Marking 20 years
of bold journalism,
reader supported.
Opinion
Energy
Environment

Does Divestment Make Sense? Ask an 'Ethical Investor'

We did, and their insights give energy to a movement growing stronger each day.

Atiya Jaffar, Kelsey Mech and Lisa Helps 11 Feb 2015TheTyee.ca

Atiya Jaffar is a graduate student at the University of Guelph.

Kelsey Mech is the national director of the Canadian Youth Climate Coalition.

Lisa Helps is the mayor of Victoria.

We are facing a pivotal moment. Our society remains deeply dependent on oil, coal and gas despite repeated warnings that we must cease to source energy from these fossil fuels if our climate is to avoid surpassing an irreversible tipping points. The reality of this problem has become unavoidable, with millions around the world already facing the extreme impacts of climate change. And now, with the combined drop in oil prices and the value of the Canadian dollar, even renowned financial experts have echoed the calls of environmentalists in asserting that our energy system must rapidly undergo a transition to renewable sources.

How do we accomplish such a transition? We can interrogate the efficacy of regulations that fail to hold fossil fuel companies accountable for their environmental crimes. We can raise our voices in support of a carbon pricing system, as Torontonians did at the Carbon Forum last month. We can vote improve public transit capacity, as Vancouverites hopefully will this spring. We can support local, autonomous, community-based energy infrastructure like the T'Sou-ke Nation solar project.

But let's not ignore the (fossilized) dinosaur in the room. We need to invest in the kind of future that we want to see and investing in a better future, naturally, implicates divesting from a future that harms us. This is the foundational premise of the global divest-invest movement: take big money away from big oil and put it somewhere better.

This movement began on college campuses in 2011 and, since then, has taken off, with the Rockefeller Brothers Fund, the City of Seattle and Stanford University, among hundreds of other institutions around the world, all recently pledging to divest. Other institutions are getting closer every day, as was indicated by UBC's faculty vote in support of divestment yesterday. In 2014, a total of over $50 billion was divested from fossil fuels globally. Nevertheless, despite this movement's various milestones, divestment has recently attracted some criticism.

Recently, the Pacific Institute for Climate Solutions (PICS) produced a report examining the efficacy of fossil fuel divestment. The authors explained that it is "difficult to know where divested funds could be reasonably reinvested to enable the development of a low-carbon economy." They proceeded to summarize a modelling exercise that indicated redirecting divested funds from fossil fuels to renewables would have negligible implications for GHG reductions considering that our economy is highly "dependent on fossil energy."

We did a bit of research ourselves and spoke to individuals in the financial sector specializing in ethical investment, asking them to respond to these arguments.

What investors say

"The 'divest and invest' movement is not proposing to simply move money from filthy energy to clean; we need to retool the global economy top to bottom," said Donna Morton, managing partner for Principium Investments, a U.S.-based financial advisory firm that has centred its business around presenting "future-minded, clean and sustainable" investment portfolios to individuals, firms and institutes that are looking to divest their holdings from fossil fuel companies. Morton emphasized the opportunity for investment in "innovative technologies, safe food and energy-efficient housing." She explained that as part of a team of seven, she "built a 100 per cent fossil-free portfolio within nine months," adding with a chuckle "just imagine what Bay Street would accomplish if they set out to do the same."

Andrew Heintzman, CEO of Investeco Capital Corp and author of the book Fueling the Future had a similar response. "Capital investment in renewables has now outpaced capital investment in fossil fuels globally," he stressed. "So the argument that there is a constraint on where to put the money is weak. The reality is that not only are renewable energy investments outpacing capital investment in fossil fuels, but they tend to be a far better match for most pension funds, as they have much more reliable inputs and are usually backed by long-term power purchase agreements at a fixed price."

Both experts took issue with the PICS argument that investments in renewables have little implications for GHG reductions. "This point is obviously circular," Heintzman said, "If the economy was less dependent on fossil fuels, then the emissions profiles of these other industries (and all industries) would be reduced." Morton concurred, adding that "the International Energy Agency estimates we need at least a trillion a year going into renewables to decarbonize the economy -- that's $30-40 trillion over the next 30-40 years." We might not be there yet, but we're on our way. In 2014, global investments in renewables totalled about $310 billion.

We live in a society that is defined by its reliance on fossil fuel sources. Our cities are planned in a way that privileges the use of petro-powered automobiles. Entire provincial electricity grids continue to source their energy from dirty fuels like coal. Our governments criminalize citizens for opposing industries like the tarsands that are rewarded with heavy subsidies for polluting and harming communities. We can and must do better than this.

We need a transition. As the mayor of B.C.'s capital city, the director of the Canadian Youth Climate Coalition, and a graduate student researching sustainable energy, we have undertaken diverse approaches to fighting for a clean and just energy economy. Yet we all continue to stand strongly in support of the divestment movement. Ultimately, we recognize that we need to send a clear message to the energy industry and government: "Fossil fuels are history, renewable energy is the future." Why not speak up in the world's most powerful language: finance.  [Tyee]

Read more: Energy, Environment

  • Share:

Facts matter. Get The Tyee's in-depth journalism delivered to your inbox for free

Tyee Commenting Guidelines

Comments that violate guidelines risk being deleted, and violations may result in a temporary or permanent user ban. Maintain the spirit of good conversation to stay in the discussion.
*Please note The Tyee is not a forum for spreading misinformation about COVID-19, denying its existence or minimizing its risk to public health.

Do:

  • Be thoughtful about how your words may affect the communities you are addressing. Language matters
  • Challenge arguments, not commenters
  • Flag trolls and guideline violations
  • Treat all with respect and curiosity, learn from differences of opinion
  • Verify facts, debunk rumours, point out logical fallacies
  • Add context and background
  • Note typos and reporting blind spots
  • Stay on topic

Do not:

  • Use sexist, classist, racist, homophobic or transphobic language
  • Ridicule, misgender, bully, threaten, name call, troll or wish harm on others
  • Personally attack authors or contributors
  • Spread misinformation or perpetuate conspiracies
  • Libel, defame or publish falsehoods
  • Attempt to guess other commenters’ real-life identities
  • Post links without providing context

LATEST STORIES

The Barometer

Do You Think Naheed Nenshi Will Win the Alberta NDP Leadership Race?

Take this week's poll