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Fossil Fuel Divestment Has Doubled In the Last 15 Months (vice.com)
An anonymous reader quotes a report from Motherboard: A little over a year ago, it was big news that thousands of people and hundreds of institutions controlling more than $2.6 trillion in total assets had pledged to remove their investments from stocks, mutual funds, and bonds that invest in fossil fuel companies. A year later, that number has doubled. According to a report by DivestInvest, a philanthropy helping to lead the movement, more than 688 institutions and 60,000 individual investors worth $5.2 trillion have pulled their investments from fossil fuel companies and have reinvested a portion of their assets into clean energy companies. In September 2015, 436 institutions and 2,040 individuals worth $2.6 trillion had divested. For comparison, the total net worth of investors who had pulled out of the fossil fuel market was just $52 billion in September 2014. Divestment is increasingly seen as one of the stronger moves that private citizens and companies can take to support the move to clean energy. The movement started in earnest in 2011 when college students began petitioning their institutions to remove their assets from stocks, bonds, and mutual funds that invest in fossil fuel companies. What was seen as a gimmick at the time appears to be gaining real momentum a year after the Paris Climate Treaty was signed.
Sorry, couldn't resist...
Ezekiel 23:20
If you divest, you are not a stockholder. You have no say in how the companies invest or spend their money. Much wiser to invest and help to steer the company by participating. "If you are not part of the solution, you are part of the problem."
By this metric, I "divested" myself last year of a substantial amount of energy sector stocks and reallocated to "green" electric utilities.
What actually happened is the price of oil tanked, there's no limit on supply, the floor went out on the returns and there is no sign of a rise in price in the futures markets.
I'll be more impressed if this trend continues when oil goes on the upswing after growth in consumption rebalances with supply glut. I've got $0.02cdn on this "trend" fast reversing if that's the case - and my $0.02 isn't worth what it was a few years ago for the same reason.
..don't panic
It was the individual investors that called for this. Why would they sue over something they asked for?
The article isn't clear but it implies that most of the divestment comes from removing fossil fuel companies from stock portfolios.
If so then the companies aren't buying those stocks back, somebody else is buying them. It doesn't effect the company one bit, other than maybe drive the price down minutely while it's a sellers market. All that really does is minutely help the buyers who are now taking on the risk and the reward of owning that stock.
Either I'm confused about what they're doing or they are.
This means my investment in oil, shale, and natural gas should reap even larger returns
Not true. They sell their investments to other investors. That by itself has zero effect on your investment. But if this happens enough, it signals the market that these investments may not be as worthwhile, and new investors may offer lower prices as a result. Down goes your portfolio.
Freedom to fear. Freedom from thought. Freedom to kill.
I guess the War on Terror really is about freedom!
Divestment doesn't do anything except put said stocks on sale for another buyer. If you want to hurt the business of fossil fuel companies then stop buying their products.
FTFY :)
Freedom to fear. Freedom from thought. Freedom to kill.
I guess the War on Terror really is about freedom!
This is baloney. Divestment has no effect. If someone pulls out of an investment by selling, someone else is buying. Oil stocks have been going up due to promised production cuts. Fossil fuels are what drives the worlds economy.
By divesting in these companies, you decrease demand for their stock. That drives the stock price down. Which allows the company to buy back its stock at a lower price. When it pays dividends, it gets to keep more of those dividends instead of having to distribute them to shareholders, because it owns more of its own shares. So by divesting from these companies, you're allowing the people running them who are gung-ho about fossil fuels to keep a larger percentage of their profits to reinvest into more future fossil fuel production.
OTOH if you buy up as many shares of the stock as you can, you gain voting power at annual shareholder meetings. Usually this means you get more votes for who gets elected to the board of directors who oversee the top officer of the company. Most of these companies aren't fossil fuel companies; they're energy companies. They dabble in renewables and nuclear power, it's just that most of their operations are in fossil fuels. If you can get enough shares to elect anti-fossil fuel people to the board of directors, they would have the influence to get the corporate officers to decrease future fossil fuel operations and invest more heavily in renewables.
