The movement to divest from fossil fuels and invest in renewable energy alternative continues to accelerate, with commitments from nearly a thousand institutional investors, a report from DivestInvest and Arabella Advisors finds.
The 2018 edition of The Global Fossil Fuel Divestment and Clean Energy Investment Movement (28 pages, PDF) found that assets under management by investors committed to divestment has increased 11,900 percent, from $52 billion four years to $6.24 trillion today. According to the report, the primary drivers behind that growth are insurance companies (more than $3 trillion under management), pension funds, and sovereign wealth funds. Ireland, which has an €8.9 billion ($10.4 billion) sovereign development fund, became the first country in the world to commit to divest its wealth fund from fossil fuels, while New York City, with $189 billion held in pension funds, is the largest city to date to do so.
According to the study, the accelerating trend is fueled by a combination of ethical, financial, and fiduciary imperatives — including grassroots mobilization against fossil fuel projects and pipelines; the introduction of new fossil-free financial products; new analyses showing that investors can divest without jeopardizing their risk/return profiles; and the growing imperative faced by investors to manage their reputational risk and align themselves with the goals of the UN Paris Climate Agreement.
"I commend the divestment movement for its incredible progress over the past year," said Mary Robinson, former president of Ireland and a former United Nations High Commissioner for Human Rights. "The invest side of the equation is equally significant. Imagine if all investors committed 5 percent of their assets to ending energy poverty, offering women new economic opportunities, ensuring a just transition for workers from extractive industries, and helping native communities earn revenue from wind farms — this is what climate justice requires."
"Institutional investors must be Paris-compliant, not just governments," said Wallace Global Fund executive director Ellen Dorsey. "Today, our movement pledges to increase divested global assets to $10 trillion by 2020. Investors should also commit at least 5 percent of their portfolio to climate solutions to help rapidly scale to 100 percent renewable energy and universal energy access. For those investors who persist in engaging with the industry, we ask them to set 2020 as the time limit for engagement: If companies cannot or will not produce two-degree transition plans by then, investors must divest or they will own climate change and its impacts."