Divestment Fossil Fuels

Divestment consists in excluding high greenhouse gas emitters or other environmentally harmful companies and/or industries from portfolios. It affects in particular fossil fuel sectors like the coal, oil and/or gas industries. Environmental NGOs are running numerous campaigns targeting banks, foundations, major universities and pension funds to try to force them to sell their stock (for example, stocks in the 200 companies ranked by the Go Fossil Free movement as the worst polluters on the planet) and reinvest their capital in financing renewable energy.

By October 2015, roughly 500 investors with €3.7tn assets under management announced their intent to divest from these companies.

In the last years, several divestment initiatives were launched which have gained momentum recently. The main initiatives are:

THE PORTFOLIO DE-CARBONIZATION COALITION

THE PORTFOLIO DE-CARBONIZATION COALITION

Established by the UNEP (UNEP-FI) and the CDP, the Portfolio De-carbonization Coalition is a multi-stakeholder initiative whose slogan is: "Mobilizing financial markets to catalyze economic de-carbonization". Its founding signatories are the Swedish pension fund AP4 and the French asset manager Amundi. Investors joining the Coalition are committed to specifying the amount of assets that they will de-carbonize. There are no restrictions on the methodology or asset class, but the information concerning both must be disclosed.

Read more on the Portfolio De-Carbonization Coalition

MONTREAL CARBON PLEDGE

MONTREAL CARBON PLEDGE

The Montreal Carbon Pledge, launched at the PRI annual conference in Montréal on 25 September 2014, aims to establish a framework for the de-carbonization commitments made by those taking the pledge. It is meant to complement the Portfolio De-carbonization Coalition. The signatories agree to measure, publicly disclose and reduce the carbon footprint of their portfolios.

Read more on the Montreal Carbon Pledge

GO FOSSIL FREE

GO FOSSIL FREE

This international civil society movement is using the carbon risk concept in campaigns that resemble those protesting apartheid in South Africa in the 1980s and 1990s. Its aim is to encourage investors to divest from the 200 most carbon-intensive companies in the world. It is also attempting to get individuals to question their banks about their financing of fossil fuels. Carbon risk has already become a reputational risk for financial institutions.

Read more on the Go Fossil Free movement

Read the full Novethic study to learn more (to update link once study published)