Every year, 5.5 million people die prematurely because of air pollution (Lelieveld et al 367). In fact, that number is more than the deaths caused by malaria and HIV/Aids combined. By 2050, the number is projected to double if the problem cannot be tackled properly (Carrington). When asked how to address this problem, a common answer is to reduce our fossil fuels productions. But how can we the world together solve this problem? In the recent book This Changes Everything, the author, Naomi Klein describes how the world is struggling to reduce carbon emissions, and we are approaching the point where climate change is soon to be out of control. The author expresses her indignation about the machinations of big polluters and their collaborators, and concludes with a hope of a revolution “when societies suddenly decide they have had enough” (Klein 464), so “only mass social movements can save us now” (Klein 450). To do so, she urges people to act and apply comprehensive boycotts, divestments, and penalties against lobbied politicians, parties, countries and corporations that are destroying our resources and future. One of the remedies she mentions is the divestment movement which can stop the “intention of pushing the planet beyond the boiling point” of big oil companies (Klein 354). Divestment def: Divestment is considered as one of the few remaining practical strategies likely to awaken organizations and individuals around the world to the powerful necessity of massive and immediate action to fight against climate change and extractivsm because it is morally, strategically and financially important.
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Greenhouse gas emissions in the world are continuing to increase rapidly, yet the climate is worse than anticipated. Scientific evidence suggests that, with the absence of significant progress to slow emissions, the climate of the earth will warm up at least 3 degrees Celsius, if not more. Stern Review on the Economics of Climate Change conclude that if future temperature increases two or three more degree, one-sixth of the world’s population would face “floods or droughts and reduce crop production in Africa enough to put several hundred million people at risk of starvation” (Lockwood). In order to keep the world safe, international commitments based on scientific evidence have committed to keep warming around “2Â°C of the pre-industrial baseline.” However, the earth is currently at about “0.8Â°C above this pre-industrial level” (IPCC). Without strong and meaningful solutions to slow down emissions, the dangers of warming at higher levels such as 3Â°C or 6Â°C will likely result in the sea level rise up to three feet by 2100 and ten feet by 2300 (World Bank). Hundred millions people will have to seek for new settlements. Catastrophic fires will take place in Amazon forests more often, which is responsible for ten percent of the world’s oxygen supply. Yet, the Himalayan ice sheet will melt, causing 2 billion people in Asia losing water supply for drinking and farming. However, fossil fuel extraction companies rely on extracting resources that are incompatible with the 2Â°C warming threshold. Carbon budget has been estimated at 565 gigatons of carbon dioxide in 2012, but fossil fuel companies hold reserves that are estimated at 2795 gigatons which is five times as much compared to the carbon budget. In other words, only 20 percent of their reserves can be exploited and burned without exceeding the 2Â°C warming threshold, and the other 80 percent must be kept intact in the ground. Despite the truth that burning fossil fuel will cause the world to reach the limit of warming, they continue to extract and also pour billion of dollars every years into finding new resources, about 674 billion in 2012. Furthermore, they have spent billion on exploring unconventional fossil fuels which are more harmful to the environment such as coal seam gas and tar sand. These activities are considered as unscrupulous behaviors, regardless of whether these extraction and exploration companies are putting money into research and development methods related to cleaner harnessing methods and alternatives, and alsotheir activities have contravened local laws or jeopardized indigenous people’s health by causing water contamination and releasing emissions during the exploitation process. To smoothen those exploitation processes, fossil fuel companies have funded climate change deniers and influenced politicians to ensure legislations that limit environmental rules can be passed. They also advertise campaigns against proposed initiatives, exaggerating the potential job losses and imbalance of energy security. Therefore, fossil fuel companies have shown a lack of integrity and accountability, so continuing to invest in these companies does not fit social morality any more. As in Bill McKibben’s words, “If it’s wrong to wreck the planet, then it’s wrong to profit from that wreckage.” However, fossil fuel companies and opponents argue that the world is so dependent on fossil fuels, and any abrupt change will impact on the poorest countries and communities because only fossil fuels can lift them out of poverty. In fact, the world has seen that alternative energy has brought benefits to the world’s poor. For example, in Bangladesh and Mongolia, more than 3.5 million solar homes systems have been installed in rural Bangladesh, creating 70,000 direct jobs (World bank). The solar homes system has been changing their lives by not only lighting up their homes with low-cost energy, but also provide a safer energy source to cook rather than burning coal and wood because indoor air pollution is one of the main causes of death in these countries, due to the use of dirty oil or coal plant to cook (Varma). If we perceive that destroying the climate in which humanity evolved by promoting fossil fuel emissions is wrong, then making profit from investing in these companies is also unethical. Divesting may not prevent fossil fuel companies from continuing their activities. It will, however, put the pressure on them to behave responsibly and make them not to continue acting with impunity.
