What is divestment?

Why divest?

The environmental arguments to divest are obvious: the agenda of the fossil fuel industry is just not compatible with the survival of our planet and the health and safety of the people who live on it. Unless coal, oil and gas production currently in operation is retired early, emissions from existing projects will push global temperature rise past safe limits That means we cannot open any new fossil fuel projects and we have to phase out existing ones.

But the arguments in favour of divestment don’t stop there.

Divestment makes financial sense

Fossil fuel stocks are on a long-term downward trajectory, and COVID-19 has only sped this process up. Renewables stock prices are growing year on year.

Not divesting risks serious costs to institutions’ investment funds. For instance, the value of oil company shares owned by UK public pension funds fell by £2bn in less than four years. In 2015, LGPS funds lost a collective £683m by not divesting from coal.

The energy transition is well under way and divesting from fossil fuels now offers an opportunity to make smarter, more profitable investments.

Climate justice

Divestment is also one of the most direct ways that people in the UK can take action to support countries in the global south that are some of the worst affected by exploitative oil giants and the repercussions of their immoral business plans. For instance, Shell has been involved in several high-profile environmental scandals in recent decades, paying millions of dollars of fines for its operations in Nigeria and threatening to drill in the fragile environment of the Arctic.

Recently, both the UK government’s foreign credit agency (UKEF) and oil company Total have come under fire for plans to build a gas project in Mozambique, despite significant adverse environmental and social impacts associated with the mega-project.

Human rights

There are countless examples throughout history of fossil fuel companies trampling on human rights and wrecking our planet.

Determined to maximise their profits at any cost, the fossil fuel industry is a perfect example of corporate power dictating policies against the public interest. They have successfully used their financial might and political influence to deceive the public on climate change and lobby against action on climate change. The fossil fuel industry has been known to mistreat its workers and some corporations have been linked to tens of thousands of premature deaths, the pollution of rivers and the deforestation and destruction of indigenous homeland to make way for oil pipelines.

Action is needed to dismantle the power and influence of this reckless industry and instead prioritise the health and rights of people around the world.

Divestment works

Successful divestment campaigns have been fought in a number of sectors with great effect. 

Nowhere was it more powerful than in the case of South African apartheid, where an international divestment effort played a major role in breaking the back of the regime and ending racial segregation. By the mid 1980s a movement initiated by students saw 155 campuses, 26 state governments, 22 counties, and 90 cities divest from companies doing business in South Africa. This, alongside the struggles of people within South Africa, played a key role in stigmatising apartheid and the government on the world stage, and ultimately led to legislative change. Archbishop Desmond Tutu, one of the most revered figures of South Africa’s anti-apartheid struggle, also expressed his support for fossil fuel divestment.

Globally, the divestment movement is having a significant impact on the clout of the fossil fuel industry. The number of institutional investors committed to divest has risen from 180 in 2014 to more than 1,500 in 2021. As a result of campaigners’ efforts, Royal Dutch Shell listed divestment campaigns as a material risk in its 2019 annual report, and Bob Dudley, the former CEO of oil giant BP, said in 2018 that activists’ efforts could “threaten energy security and the global economy”.