Scale & pace of divestment grows following latest commitments


Welcome news this month as the pace of fossil fuel divestment continues to quicken. In September pledges to divest passed $2.6 trillion, and People and Planet have just announced that 8 new higher education institutions have divested. In all commitments to divest have increased more than 50 fold over the last year.

Photo credit: William77, From Wikimedia Commons

The breadth of institutions coming out of fossil fuels is also widening to include pension funds in California and the UK Environment Agency.

This latest tranche of divestment heightens the relative risk (see Bloomberg Business: The Oil Industry has been put on Notice) of remaining in fossil fuels and the pressure on the Church of England and the Methodist Church to build on the welcome commitments made this year to disinvest from coal and tar sands and sell remaining holdings in oil and gas companies.

They also show that arguments about disinvestment versus engagement are not confined to churches. Following the announcement that Wolfson College (University of Oxford) with an endowment fund of £42m, would exclude investments “in companies that derive a majority of their revenue from the exploration, ownership or extraction of thermal coal and oil sands”, there was criticism about the decision to retain holdings in oil and gas companies.

Jeremy Leggett a Wolfson College alumni, and chair of SolarAid said “Divesting from coal and tar sands is a good start, but it isn’t realistic to think that individual colleges and even universities can engage effectively with oil and gas giants to change behaviour. They should just divest. How incongruous is it to teach young people the science behind global warming’s dire threat to their future, and then invest in two of the main routes to fueling it?”.

The list of recent disinvestment commitments includes:

Environment Agency Pension Fund

Financial risks of climate change

The Environment Agency Pension fund is divesting from fossil fuels in response to the financial risks posed by climate change. Photo: https://www.eapf.org.uk/investments/climate-risk

The UK’s Environment Agency Pension Fund worth £2.9bn announced October that it will divest 90% of it coal assets and 50% of its oil and gas stocks in the next 4 years (by 2020). The EAPF will also invest 15% of the fund in low carbon energy and energy efficiency.

Mark Mansley, EAPF’s chief investment officer, said the new policy was not a “knee-jerk reaction” but followed over a decade’s analysis of the financial risks posed by climate change.

California Pension Funds

In September lawmakers in California passed a bill requiring two of the state’s largest pension plans to divest their holdings from thermal coal. The move came as part of push this legislative session to address climate change.

The measure called ‘Investing in Values and Responsibility’ passed the state assembly by 43 votes to 27. It calls for the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) (the largest pension funds in the US) to begin a divestment process in any holdings of thermal coal, and to complete that divestment within 18 months of the law being applied to a particular pension system.

CalPERS has about $292bn in assets and CalSTRS has $191bn in assets. CalPERS currently holds stock in about 30 coal companies, mostly in index funds, with a value of about $167m, according to legislative information on the bill. CalSTRS has “approximately a $40m holding” in coal, according to a statement provided by Ricardo Duran, media relations spokesman for the plan.

Eight new higher education institutions

People and Planet has announced that 8 new higher education institutions have divested from fossil fuels. Birmingham City University, Cranfield University, Heriot-Watt University, University of Herfordshire, University of Portsmouth, and University of Westminster now hold their investments in funds that exclude coal and tar sands.

Oxford Brookes University has divested from all fossil fuel companies. And as discussed above Wolfson College Oxford is excluding thermal coal and tar sands.

The commitments add a further £69m to the university endowment funds which exclude fossil fuels.

Further information

C of E affirms policy to disinvest from coal and tar sands. Click here.

Methodist Conference votes overwhelmingly to disinvest from coal and tar sands. Click here.

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