BY: TYLER FYFE
In the 1980s South African apartheid was still at its peak. Legislation enacted by the white regime made protesting race laws by demonstrations or picketing punishable by imprisonment or whipping. So investment protest was born on American college campuses. It turned out to be a lot more effective than picket lines.
In the mid-’80s American college students pressured administrations to pull all endowment funds invested in South African companies. It created a domino effect and from 1985 to 1990, over 200 U.S. companies pulled all South African stocks causing a loss of $1 billion American dollars. The South African government’s hand was held to the stove and within four years racial segregation dissolved.
Now protest investment also known as the“divestment movement” is being used to take action on climate change gaining ground on over 300 college campuses. The message is simple; put morality above personal finance.
John D. Rockefeller’s fortune was made from oil, so it was a surprise to everyone when The Rockefeller Brothers Fund pulled all investments from coal and tar sands oil as part of an environmental initiative last year.
The signal sparked a mass migration of funds of over 800 investors including The Church of England and the World Council of Churches committing to a divestment resulting in the loss of over 50 billion dollars in the next five years. The cities of Seattle and Santa Monica have also purged themselves of fossil fuel investments. Most recently, California passed SB 185, or the “Investing with Values and Responsibility Act.” The bill will force the biggest pension funds in the state to divest completely from coal in the next 18 months.
Some have argued that divestment movements have little direct consequences for the finances of major companies. But the premise is simple, no CEO wants to catch the slow-brewing disease of bad-public relations.
Taking notes from divestment campaigns against South Africa in the 1980s and tobacco companies in the 1990s, investors are using their money to promote positive social change.
Andy Sig of the Bank of America Merrill Lynch is quoted as saying, “Clients are telling us they want their portfolios to reflect their values and help improve the world they live in. As their enthusiasm grows, we continue to offer new opportunities to meet this need. We have made impact investing a strategic priority and will bring clients innovative solutions that help them promote positive social change.”
As environmentally conscious investors are cutting their ties with fossil fuel, those left dragging their feet are being publicly shamed.
The Guardian sent an open letter of disapproval signed by over 1,000 medical professionals to Bill Gates and the Wellcome Trust saying that by financially supporting the top 200 fossil fuel companies, they’re putting the future in danger.
The Bill and Melinda Gates Foundation has still refused to divest over $1.4 billion dollars invested in fossil fuel companies. But the Gateses should be worried—fossil fuel divestment is the fastest growing divestment campaign in history and has those still drunk on black gold worried.
While personal fortunes may not be affected, a mass exodus of money, also known as “capital flight” is spurring international debate. Last year, Wellcome Trust lost an estimated 175 million pounds on fossil fuels alone. If history repeats itself, the divestment movement could produce real change in policy. By current estimates, we will exceed the two degree celsius mark causing environmental catastrophe in 17 years. That will make me 39. How old will you be? The growing divestment movement isn’t a silver bullet to change. But it is certainly a steroid.
Sources: audubon.org, gmasolar.ca, huffingtonpost.kr, johndrockefeller.org
