Tipping the Scales in Our Favor: The Fossil Fuel Divestment/Renewable Investment Movement

Let's be honest: We all know why the U.S. Congress won't pass comprehensive climate change legislation or enact a regulatory framework that accelerates America's transition to a clean energy economy.
07/13/2015 04:00 pm ET Updated Jul 10, 2016

Co-authored by Stephen McConnel

Let's be honest: We all know why the U.S. Congress won't pass comprehensive climate change legislation or enact a regulatory framework that accelerates America's transition to a clean energy economy.

It's no mystery: The logjam created by money influencing politics.

The dollar is still the mightiest and most powerful influencer in Washington. The fossil fuel industry and the ridiculously wealthy investment funds that support the industry still control an extraordinary amount of capital that buys them an extraordinary (and irrational, unethical, and immoral) level of influence and power in legislative bodies worldwide.

Our scientific arguments that unequivocally prove we are destroying the world and putting human civilization at risk fall on deaf ears. The moral and ethical arguments we have made -- including a phenomenally powerful and honest assessment made recently by Pope Francis -- clearly reveal we have a moral and ethical duty to protect the planet for us and for future generations. But these arguments do not seem to tug on the heart strings of policymakers or appeal to the human virtue to do what is right for others, for our future generations, and even for ourselves.

Despite the immensely clear scientific evidence and moral and ethical considerations, today we continue to spew carbon, burn poisonous fossil fuels, and continue to place our existence on a path of mutually assured destruction. And it's not just Congress that lacks the will to do what's right (based on sound evidence): The international climate talks in Paris later this year will more than likely amount to just more "talk" and no action. Let's hope that is not the case, but if past experience is any indication, that will ultimately be the outcome.

But there is one saving grace on our side: the most powerful and mightiest influencer, and perhaps the best argument we have in our pocket to fight back. Yes, that's right: It's also money -- OUR money. The momentum is growing on several fronts for us to capture this argument, influence, and power. Sometimes, you have to play by the same rules of the game to win.

The fossil fuel divestment movement is not only playing by the rules of the game, it is redefining them. And it may ultimately help us win the climate change argument. By using both the moral imperative and economic realities of our folly in continuing to invest in fossil fuels, we can persuade the industry's capital and investors to flee to the "greener" pastures of renewable and clean energy, accelerate our responsible transition to carbon neutrality, and chip away at the powerful stranglehold the fossil fuel industry has on Congress.

Fortunately, seizing this moral and economic high ground is well under way but there is still a lot of work to done. In the past few years, the movement to divest from fossil fuels has gained momentum and has helped spur the movement of billions and billions of dollars of investments from dirty to clean energy. The divestment of fossil fuels is happening across all sectors -- national and state governments, universities, and even institutional and individual investors.

Citing climate change and a poor investment outlook, Norway's parliament in May decided to unload $8 billion of its investments in coal from its sovereign wealth fund. Also, a French financial services firm, Axa, recently decided to rid itself of $560 million in coal investments. Last month, Oxford University announced it would limit its investments in oil and coal and that the university's $2.7 billion endowment would "steer clear of sectors with high social and environmental risks," according to Bloomberg Business.

Indeed, a growing number of institutions are steering clear of investments that put our environment and future at risk. Even investors are creating funds that avoid dirty energy and direct billions of dollars of capital to renewable energy instead.

The Wallace Global Fund, for example, is "one of 70 foundations with assets totaling $5 billion that have publicly pledged to divest fossil fuel stocks from their portfolios and put their money behind clean energy."

Why is the fossil fuel divest/renewable investment movement gaining momentum? Of course, there are many scientific, moral, and ethical arguments for institutions and funds to rid themselves of investments in carbon-intensive industries. But as we well know those reasons do not always outweigh the desire to make money. And in fairness, investments are made to ensure that institutions, corporations, and even families have adequate capital to survive and thrive.