I guess the hope is that instead of investing in fossil fuel companies, you can invest the money in renewable energy companies. And that eventually the renewable energy companies will drive the fossil fuel companies out of business. But as I said, most of these fossil fuel companies are actually energy companies. Unlike pro-renewables people who are mostly anti-fossil fuels, the pro-fossil fuels people are not anti-renewables. They simply prefer fossil fuels because they're cheaper. If renewables become cheaper than fossil fuels (whether naturally or after government subsidies), they will simply shift their operations more towards renewables. So I'm really skeptical the "drive them out of business" plan would work.
So the best course of action would seem to be to invest heavily into fossil fuels companies, elect directors sympathetic to your cause, and have them exert pressure on the corporate officers to steer these companies away from fossil fuels and towards renewables.
Big Oil, or they'll buy up all the...
Whoops. Standard Oil 2.0 (with the Trump Stamp of Approval).
You're confused about what they're thinking. They're *caring*, not thinking. What mostly matters, to them, is what they're *feeling*. It doesn't matter much whether it works or not, it's mostly about the emotions, the math is beside the point.
That may come across as critical; it's not meant to be. Liberals criticize conservatives saying conservatives don't care. The liberal parody of a conservative is an accountant type, working the numbers quite dispassionately. There is a grain of truth to that. We do the arithmetic of the stock transactions, they *care*.
Assuming he reinvests as the share price goes down, the per-share dividends will increase (all else being equal).
Old people fall. Young people spring. Rich people summer and winter.
The sweet irony of posting a complaint of poor editing to the wrong article.
You have to separate demand for the product from demand for the shares of the company producing said product. The share price reflects the market's confidence in the value of the shares which is only partially informed by the demand for the product. If the divestment campaign gets big enough, investors could become wary of being left holding the bag, and the share price would drop.
But I see no massive selloff scenario that would cause the share price to rise. "Everyone's selling these shares and others are refusing to buy them? They must be super valuable!"
Freedom to fear. Freedom from thought. Freedom to kill.
I guess the War on Terror really is about freedom!
I was a suit at Mobil Oil Corporation.
I asked an intern, "What does Mobil Oil sell?"
He said, "Petrochemicals?"
I said, "Stocks."
It little behooves the best of us to comment on the rest of us.
I get the caring, I was doing something similar to this long before they started. In 2007-8 I intentionally avoided moving toward the very safe fossil fuel market.
It was more the tone of the article slanted toward the idea that they were in some way inflicting financial pain that I found confusing which is differeng than doing it for altruistic or ethical reasons.
The post below supplies some evidence that is in fact cutting into their bottom line and forcing the companies to buy back stock at 6x the normal rate to keep the price propped up. If that is indeed the case then it completely changes my view on what they're doing.
Supply and demand. As less and less investors demand that stock, the price will go down accordingly. For the fossil fuel companies that are also utilities, they will also face headwinds to their stock prices as the Fed raises interest rates over time as has been rumored.
If the stock price goes down, but they continue to make the same profits, the returns on buying the stock goes up.
If you want to hurt oil companies, stop buying the oil.
I should use this sig to advertise my book ISBN-13 : 978-1501515132.
The share price dropping gives the corporation the ability to buy back shares at a lower price. This improves the ability of the company to do things like go private or otherwise defend itself from troublemakers in the general public.
A well established company with ongoing profits needs stockholders like a boat needs a hole.
The only harm that such divestitures cause a company are that some employees who have been rewarded with stock options will see the value of those options fall for a few years until the divestiture fad falls off.
Contribute to civilization: ari.aynrand.org/donate
The biggest investors in alternative energy research are the major oil companies. The people controlling the fossil fuel based markets are not stupid. They know alternative energy usage will continue to grow in the future. They know all the money they spend on alternative energy development can be recouped by the tax credits the government hands out to companies investing in alternative energy related projects. They all have enough cash and political power to make sure they can eventually control and profit from the emerging alternative energy markets the same way they control the fossil fuel markets.
It's easy to jump on the bandwagon when it's finally rolling to riches. Wind and solar are now both under the cost of coal and will continue to drop as technology already in the pipeline matures and volume keeps increasing.
