Divestment



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CBSG's Divestment Story --> http://www.cbsg.org/case-study-cbsgs-divestment-story


Organizations that invest money can choose to divest from fossil fuel companies and reinvest in solutions that align with their mission of conservation.

Divestment is the opposite of an investment—it simply means getting out of stocks, bonds or investment funds that are unethical or immoral. Fossil fuel investments are a risk for investors and the planet—that’s why we’re calling on institutions to divest from these companies.

After zoos and aquariums make the decision to divest, the first step is to freeze any new investment in fossil fuel companies. Next, create a plan for divesting from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within five years. Five years should allow enough time to unravel some of the more complex institutional investments.

These three numbers highlight the key role of the fossil fuel industry in the climate crisis:

  • 2°C: The maximum amount of global warming that can occur without causing runaway climate change. Almost every country in the world has agreed to this and has committed to not exceeding this increase in global temperature.
  • 565 gigatons: The amount of carbon scientists say we can burn and keep warming below 2°C. At current rates, we’ll burn this amount of carbon in just 16 years.
  • 2795 gigatons: The amount of carbon fossil fuel companies have in their reserves. That’s 5 times more than the amount of carbon we can burn before surpassing the 2°C limit.

Fossil fuel companies work hard to ensure that they can continue to extract more fuel and to see large profits and tax breaks. They lobby governments and fund politicians who cast doubt on the truth of climate science and the need to drastically reduce global carbon emissions.

These companies need to leave their reserves in the ground, but extracting those reserves is a key part of their business plan, so we know they won’t do so voluntarily. The consensus indicated by divestment tells governments and the financial sector that like other citizens and institutions, zoos and aquariums are concerned with climate change and the role of the fossil fuel business plan in perpetuating it. It gradually takes away the social liscense of fossil fuel companies.

Government policies are necessary for limiting the industry’s ability to burn their carbon reserves and pollute the atmosphere for free. Leveraging zoos and aquariums, universities, and other institutions to create a consensus within the investment world and the public at large can amplify our concern to decision makers.

When these policies come into play, fossil fuel reserves - which are valued as assets in financial markets - will be unburnable, making them stranded assets.

The intention is not to bankrupt fossil fuel companies. It is more a moral statement than a financial one - it is wrong to profit from activities that lead to the destruction of the planet.


 

The Movement So Far

The global movement calling on universities, religious institutions, cities, and states to stop investing in the fossil fuel industry now includes 697 campaigns worldwide. Stanford University, the Rockefeller Brothers Fund, 34 cities, and the World Council of Churches — representing over half a billion members — are among the 700 investors worth more than $50 billion who have already committed to going fossil-free. Divestment has been endorsed by the British Medical Association, Union of Concerned Scientists, World Bank, and the UN.

Divestment is also catching the financial sector’s attention. Numerous reports and articles from financial investors express the increasing volatility of fossil fuel profits. Carbon Tracker Initiative states:

“Currently financial markets have an unlimited capacity to treat fossil fuel reserves as assets. 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.”

Both HSBC (one of the largest banking and financial services organizations in the world) and Standard & Poor’s (worldwide leader of financial market intelligence) have released reports about the growing risk associated with fossil fuel investments. MSCI Inc., a mainstream investment analytics firm, released a report saying that the #1 trend to watch in 2014 is fossil fuel divestment.

 

Check out the Divestment FAQ page for much more information. 

 

Past Successes

History shows that the attention generated by divestment can change the course of events and instigate government action. There have been a handful of successful divestment campaigns in recent history, but the most impactful one rallied around the issue of South African Apartheid. Divestment not only applied direct economic pressure, but also helped reveal the immorality of apartheid, galvanizing a movement of concerned citizens around the world. Archbishop Desmond Tutu stated that the movement to end apartheid “would not have succeeded without the help of … the divestment movement of the 1980s.” 

A similar strategy can help us transition from “business as usual” fossil fuel extraction to making the big changes required by the scope of the problem. Just as apartheid divestment originated from a deeply moral issue, so the heart of the fossil fuel divestment movement springs from a moral standpoint: it is wrong to profit from activities that lead to destruction of the planet, its people, and its wildlife.

 

 

Next Steps

1) Find out where your money is. Talk to your foundation, board, or financial planner to find out where your money is invested. Even zoos and aquariums with ethical investment policies are likely invested in one or more of the top 200 fossil fuel companies (http://gofossilfree.org/companies/).


2) Commit to pursuing divestment. It’s both that simple, and that complicated. A commitment to exploring divestment does not mean that you know all the answers or can predict the outcome. It means that your institution will begin taking necessary steps to move in this direction. Remember, it doesn’t have to happen overnight—the goal is full divestiture in 5 years.

Ready to get started? Join the Movement to indicate your intention to explore divestment for your institution.


3) Research responsible investment alternatives. Investment products that exclude fossil fuel industries are available to investors and, just like for any investment product, there is help available for identifying fossil fuel free funds. For a good place to start, visit http://www.greenamerica.org/fossilfree/, which has links to fossil free mutual funds, green asset management firms, and financial planners.


4) Spread the word. We know that you will not make a divestment decision lightly. Thus when you’ve decided to consider divestment, let CBSG know so we can celebrate your commitment and your courage to lead. Announcing your intention to divest doesn’t have to wait until you have all the logistics figured out. Cities like Seattle and San Francisco announced their consideration of divestment before their boards even met. This is something to be proud of, and though divestment will be complicated, the message it sends is not. Let your divestment serve as an invitation for other zoos and aquariums and your community to also actively participate in this movement.


5) Meet with your financial planner. Once armed with a sufficient amount of information, meet with your financial planner if you have one. Most likely, they will be familiar with some type of socially responsible investing (SRI) and can help you identify fossil fuel free products. Remember that this is a new movement and your advisor may take some convincing. Their job is to help you and your institution meet your goals, and this includes ensuring your portfolio is aligned with your mission. 


6) Divest stocks. Research divestment options for your other investments. Divesting stock holdings might be easier than divesting your pension fund or endowment, so if your institution invests in stocks, pursue that first. While mutual funds and endowments will take time to untangle from fossil fuels, if your zoo holds any stock in the Top 200 fossil fuel companies, divesting from these might be considered “low-hanging fruit” in comparison to finding a new investor for your endowment or researching fossil free mutual funds.