What Is Divestment and Why Should I Care About It?
VICE Impact answers 12 questions about this week's Global Divestment Mobilization.
Fossil fuel companies are driving the climate crisis and have delayed action on climate change for decades. But we know that already. What we might not realize is that our own money is most likely helping fund these companies.
This week's Global Divestment Mobilization wants to make sure you know (and mobilize against) the fact that even when you're not spending your money online shopping, your funds are most likely being used to ultimately fund climate change.
Sound confusing? We explain.
1. What exactly is the Global Divestment Mobilization?
It's a worldwide campaign to encourage fossil fuel divestment. It started May 5 and ends May 13.
2. So, what is divestment?
Divestment is the opposite of investment – it's the removal of your investment capital from stocks, bond or funds.
What's happening right now is that fossil fuel companies are banking on these targets not being met so they can keep on extracting, selling and looking for more fossil fuel to extract. The fossil fuel divestment movement wants to try to make that not happen.
We all agree that fossil fuels such as coal, crude oil, and gas, are non-renewable, finite resources that need to be kept in the ground to avert a climate crisis. In fact, recent findings recommend that 88 percent of the world's coal reserves, 35 percent of known oil, and 52 percent of natural gas reserves are "unburnable". This means that they should not be extracted to stay true to the Paris Agreement, which was signed by representatives of nearly 200 countries and outlines that global temperatures should not increase above 2 degrees.
But, unfortunately, fossil fuels keep getting extracted from the ground.
4. What about the companies behind the Dakota Access Pipeline (DAPL)?
Once fossil fuels are extracted they need to get transported to refineries. Transporting fossil fuels is often a controversial and risky process. We've seen this recently with the construction of the $3.7bn Dakota Access Pipeline. Built to transport some 470,000 barrels of crude oil a day across 1170 miles, including Lake Oahe, it has been opposed by the Standing Rock Sioux Tribe, indigenous water protectors and activists who fear it will contaminate drinking water and sacred burial sites. Energy Transfer Partners who own the project are definitely part of the fossil fuel industry that this divestment campaign is targeting.
5. So we should reduce our consumption of these resources?
For sure. Taking public transport instead of your own car or being an ethical bottled water drinker will help keep fossil fuels in the ground. But we need more than that to keep temperatures from rising.
This is where fossil fuel divestment comes in.
6. So this all deals with reducing the amount of capital fossil fuel companies receive so we can keep fossil fuels in the ground?
That's the idea. It's showing that you won't invest in contributing to the destruction of our planet. But the aim is that, as a consequence of divestment, fossil fuel companies will be pushed to rethink their business models and encouraged to look towards renewable energy solutions instead of looking for new resources to extract from our planet.
7. So who is investing in fossil fuel?
Almost certainly, you.
8. How can I be investing in fossil fuel if I can barely even pay my bills?
We feel you. But in any case, most major banks, including Chase, Citigroup, Bank of America, Wells Fargo, US Bank, Capital One, HSBC, Lloyds, Barclays, the Royal Bank of Scotland and Santander, have millions invested in fossil fuel companies and in fossil fuel infrastructure projects like the Dakota Access Pipeline. It's actually hard to find a big bank that isn't investing in fossil fuel.
If you did put all that birthday money from your grandparents in a savings account, then you can move that money to somewhere like Triodos Bank. By putting your money in what's called an "ethical savings account," you are helping combat climate change even when lying in bed on a Sunday morning.
Banks like Triodos only lend money to people and organizations making a positive impact - culturally, socially and environmentally. They invest in organic food and renewable energy farms, environmental educational projects and much more.
They are planning to start offering current accounts next month but in the meantime, the Co-op offers mainstream current accounts and despite its recent financial struggles, is still the only major UK bank committed to fighting climate change. In the US there is a lot more choice when it comes to ethical banking. According to SWICH, Spring Bank, Sunrise Bank, Beneficial State Bank or OneUnited Bank are all safe bets. The founder of SWICH has also put together a list of US banks that are definitely not investing in DAPL.
9. So, I should just take all my money out now?
So what you should do is tell your bank you're switching to divest from fossil fuel and ask them to change direction.
Credit unions and building societies are not too bad either. Very few of them actually have explicit policies which exclude fossil fuel investment, but since they are largely engaged in mortgages or personal loans, they have little connection to the oil, gas and coal industries.
10. The money in my savings account doesn't seem like it's directly helping suck out crude oil. So what else can be done?
There's no time to waste when it comes to climate change and big actions are needed urgently. That's why the Global Divestment Mobilization week is focusing on encouraging bigger organizations to divest their funds.
The fossil fuel divestment campaign has received backing from the UN, mobilized thousands of people around the world to take action and thousands of groups, companies and people are divesting. Last year, for example, the Bill and Melinda Gates Foundation divested its entire holding in the oil giant BP ($187m).
Even Mark Moody-Stuart, the ex-chairman of Shell said divestment was the "rational option".
Many are yet to divest though. The UK parliament, for example, still hasn't divested its £612m pension fund.
11. Are organizations not divesting because it's not financially viable?
Well actually, now that the Paris Agreement on climate change has been made, investing in fossil fuel will soon enough be worthless. In fact, even The World Bank supports the financial argument for fossil fuel divestment.
Its president Jim Yong Kim stated that, "every company, investor and bank that screens new and existing investments for climate risk is simply being pragmatic."
On top of this, with the growth of divestment campaigns, the damage in reputation in investing in fossil fuel can have serious financial consequences.
12. So fossil fuel divestment can be a powerful advocacy tool?
Yes it can! Previous divestment campaigns have been pretty successful. Perhaps the most well-known was the divestment campaign that played a role in the fight against apartheid in South Africa.
And, in fact, according to a study by the University of Oxford, fossil fuel divestment has the potential to cause significant damage to coal, gas and oil companies.
If sticking your head in the sand or turning yourself into a giant carbon bubble, isn't your thing, you can also support the campaign sitting at your local coffee joint.
If you're interested in all this divestment business, click here to learn more on one of the fastest-growing divestment campaigns in history, and check-out this story from NPR on how local activists made a difference in these major U.S. cities.
- Fossil Fuels
- North Dakota Access Pipeline
- Fossil Fuel Pollution
- Impact Climate
- ethical savings accounts