I saw someone post that we'd still be using oil in 2050. They are right, but it won't be for energy. There are many other uses that won't succomb as quickly. By that point, we'll probably be spraying solar cells onto everything around us for pennies on the dollar compared to deriving energy from petrochemicals.
We didn't reach peak oil so much as we reached critical mass on true renewables. If we keep resisting the inevitable, the only result that will come from it is being left behind as other countries rake in the bucks from the new businesses created.
The problem is that what the "oil" companies these people envision from 20 years ago no longer exist - they're now energy companies and also one of the largest investors in renewable energy. Isn't this kind of contradictory to their goals?
You say "caring", I say "having integrity". But hey, you've got the only correct value system, right?
Why yes, I AM a rocket scientist!
Unfortunately, it's not going to work. Stocks don't respond like pork bellies to supply and demand.
That's a great explanation except that, you know the value of their shares has gone down.
Only temporarily from the selling, and even then only if there are not more buyers looking for even a minor bargain.
It's still smart to invest in companies that produce energy from oil today, because they will be a huge source of renewable energy tomorrow. As they are experts on energy distribution, they have a giant head start and the ability to buy up smaller renewable energy companies...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Not true. They sell their investments to other investors. That by itself has zero effect on your investment. But if this happens enough, it signals the market that these investments may not be as worthwhile, and new investors may offer lower prices as a result. Down goes your portfolio.
Except there are plenty oligarchs that don't have to consider the public opinion and will invest in whatever is legal and makes money. Look at the tobacco industry, arms industry, porn industry or any kind of business some may find morally questionable and a few "ethical" non-investors don't matter at all. If you sell out slowly you do nothing and if you dump it quick you're just offering arbitrage until the price is back where it should be. There's only two things that matter, whether the underlying business is affected too or whether you'll run out of even more shady characters to sell it to if you want out. The latter you can forget about, we're talking coal plants and ICE cars here not child labor sweatshops and illegal arms trade.
As for the market, I'd say most of it is lukewarm to being "green". It's not like running around with a fur coat or animal-tested cosmetics, most people manage quite fine to justify that they need a "gas guzzler" and until there's a decent alternative they're not bad people for having one. It's not hard to find some over the top eco-hippie to prove nothing will ever be enough, if you don't want to give it any effort at all. Making funds sell out of fossil fuel car companies does nothing if you can't convince people to stop buying fossil fuel cars. It's just mental masturbation to pretend you're doing something for the environment.
Live today, because you never know what tomorrow brings
Nonsense, such churning only can lead to temporarily depression in price if there is any effect at all, some people gets a bargain and then the price rebounds. Portfolio is fine. This "divestment" doesn't in any way harm fossil fuel companies nor their stockholders.
That's all well and good, but it doesn't help the GP whose shares halved in value.
Freedom to fear. Freedom from thought. Freedom to kill.
I guess the War on Terror really is about freedom!
Miles driven per person has been declining for a decade, just fyi. Electrics are going to be a massive wave on top of that.
Basically ZERO maintenance for 100K miles beyond consumables. And electricity is basically 1/5 the cost of oil, even at today's prices.
The vehicle range isn't on par yet, but even so most families with 2 cars have one just for around town and one for trips. That's a very rich target market to pick away at.
People in cars cause accidents....accidents in cars cause people
this makes it more profitable to actually pump gas out of the earth as it makes it cheaper to do so as they will need to pay outside investors less.
what it makes less profitable is selling investments in oil. THAT IS NOT THE SAME THING as oil being less profitable! quite on the contrary! less competing investment means more profits for those that do invest and more profits from more pumping.
it really is like giving money to whoever keeps pumping.
world was created 5 seconds before this post as it is.
only affects lucrativiness of resale of oil stocks.
it doesn't affect how profitable it is to sell oil. in fact, if you sell off your oil investments at below market prices you are making oil pumping more profitable for everyone else who is doing it.
you know what divesting means? it means SELLING UNDER MARKET PRICE. it's stupid. it's mega stupid. especially when you are divesting from massively profitable global companies!
world was created 5 seconds before this post as it is.