Although there is a widespread agreement that institutional investors leaving their funds will not directly harm fossil fuel companies, there may be a direct financial impact on the areas where funds are reinvested. Renewable energy and other clean technology companies are widely recognized as under-capitalized, meaning that greater investment in these sectors could help push the development of alternative and renewable energy. In a report in 2014, the IEA confirms that global financial support for fossil fuels in which exploration is only a portion, was estimated at $ 550 billion in 2013. That was four times the subsidies for renewable energy. Because of the huge costs for exploring reserves and the fluctuation in prices of coal and oil, these generous public subsidies are deemed uneconomic, holding back investment in renewable. But if billion of dollars are withdrawn from fossil fuels companies, what are the sectors where the investments could yield high returns and also facilitate the transition to renewable and clean energy system?
A recent report from the Sustainable Conservation Alliance found that colleges investing in lighting and heating energy efficiency at their facilities earned an average return on investment of 28 percent. Renewable electricity generation such as wind, solar and biomass, not only reduces emissions but also creates jobs. Some investors argue that fossil fuels companies promise to make fossil fuels become a cleaner source of energy, so divestment is not necessary. The fact that large fossil fuel companies often have some activities in the field of renewable energy makes the divestment movement become complicated. Some observers also argue that shareholder involvement may motivate fossil-fuel companies to convert into renewable energy providers. However, renewable energy accounts for only a small proportion of activities, reaching a peak of 6% by 2015), and there is currently no sign that the transition will occur. As Klein asserts, “And even as the demand for renewables increases, the percentage the fossil fuel companies spend on them keeps shrinking – by 2011, most of the majors were spending less than 1 percent of their overall expenditures on alternative energy, with Chevron and Shell spending a deeply unimpressive 2.5 percent.” New reserves are still being exploited and explored although in most cases further development is incompatible with the limits of safe climate change. Historically, companies and industries that have not been able to grow fast enough to transform their underlying business operations tend to become outdated and then replaced by new ones. Divestment can facilitate the transition to clean economy. That a massive global transition away from fossil fuels and towards renewable energies, led by solar, also means that there are and will continue to be competitive investment returns earned from carefully selected investment exposure to renewables.
The movement is criticized when it gets more attention. It is described as an empty strategy: When you sell your shares, new investors will take your spot. They also have the same influence. Therefore, some investors claim that the divestment from fossil fuel companies is a symbolic act.
“But what the emergence of this networked, grassroots movement means is that the next time climate campaigners get into a room filled with politicians and polluters to negotiate, there will be many thousands of people outside the doors with the power to amp up the political pressure significantly – with heightened boycotts, court cases, and more militant direct action should real progress fail to materialize. And that is a very significant shift indeed.” (Klein 355)
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History shows that divestment campaigns do work by removing the social license of the companies and casting them as social pariahs that run counter to social values. This results in a country or industry running into serious difficulties. As Nelson Mandela and Bishop Tutu have insisted, the divestment campaign in the 1980s was critical to the overthrow of apartheid in South Africa. In the 1990s a divestment helped bring major changes in the tobacco industry after decades of denial. â€¢ As a recent Oxford University study has shown,1 even when divestment has no direct, substantial financial impact on companies, it helps to remove the social license of companies pursuing highly destructive practices. In doing so it helps build a movement that harms the public image of these companies, reduces their political support, and thus impacts their financial interests. Such a campaign can thus help convince the companies to act in a more socially and environmentally responsible way. The campaign can also help convince governments to restrict the GHG emissions of the fossil fuel industry.
True, fossil fuel is not in itself a social evil the way apartheid or tobacco addiction are. However, the impact or global warming caused by fossil fuels is far more extensive than apartheid and tobacco. And that impact will be hardest for developing countries and the poor, and the devastating social injustice that will result outstrips the terrible consequences of apartheid. Similarly, the health impacts of global warming will be more deadly than tobacco addiction. â€¢ Fossil fuel companies are aware of the devastating harm they are causing and will cause. Yet they are working very hard to continue profiting from the use of fossil fuels and they are fighting against the promotion of renewable energy that we need. While the production of energy itself is a social necessity, to knowingly continue the production of energy that will cause vast pain and destruction for the financial gain of a few is indeed evil.
If you own fossil fuels you own global warming. You own the most likely cause of global economic and possibly even civilization-level failure, and moreover, you own a power source that is having an increasingly tough time competing economically. The human community has never faced such certain and devastating consequences if action is not taken. Apart from nuclear war, climate change dominates all previous threats to humanity in its scope and extent. The magnitude of the threat in itself represents a powerful argument in favor of divestment. The movement will send an important message to the world that climate change is happening and immediate actions are needed through reducing greenhouse gas emissions and shifting rapidly to the carbon-free world. Such changes can be considered disruptive and difficult, but necessary and will benefit human health and wellbeing in the short run and in the years and decades to come. There are strong moral and financial reasons for organizations and individuals to divest from fossil fuels. Also, divestment is an opportunity for organizations to align their investments with their values and show leadership on climate action. It is not only a political issue or something to be handled by big organizations. Anyone can do something to contribute and to convince institutions to divest. Maybe there is a local divestment group you could join or simply support the international campaigns of 350.org. Ask your bank if they are still investing in fossil fuels. It is up to us to decide where our money is working for.
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