consolidate, to make sure that everyone everywhere knows what’s going on and can participate.
There has been a recent spate of university divestments – what do you think has triggered this and will it continue?
First, the problem keeps getting worse—2014 was the hottest year ever. Second, it’s clear by now that no oil company is going to do the right thing without this kind of pressure, so people are increasingly realizing that morality demands action. Third, the crash in oil stocks makes clear that students were right a year ago when they warned this was a risky bet—that plunge has wiped out $390bn (€345bn) in portfolio wealth in a year, which makes it clear that prudence demands action as well.
In your influential 2012 Rolling Stone article, “Global Warming’s Terrifying New Math,” you crunched figures from Carbon Tracker, which helped put the fossil divestment debate on the agenda. But Carbon Tracker don’t really talk about divestment, isn’t the reality more nuanced than you present it?
I fear the reality is even less nuanced. We’ve already passed the danger point for climate change—that’s what it means when scientists say, as they did last May, that the West Antarctic ice sheet has now come unmoored and its melt, and a subsequent ten foot rise in sea level, is now inevitable. Carbon Tracker’s numbers have become the conventional wisdom—it’s not me in Rolling Stone, it’s the governor of the Bank of England, the head of the World Bank, the analysts at HSBC; they’re all sounding the same alarm about the carbon bubble.Asset managers Amundi and AP4 recently launched low carbon mutual funds for investors seeking a smaller carbon footprint versus conventional ones by underweighting fossil fuel stocks. What is your view on this?
I’m for selling the stocks altogether.
A coalition of investors recently filed a number of climate change resolutions at Shell and BP’s AGMs. What is your view on this? Is there an argument for staying in fossil fuel stocks so you have a voice to influence the company?
I think Bevis Longstreth, twice appointed by Ronald Reagan to the SEC, answered this most clearly in an essay on the uselessness of engagement when core business practices are at stake. In essence, the oil majors are their reserves.
What is your view on the volatility in oil price? Will it help your cause?
I think it’s best contrasted with the steady, constant downward trend in the price of solar power, which Deutsche Bank just said should drop another 40% in the next couple of years.
You stepped down from 350.org late last year. Why?
I stepped down as chair of the board. But I’ve been a committed volunteer since I founded it eight years ago and continue to be. We’ve just reached a size where there are people better equipped than me to run board meetings and parse out budgets. I’d rather organize.
Shell has advised its investors to support climate change resolutions filed by a coalition of investors. Is this a positive sign?
It would have been a better sign if they hadn’t the same afternoon announced plans to go back to the Arctic this summer and try to drill. The fact that, having melted the Arctic they now want to drill it, makes them in my opinion the most irresponsible single corporation I can imagine.
The London School of Economics has announced that it will commission a review into the risks of its fossil fuel investments following student pressure. What are your views?
My view is that the LSE students are great—I had the best time speaking to them, and left certain that they would press administrators till they had no choice. These kids are way smarter than I am, especially on these questions of economics. Thank heaven for them.