The sweet irony of posting a complaint of poor editing to the wrong article.
I think the editor moved the post to this article just to get back at GP. If it was good enough for Reddit's CEO, after all...
Irony: Agile development has too much intertia to be abandoned now.
Why the hell is it still legal in the US to invest in and own securities based on oil as a commodity. There are exempt items that are deemed too important to have investors screwing with the prices. If I remember one example, it's this little heard of product called food. So why not make it illegal to invest in physical oil or gasoline itself on markets? That'd overnight reduce gas prices, which of course would do nothing to promote green technologies but still.
There's a class of mutual funds you can buy at any financial institution called "ethical funds". These funds basically try to stay away from environment-harming or social harming companies, thus will not invest in oil and cigarette companies, for example. They will traditionally have lower returns than a traditional fund in the same category because well, face it, oil and tobacco make a lot of money.
These funds are surprisingly popular, because people know they get lower returns, but on the flip side, know they aren't investing in companies that pollute or earn money off other people suffering. And for them, earning money is but one part of the whole story - earning a dollar is important, but is not earning it by polluting or by human suffering.
Of course, not everyone is out to make a dollar by hook or by crook - some care about how that money was made
Every major investment firm with actively managed funds takes criteria other than profitability into account when deciding what to buy and what to sell. For example, a special situations fund will only buy companies it expects to be rebounding from serious trouble. Taking sustainability issues into account is just fine, and not different in kind from what funds already do.
Obviously large scale divestment matters: it can cause the divested stock's price to fall over the long term. That puts pressure on management to address the issues causing the divestment. The basic mechanism is pretty simple. I don't know why you're making it out to be impossible, it's obviously not. And obviously, if stocks in multiple companies in a sector all start to fall because of divestment, then the sector as a whole comes under pressure. Again, hardly rocket science.
2.6 Trillion last year, double that now... in what universe is 2.6 Trillion dollars "a few" ?
Unicode killed the ASCII-art *
How is that interesting? It is totally dumb to believe you could change their course by owning some stocks. You have to have a majority of stocks with voting rights in your pocket. Furthermore, why should you invest money in a company where you disagree with their goals? It makes more sense in investing money in the future than try to help coal and oil industry to understand that their business model is phased out.
Oil companies have under performed compared to the market average, as oil prices are relatively low these days.
The liberal parody of a conservative is an accountant type, working the numbers quite dispassionately.
I'm going to go out on a limb here and guess you don't know many liberals.
SJW n. One who posts facts.
Evidence seems to show that divestment does not lower stock prices. (A consequence of the "efficient market hypothesis", incidentally)
There has been a Saudi oil price war designed to bankrupt a lot of the many new oil and gas startups that sprung up recently as part of a gas boom. It worked. "Nice" friends we have. Maybe we should stop giving them so much free military aid?
..and many oil reserves have had their stocks utterly decimated.
For instance, Pacific Coast Oil Trust (ticker symbol ROYT, dont ask me why) has gone from ~$18.00/share paying dividends in 2013 to ~$1.20/share paying no dividends today, and that crash happened when Saudi Arabia started trying to keep up with the U.S. in oil production in late 2013.
Not good for investors, but cheap energy is great for everyone in general.
"His name was James Damore."
Virtue signaling is not "having integrity."
"His name was James Damore."
They're *caring*, not thinking. What mostly matters, to them, is what they're *feeling*. It doesn't matter much whether it works or not, it's mostly about the emotions, the math is beside the point.
You know, that's really interesting, because as a fairly liberal person, I find the exact opposite to be the case: there are a lot of instances of conservative policy that doesn't make fiscal sense but *feels* conservative. Look at drug tests for welfare recipients - they cost far more than they save, so on the whole the country spends more on welfare if drug tests are made into a prerequisite. There are lots of similar situations, giving homeless people apartments has been a huge success in Utah, it ends up being cheaper to pay $10k/yr for a basic apartment than $15k-$20k/yr for emergency room visits, police calls, jail time, etc. So, it's a better fiscal solution, but it feels unfair, so conservatives generally don't like it.
