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The Urgent Problem of Climate Change

Our planet is changing. 

We need to pay attention and change our behavior.

Scientists warn that we are rapidly approaching critical tipping points in our climate system, which could result in adverse impacts such as droughts, floods, and extreme weather events.

Climate change also has vast implications for human health. Rising temperatures exacerbate smog levels in some cities, reduce air quality throughout regions, and contribute to a variety of health problems.

The World Health Organization has reported that climate change contributes to approximately 150,000 deaths annually.

These may seem like distant threats, but they are already costing taxpayers billions, and posing significant risks to communities and the economy.

To protect our communities and save taxpayer dollars, we need to slow these costly impacts by reducing carbon pollution now – at the same time we accelerate the clean energy solutions that will power our future prosperity. 

Both consumers and businesses have a say in the future by voting with their wallets. We can stop investing in businesses that harm the planet and the people that inhabit it.

What Is Responsible Divestment?

Divestment is a tactic in which an organization, such as an institution or individual, divests itself of stocks, bonds, or investment funds that are unethical or morally ambiguous.

The fossil fuel divestment movement — including Green Business Bureau — calls on investors and companies to divest from fossil fuels and instead support and  invest in clean energy solutions.  “With the rising number of creative climate solutions – such as the ones discussed by Green Business Bureau founder, Bill Zujewski, in a recent interview with Finance Strategists – no company can legitimately claim ignorance.”

How Divestment and Reinvestment Work To Affect Climate Change

Divesting from fossil fuels is a way to remove your financial support from industries that threaten our survival here on earth.

If we intend to avoid the worst predictions of out-of-control climate change, then divestment is one of the most powerful steps that everyone can take to hold fossil fuel companies accountable for their role in blocking progress on climate action.

The effectiveness of this tactic lies primarily in the hands of individual investors. Having said that, a shift away from fossil fuel companies that is big enough to be noticed will only be effective when a critical mass of individual investors, working together, purge fossil fuels from their portfolio.

Divestment operates on a simple capitalistic theory – when demand decreases, the supply of fossil fuel will eventually decrease as well in order to try and slow falling prices. Once companies have filled up all their storage facilities, the only thing left to do is slow down or halt drilling operations.

There is a price below which it isn’t economically feasible to keep pumping oil from the ground. That’s when oil companies sit back and wait for prices to start rising again. Only what if they didn’t?

On the other hand, when investors buy stock in an earth-friendly company, it increases the share price and provides capital to fund their operations.

How To Divest

As the effects of climate change become more apparent, divestment has become an increasingly popular method of investing.

Here are steps you can take to run your own divestment campaign:

Step 1: Know how much investment you have with fossil fuels.

Talk with your investment custodian about where your money is invested. The list from Fossil Free Indexes, LLC will show you the top 200 coal, oil, and gas companies by carbon reserves.

From here, calculate how much of your portfolio is tied up with these companies and plan to get rid of it.

Step 2: Explore divestment options.

Your bank or investment administrator may offer a fossil fuel-free investment option that you can select to invest in companies that are working toward solutions to environmental problems instead of making them worse.

Before you panic, realize that divesting from fossil fuels does not mean your money is gone.

It just means you are no longer invested in industries that are actively working against progress on climate action. Instead, you’re switching it to companies that have shown they are ready to fight climate change.

Step 3: Spread the word about divestment.

Tell friends and family what you are doing and why it is important.

Share your story with social media outlets to increase visibility of the movement and encourage others to do the same.

Step 4: Reinvest responsibly.

Now that you are no longer invested in fossil fuel companies, look for ethical investment options.

Think about how your money is spent and what it supports.

Focus your investment around ethical values that support positive progress toward a sustainable future. 

One way to do that is by connecting with institutions that support sustainable investing. A good starting point is to study Carbon Collective’s Climate Index, the world’s most comprehensive list of climate change solution stocks. 

Opportunities for Responsible Reinvestment

Organizations that have divested from fossil fuels can reinvest in clean energy solutions like wind, solar, geothermal, hydroelectric power plants, which are more sustainable alternatives that produce cleaner sources of energy without contributing to climate change.

Investing in renewables reduces pollution, combats climate change, creates jobs, strengthens our economy, and can be done relatively easily through a targeted investment portfolio towards renewable energy investments.

There are many socially-responsible funds that prioritize investments in renewable energy, as well as those that “green up” their portfolios by investing money into clean technologies or sustainable business practices.

The Impact of Shareholder Action

Direct action has been one of the most powerful forces behind historic movements for social change.

As shareholders, we have tremendous power over the companies we invest in.

The shareholder resolution is a way to bring the tactics of direct action into the world of investing. It can help build pressure on companies that are blocking progress on climate change.

If enough people care about an issue, then it becomes harder for corporations to ignore them.

The bottom line is that the divestment movement has helped boost visibility of this critical social movement by engaging more people in the fight against climate change.

We are beginning to see cracks in the fossil fuel industry’s formerly impenetrable armor, and shareholder resolutions are paving the way for continued progress toward solutions.

The Bottom Line

Hopefully, this article has provided plenty of compelling reasons to divest from fossil fuel companies.

By withdrawing our investments, we are not only refusing to participate in the business of climate change – but also are sending a clear message that it is time for companies to take responsibility and work toward solving this problem.

It’s time to put your money where your mouth is and make multinational corporations sit up and take notice that business as usual is going away. Smart companies will realize there is money to be made in the climate revolution and change their behavior accordingly.

About the Author

True Tamplin, BSc, CEPF

True is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

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