While the growth trajectory for fossil fuel divestment may well be “enormous”, as Arabella Advisors global investment manager Ellen Dorsey says in a post on Climate Central, a closer reading of Arabella’s latest divestment report suggests the headlines touting US$5.2 trillion in activity so far are a bit premature.
“That’s a huge sum of money,” Climate Central writes of the US$5.2 trillion figure. And it would be, if that much money were actually being withdrawn from fossil investments. If it were also being redirected to clean energy, a cash infusion on that scale would undeniably turbo-charge the transition off carbon.
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Pointing to divestment leaders like Norway’s sovereign wealth fund, Germany-based financial services giant Allianz, and Amalgamated Bank, which in September became the first U.S bank to divest, the report asserts that “the $5 trillion figure is significantly lower than the full scale of commitments made.” The group argues that the lofty figure shows the success of “divestment advocacy [that] has converged with broader climate activism and fossil fuel resistance campaigns to create an increasingly unified global movement. Different strains of climate advocacy are now reinforcing each other, framing a larger narrative about the decline of fossil fuels, and putting the industry under mounting legal, regulatory, political, and cultural pressures.”
But inspiring as that hope may be, the pressures do not in fact approach anything like US$5.2 trillion in divestment. The imposing headline figure, as the Arabella report concedes in its details, is really only the estimated total of all the financial assets administered by the 688 institutions and 58,400 individuals in 76 countries which, it states, “are on board with divesting from fossil fuels.”
By “on board,” the Arabella authors do not mean actually selling off all their coal, oil, and gas assets, let alone shifting US$5.2 trillion out of fossils as an investment class and into something else. Rather, they mean “committing to some sort of divestment from fossil fuel companies.”
The instances of actual divestment that the authors do identify suggest a scale that falls some distance short of the trillions of dollars: “The Bill & Melinda Gates Foundation, which has $40 billion in [all classes of] assets,” they offer as one example, “has not pledged to divest but has reduced its fossil fuel holdings by 85% over the past two years, and recently sold all its holdings in BP. The Hewlett Foundation has opted not to make any future investments in private partnerships involved in oil and gas drilling.” For its part, UK insurer Aviva, with $572 billion in holdings, “began shareholder engagement” with 40 companies whose revenue relies heavily on coal mining or power generation.
All good, but despite the headline, still some way from putting a death grip on fossil equity values.