Fossil Fuels Divestment Reaches $6.24 Trillion
Fossil fuel companies own our governments, so the number one goal of the movement is to weaken their grip and and then to expose the failed business model of the industry. We want them to re-direct investments to renewables, says Ellen Dorsey, Executive Director of the Wallace Global Fund
SHARMINI PERIES: It’s The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.
Fossil fuel divestment has become a global phenomenon. This week, the Global Fossil Fuel Divestment Movement released a new report showcasing an incredible growth in scale and impact of the movement. According to this report, close to 1000 institutional investors with $6.24 trillion in assets have committed to divest from fossil fuels. This is up from $52 billion just four years ago.
This week we have been covering the protests of the environmental activists and the California Governor Jerry Brown’s Global Climate Action Summit. The protesters that are on the streets are demanding that their leaders play their role in accelerating policy efforts to curb global warming. To discuss all of this with me today is Ellen Dorsey. She is at the summit, and she’s joining us from San Francisco.
Ellen Dorsey is the executive director of the Wallace Global Fund, a private foundation focused on progressive social change in the field of the environment, democracy, human rights, and corporate accountability. Ellen Dorsey was awarded the 2016 inaugural Nelson Mandela and Graca Machel’s Brave Philanthropy Award. Ellen, I thank you so much for joining us.
ELLEN DORSEY: Thank you, Sharmini, for having me.
SHARMINI PERIES: Ellen, now, obviously you are celebrating the monumental achievements of the movement and the successes the divestment movement has had. And of course your role has been very important in all of this. So highlight for us the achievements of the movement, and what is actually logged in that report.
ELLEN DORSEY: Sure. So just this week movement leaders released a global state of the divestment movement report, announced new commitments by investors to move their assets out of fossil fuels as an ethical, financial, and fiduciary imperative, and into climate solutions, as well- investing as well as divesting- and issued a call to action to be carried out through the proceedings of the Global Climate Action Summit.
In short, four years ago we held the first press conference in September of 2014. And at that time it marked that there were $52 billion in assets under management that had already divested from fossil fuels as a result of advocacy begun by students just three years earlier. And now, four years later, this week we announced that nearly a thousand institutional investors have committed to divest from fossil fuels with $6.24 trillion in assets under management. That’s a nearly 12,000 percent increase from that first announcement.
SHARMINI PERIES: All right. Now, Ellen, you’re not talking about just divesting. You’re also talking about investing in good things. Tell us about that part of the report.
ELLEN DORSEY: Not all institutions that have committed to divest have made explicit commitments to investment, but many have. For instance, my sector, philanthropy, we organize something called Divest Invest Philanthropy. We now have over 175 foundations that have committed to divest from all fossil fuels and invest 5 percent of our investment portfolios in climate solutions, including what I think is very important, is investing in universal energy access to make sure that the billion-plus without electricity today are included in the energy transition and are reached with safe, clean, and affordable energy, and also to invest in the just transition. We should be putting our capital into extractive communities, and to support dislocated extractive workers.
On the call to action, the call to action that we released on Monday included a call for all investors to be putting 5 percent of their investments into climate solutions to rapidly scale renewables, which we must do to be able to reach that 2 degrees Celsius limit of warming. We also have to invest in the solutions, as well as divest from the problem.
SHARMINI PERIES: All right, Ellen, you were talking about universities and students engaged in this movement, which has been a critical part. Give us a sense of how this movement grew; how it started, and how it grew.
ELLEN DORSEY: Yeah, it’s a great story. In 2011, the first group of students working on fossil fuel divestment emerged at Swarthmore University. In the summer of 2011, students from about eight campuses, along with four or five environmental organizations, came together to plan campaigns on college campuses. Started with 8, grew to 40. In the interim, an organization called Carbon Tracker released its analysis about the impending carbon bomb, the kind of stranded asset risk analysis, and the idea that just like there was a tech bubble, there would be a carbon bubble.
And so Bill McKibben brilliantly linked these divestment campaigns with this new analysis by Carbon Tracker, and released an article called Do the Math in Rolling Stone. It lit a match. 40 campuses went to 400 overnight. And then the movement started spreading to faith, to cities, to pension funds, to philanthropy, my sector, health groups, hospitals, and now it’s reached the financial mainstream. Large-scale insurers, large-scale pension funds have all been committing to divest. Some for ethical reasons, some for ethical and financial reasons, some for purely financial reasons and to uphold their fiduciary duty. So it’s exploded, grown like wildfire around the world.
SHARMINI PERIES: Ellen, speaking of the global effect. Now, various city mayors and governors like Governor Brown has taken this issue up. Now Mayor of New York Bill de Blasio and London Mayor Sadiq Khan just published an op-ed in The Guardian calling on all cities to divest from fossil fuels. This is incredible, it’s having a domino effect all over the world, which is wonderful. Tell us more about it.
ELLEN DORSEY: It’s unbelievably exciting to watch. You know, I’ve been an activist for many decades. Hate to say how many. And I consider myself a little bit of a student of social movements. And this movement is now a fully- a full-blown global social movement. It’s hydra-headed. It’s not coordinated by any one institution. It’s made up of individuals that have called upon institutions that they have a relationship with, a university, their faith group, their pension fund, their retirement accounts, and advocated for those, you know, institutional investors to divest from fossil fuels. And it’s exploded globally. It’s in many countries in the world, North and South.
