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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.
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.
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.
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.
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.
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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.
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
It isn't, because currently they're making every possible effort to stymie any attempt to reduce emissions. Yes, they may invest heavily in renewables, but in a way this is a huge conflict of interest, as they hold the cards in two decks. With their vast and now much greater political clout, they can basically hand any politician, even a high ranking one, their ass if they apply any serious effort to a meaningful action to reduce emissions (like, say, a carbon tax), but then when the effects of climate change become so obvious that not even the Heartland Institute can provide sufficient memes to keep the faithful convinced, then they'll flip the switch. "Oh hey, Florida, sorry you're underwater, but guess what, here's some ultra-efficient solar panels with large-capacity batteries, and we're happy to sell them to you at a price you can't really afford to say no to..."
The world's burning. Moped Jesus spotted on I50. Details at 11.
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.
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
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.
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.