But many compelling economic arguments are also being made that support fossil fuel divestment and renewable investment. London-based banking powerhouse HSBC is warning investors about the growing risks of fossil fuel investments; the industry may become "economically non-viable" because of the shift from dirty to clean energy, as well as the potential long-term risk of governments across the world enacting legislation that demands that transition.

Part of the theory is, "Why should institutions and individuals invest in something that is becoming obsolete?"

An incisive study by Carbon Tracker -- "Unburnable Carbon -- Are the world's financial markets carrying a carbon bubble?" -- provides a hard-hitting, fact-based account of how fossil fuel assets are becoming a risky investment: "As governments move to control carbon emissions, this market failure is creating systemic risks for institutional investors, notably the threat of fossil fuel assets becoming stranded as the shift to a low-carbon economy accelerates."

The fossil fuel industry may face a "carbon bubble" in which its investments in land acquisition and production are overvalued and utterly worthless because of a rapidly changing energy market and, hopefully, a shift in political will in favor of carbon neutral industries.

This transition to more socially responsible investments is evident in Europe where, for example, in Germany solar energy met more than 50 percent of the country's total electric demand. Worldwide as of 2013, we are "now adding more capacity for renewable power each year than coal, natural gas, and oil combined," according to Bloomberg Business.

Indeed, the fossil fuel divest/renewable invest argument is becoming more powerful and influential because it is about more than doing the right thing: It is becoming a smart investment. One study, aptly titled "Socially Responsible Investing vs. Vice Investing (.pdf)," determined that socially responsible investments can outperform "sin" investments.

But it's up to us to persistently shun investments in outdated and risky fossil fuels and promote socially responsible investing so the investment paradigm completely flips in our favor and, perhaps more importantly, so we acquire those very mighty and influential new powers for our movement -- money and market share.

If we can keep up the steady fossil fuel divest/renewable invest momentum, then we can capture that power, that influence, and that argument (economic/smart investments) to tackle climate change -- in addition to the scientific, moral, and ethical arguments that we have clearly made to policymakers again and again and again. We must keep chipping away at the capital dirty energy uses to exert extraordinary influence over Congress and other governing bodies worldwide.

We are approaching the tipping point and this major influential, economic force is on our side. But we have a long way to go. Major educational institutions, with insanely large endowments, and countless corporations and investment firms still invest deeply in fossil fuel industries. Students at universities like Harvard have held protests urging the board of directors to divest its fossil fuel interests, but to tone-deaf administrators.

So we must continue to mobilize and energize from the grassroots up and continue to demand fossil fuel divestment and renewable energy investment. We must continue to influence the movement of holdings from dirty energy to cleaner sources. Once these tables are turned, it is only then that we capture the monetary power and rebut the influence dirty energy exerts over Washington. Eventually, we gain more influence because we are now armed with more capital; thus, we bring greater influence over regulatory policy.

In the process, we spur increased investment in the clean energy sector. In effect, we influence both private sector growth of renewable energy and government policy toward it.

To win this argument, gain this influence, and shift boatloads of capital to clean energy, we must remain relentlessly persistent, energizing individuals and institutions to demand investments in Earth's future and not its destruction. We must hold institutions, universities, corporations, investment firms and individuals accountable for investing in dirty, immoral, and unethical industries that are destructive to our world and our bio-diverse ecosystems -- and at the end of the day, do not make financial sense.

Then, we can protect planet, and sure, make money too. Sometimes you have to put your money where your mouth is and play the game.

So let's persist in using our free market, private enterprise system to our advantage to accelerate renewable investment. We don't have to wait for the political winds to change. And we may be able to alter the political winds by capturing capital and money for our side, therefore becoming a mighty force and a powerful influencer.

The deck doesn't have to be stacked against us. We can stack the deck; heck, we can even be the dealer and stack the odds in our favor by seizing the enormous wealth and resources that give these corporations enormous power in Congress.