Quantcast

Don’t Let Wall Street Leave You Behind: It's Time to Divest From Fossil Fuels

Energy

As the flow of capital away from dirty, dying industries grows to a torrent, how can ordinary investors avoid being among the last mistakeholders—the final financial losers of climate change? Throughout the hallowed halls of Wall Street, never known for their social progressivism, smart money is reducing exposure to risky fossil fuels.

Bank of America and Credit Agricole are turning away from coal financing this year. Citigroup is reevaluating “risk” from oil-sands projects and investing $100 billion in renewable energy development over the next decade. Nine of the world’s largest corporations have announced that they are switching to 100 percent renewable electricity.

To date, 430 institutions and more than 2,000 individuals across 43 countries and representing $2.6 trillion in assets have committed to divest from fossil fuel companies—a 50-fold increase from just a year ago.

Norway’s sovereign wealth fund, the richest in the world and developed in an economy built on oil and gas wealth, divested from more than 100 companies for environmental and climate reasons. The University of California system endowment and pension fund has sold its $200 million stake in coal and oil sands companies and California Gov. Jerry Brown just signed a bill that would force the state’s pension investment funds, with a total of a half-trillion in assets, to drop all coal-related investments.

My fellow Nebraskan, Warren Buffet, advises "should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks." Those with real cash on the line and who speak calmly of risk-based approaches and short, medium and long-term investment strategies are declaring with their investment dollars that there is no future in dirty industries. 

In the words of PricewaterhouseCoopers, “As climate change starts to affect access to raw materials, the reliability and security of global supply chains and even the types of products and services consumers demand, CEOs must also take a strategic view … to identify both the risks and opportunities for their business.”

Concurrent with this growing tide of divestment from fossil fuels is a shift toward investing in renewable energy sources and technologies. The world is now adding more capacity for renewable power each year than for coal, natural gas and oil combined, as cleaner technologies continue to come online and achieve viability in the market. By 2030, more than four times as much renewable capacity will be added. According to the International Energy Agency, solar could be the world’s largest source of energy within three to four decades.

Which brings us to a critical question: What about ordinary investors—the members of the 76 million American households that have invested more than $12 trillion in IRAs and 401ks?

Morningstar investment research shows that more than $800 billion in fossil fuel company stocks are hidden in the thousands of mutual funds that make up those accounts. Unless you are tremendously savvy regarding the holdings of the funds in your account, you probably don’t know what your exposure is.

Fortunately, the power of the Internet is beginning to yield some helpful web-based tools that even the smallest investors can use to not only protect themselves but also leverage their savings to pursue and accelerate a clean fuel economy. One of these, FossilFreeFunds.org, allows any investor to quickly and easily analyze their mutual fund holdings and see their exposure to fossil fuel companies. It is likely that more such tools will follow.

Armed with more information and a clearer picture, investors will be able to speak authoritatively to their brokers, advisors or even office managers about shifting their investment dollars into clean energy and away from those that are responsible for climate change. 

The picture is coming into focus. The markets are pointing the way to a new economy based on high-tech, clean, renewable energy. It’s just a matter of time. Don’t let Wall Street leave you behind. Don’t be a stakeholder left holding the bill for fossil fuel companies’ mistakes.

Lisa Renstrom is the co-founder and chair of the Divest Invest Individual Initiative, a board member at Bonwood Social Investments and a former president of the Sierra Club.

YOU MIGHT ALSO LIKE

Bill McKibben: ‘VW Is the Flea to Exxon’s Elephant. No Corporation Has Ever Done Anything This Big and This Bad’

EcoWatch Daily Newsletter

A new report spotlights a U.N. estimate that at least 275 million people rely on healthy coral reefs. A sea turtle near the Heron Island in the Great Barrier Reef is seen above. THE OCEAN AGENCY / XL CATLIN SEAVIEW SURVEY

By Jessica Corbett

In a new report about how the world's coral reefs face "the combined threats of climate change, pollution, and overfishing" — endangering the future of marine biodiversity — a London-based nonprofit calls for greater global efforts to end the climate crisis and ensure the survival of these vital underwater ecosystems.

Read More
Half of the extracted resources used were sand, clay, gravel and cement, seen above, for building, along with the other minerals that produce fertilizer. Cavan Images / Cavan / Getty Images

The world is using up more and more resources and global recycling is falling. That's the grim takeaway from a new report by the Circle Economy think tank, which found that the world used up more than 110 billion tons, or 100.6 billion metric tons, of natural resources, as Agence France-Presse (AFP) reported.

Read More
Sponsored

By Gero Rueter

Heating with coal, oil and natural gas accounts for around a quarter of global greenhouse gas emissions. But that's something we can change, says Wolfgang Feist, founder of the Passive House Institute in the western German city of Darmstadt.

Read More
Researchers estimate that 142,000 people died due to drug use in 2016. Markus Spiske / Unsplash

By George Citroner

  • Recent research finds that official government figures may be underestimating drug deaths by half.
  • Researchers estimate that 142,000 people died due to drug use in 2016.
  • Drug use decreases life expectancy after age 15 by 1.4 years for men and by just under 1 year for women, on average.

Government records may be severely underreporting how many Americans die from drug use, according to a new study by researchers from the University of Pennsylvania and Georgetown University.

Read More
Water coolers in front of shut-off water fountains at Center School in Stow, MA on Sept. 4, 2019 after elevated levels of PFAS were found in the water. David L. Ryan / The Boston Globe via Getty Images

In a new nationwide assessment of drinking water systems, the Environmental Working Group found that toxic fluorinated chemicals known as PFAS are far more prevalent than previously thought.

Read More