And what’s been fascinating is now to see how cities and governments are grabbing on as a result of advocacy and grassroots pressure, not doing this just on their own, or now committing to divest. The government of Ireland has committed to divest its national fund. And now the mayors of London and New York both committing to divest and invest are launching a new forum, a Divest Invest Cities forum, calling on mayors all over the world to join them to move their assets out of fossil fuels and invest in the clean energy economy that will produce jobs in their cities, in their- in their boroughs, and et cetera. So it has exploded. It’s like, just wildfire.
SHARMINI PERIES: All right, Ellen, here are some challenges that the movement is facing. Some progressive economists at the Political Economy Research Institute, PERI, which is a progressive-oriented research house at the University of Massachusetts Amherst, published a study in April that concluded that fossil fuel divestment campaigns have not been that effective at significantly reducing CO2 emissions, and that they are not likely to become more effective over time. Now, it also found that divestment does not have a major impact on stock market prices of fossil fuel companies. What is your response to that?
ELLEN DORSEY: Well, I’m open minded and respect different opinions and different ways of analyzing the problem. First I would say that this movement has a kind of complex theory of change, if you’ll let me break apart a bit.
First and foremost, it’s build- the purpose of the fossil fuel divestment movement initially was to build a global climate movement. Prior to the early days of divestment there was not a climate movement. There were pockets of advocacy around the world, but we didn’t have a people’s movement, nor did we have a global people’s movement. So calling for divestment and calling for institutions to divest their assets from fossil fuels is something of a tactic that any activists in any part of the world could do. And so it was first and foremost a way to build power and to focus on the problem.
Prior to the call for divestment, all of the activists around the world and environmental advocates in general were calling for policy change. The problem is that the fossil fuel industry owned governments, and prevented action on policy. So the number one goal of the movement was to take away the social license of the industry to operate, and to weaken its grip over the political process. And I think that is absolutely essential first and foremost, and it is starting to do that.
Secondly, it’s about exposing the failed business model of the fossil fuel industry. You know, really pulling back the black curtain on what the industry, on the worms inside, as it were, and the problems with the industry so that investors would begin to withdraw their capital.
And then third, it’s about capitalizing the solutions. We can’t actually get off of fossil fuels unless we grow the alternatives. And by growing the alternatives and making renewables cost competitive, that is hurting the the bottom line of the industry. And the industry is starting to hurt as a result of this. In fact, even Shell Oil in their annual report cited the divestment movement as a material risk to its investors. Now, to me that tells you that they know that this is threatening them, threatening their core business model. And as well it is threatening their grip over the political process, which will enable us to regulate that carbon, which is the thing that will bring the emissions down fastest.
So a complicated answer to that question, but I’m not surprised that we don’t see dramatic reductions in emissions right now, because we’re building a longer-term movement against the most powerful industry in the world.
SHARMINI PERIES: Ellen, now, the researchers recommended that the environmental activists, instead of directing their energy into divestment, should instead direct their efforts to drive down fossil fuel consumption and CO2 emissions. So what do you make of that?
ELLEN DORSEY: Well, first of all, divestment is not the only thing that’s going to get us to what we need. So absolutely, we should be driving down consumption. I don’t disagree with that at all. But reducing consumption is not going to change the problem, the core problem, that at this point the industry has been so powerful it has worked against regulation of carbon. And so we have to do- we have to drive down consumption where we can. We have to embolden politicians to take regulatory action. But we as individuals can use the lever of finance as a people’s lever of social change, and all those factors together will work hand in hand to help us transition off the dependence on the fossil fuels and into a clean energy economy.
That, too, is going to have its own challenges. We need to fight to make sure that the renewable industry isn’t creating environmental harms and human rights violations, as well. So you know, we’re always in struggle for a better world. But this struggle right now to get off of fossil fuels is absolutely urgent, and we have very very little time to waste.
SHARMINI PERIES: Ellen, you are in this unique position of being able to go to the protest, walk the streets with civil society actors and activists, and be a part of the movement, but you also spoke yesterday at the summit, and you also have access to the decisionmakers, the policymakers, those who are all positioned to make a real difference by way of policy and adopting good comprehensive plans for the world. But you are also up against corporations in these sites of, you know, talking about these very important issues for the world. How do you navigate all of that?
ELLEN DORSEY: Yeah, it’s a good question. And I would say that I was extremely pleased to be out in the streets, in the protest, in the marches. Many of the organizations that my foundations support were out in the streets. And they’re calling for both more rapid action, more authentic action, and climate action that respects those most at risk. And to ensure that the people who are in the streets are actually in the suites, as well. That you know, consultation with Indigenous groups and frontline EJ groups, et cetera. So I was proud to be part of that march.
And in turn, when you go into the meeting, I feel it’s a personal responsibility to bring those messages into the discussion in every way that I can, whether it’s in participating in forums, or in my own, you know, remarks about climate finance, and that we need to be thinking about not just getting awful fossil fuels, but we need to be investing in the just transition and we need to struggle over the questions of who will own the clean energy economy of the future? Who are the beneficiaries? And how do we do things better that respect human rights and the environment as we’re structuring basically the underpinnings of the global economy, our energy. We’re structuring a new global economy with this transition off of fossil fuels, and so much is at stake.
So it’s important to bring the leverage of the street and the organizing and the activists into those discussions, and also to speak truth to power when the corporations are sitting in the room with you, and the government officials that are slow walking this transition. It’s important to speak with authenticity and, and often courage.
SHARMINI PERIES: And Ellen Dorsey, thank you for doing that on our behalf and on behalf of humanity. I thank you so much for joining us today.
ELLEN DORSEY: Thank you.
SHARMINI PERIES: And thank you for joining us here on The Real News Network.