The real answer, in my mind: partisan dogma is irrational on both sides. Policy is not, generally speaking, driven by data or evidence. No party has a monopoly on stupidity, although some groups capitalize on it to greater effect.
> Look at drug tests for welfare recipients - they cost far more than they save,
I think many conservatives realize that's a gimmick, pandering to a certain group of voters. That's pandering, which both sides do. I don't think it's a good example of conservative policy in general, it's not something Speaker Ryan would propose. As you said:
> No party has a monopoly on stupidity, although some groups capitalize on it to greater effect.
> giving homeless people apartments has been a huge success in Utah, ... $10k/yr for a basic apartment than $15k-$20k/yr for emergency room visits, police calls, jail time, etc.
Utah is a VERY conservative state - Republican presidential candidates get twice as many votes as Democrats in Utah. Not knowing the details of the Utah program, I can still be fairly certain it's informed by conservative principles.
While at first glance that math makes sense, and at least according to you the Utah program has worked well, there's another factor to watch out for. This math says you'd break even:
Handing a person who doesn't work another $20,000 on top of the $10,000 we already give them might save up to $20,000 in "emergency room visits, police calls, jail time, etc." HOWEVER, we're not talking about A PERSON. Handing a total of $30,000 to anyone who decides they want to stop working, and anyone non-working person who moves to Utah, will undoubtedly encourage more people to stop working. You'd be paying them $30,000 to stop working; and you'd be paying meth heads $30,000 to come to Utah. That could get real expensive, and real bad, real fast. So you have to be careful. Paying pot heads and crack-whore pimps $30K / year to come to your city could have some negative consequences. Better, in my experience, is to put some of that money in a drug court program, where people who get busted by police are strongly encouraged to participate in a program that can lead to drastically improving their lives in a permanent way.
> > Better, in my experience, is to put some of that money in a drug court program,
> The studies that exist show that on the whole, rehab, Narc Anon, Al Anon, interventions, and the like have extremely low success rates
You're confusing many very different things. If you decided that once a meth-head, always a meth-head, that's fine, think what you want.
If you have any interest in actually finding out what works, I can start you with a few pointers, based on not only reading the studies, but working directly with hundreds of alcoholics and drug addicts, many of whom have now been sober for years. First, understand that drug court is not "Narc Anon, Al Anon, interventions, and the like". Actually Narcanon and Al-Anon have nothing whatsoever to do with the addict getting sober, so you may as well have said "McDonald's and Chevron". Al-Anon and Narcanon are for family members figuring out how to live their own lives while their spouse or whoever is an active alcoholic / drug addict.
When it comes to the alcoholic or addict sobering up, some experienced counselors in rehab programs will tell you "my job is to help you get ready and decide to do AA". That's necessary because because Alcoholics Anonymous is bunch of things an alcoholic can DO, hard things, not somewhere to GO and "get cured". Studies show, and common sense confirms, that forcing offenders to visit a group of AAs doesn't get them to become sober any more than forcing them to visit a medical school a couple times turns the offenders into doctors.
On the other hand, you can imagine that having any group of people visit a medical school a few times would slightly increase the chance that a few of them would become interested and end up becoming doctors. Such it is with AA. Forcing offenders to at least find out what AA is, so they have a chance to decide whether to do it, decreases recidivism around 5%-10% during probation, though more during post-confinement parole, when many offenders are a) more motivated to avoid returning to prison and b) detoxed and somewhat accustomed to disciplined living.
So yeah, forcing people to visit an AA group doesn't work most of the time, though saving even a few lives might be worth it. On the other hand, people who CHOOSE to go to medical school and do the hard work are successful 85% of the time. AA is similar.
I was going to give you a run down of basic facts about each of several programs, but I've typed too much already and it's time for me to go. I'll just say the idea drug court is they combine many things that each work maybe 10% of the time. Recidivism rates are significantly lower than 62% rate of similar offenses handled through traditional criminal courts. It's not 0%, closer to 35%-45%, but it's a lot better than 62%, and it doesn't cost much (it pays for itself in reduced costs).
green energy will advance at a glacial pace until a serious project is done, as for example paving a hundred square miles of desert in the USA with panels and storage systems