Divest/Invest Movement
The long-term impacts of climate change are becoming easier to decipher and an increasingly likely reality. While the governments of the world move at glacial speeds to try to slow down the effects of climate change through long-term consensus building and moderate legislative attempts (ugh!), people are demanding more action, faster.
The first thing to understand is that as individuals, there are several things we can do to help make a meaningful difference. Climate change affects all of us equally and if it continues to proceed unchecked, it'll soon be too late and we won't be able to adapt fast enough to avoid the worst of the potential impacts. Most experts agree that the time to act is now.
So, how can individuals and investors make a difference that will allow for new climate solutions to appear?
One of those ways is participating in and supporting the Divest/Invest Movement. This article outlines a bit about the movement and how you can get involved.
What is the Divest/Invest Movement?
In simple terms, the Divest/Invest Movement involves individuals (often investors) who share the beliefs of a prosperous and healthier tomorrow for our planet and are wanting to contribute towards that tomorrow. It consists of individual investors, communities, and organizations who want to use their resources and influence to invest in efficient climate solutions to meet the goals of the Paris Agreement as well as other causes and issues good for society. Stakeholders range from individuals intentionally using sustainable banking options or directing their 401K to institutional pension funds directing billions of dollars.
Today's college students are just as likely to participate in this thesis as are baby boomers.
The main goal of the Divest/Invest Movement is to shift money away from extractive and harmful industries like fossil fuels, private prisons and tobacco, and invest instead in companies and organizations that are focused on solving the greatest issues facing society today. With more capital, awareness and public support, those companies will be able to continue to create solutions for the transition, creating just and fair products that benefit all stakeholders and the climate.
It's important to note that these actions are not at the expense of profit. Despite what many conventional money managers might repeat, a trade off between purpose and profit isn't necessary. The return expectations of for-purpose companies are often equal to or better than conventional alternatives over the long-run. This is due to things like growing market share among an increasingly committed and aware customer base seeking to accelerate the transition.
Representative investments include clean energy companies, racial justice organizations, climate-tech businesses, sustainable and regenerative agricultural companies, and sustainable apparel companies. There are worthwhile companies that are seeking to reinvest in community across nearly every sector.
The Goals of Divestment of Fossil Fuels
There are a couple of primary goals related to the divestment movement. The movement broadly formed in 2014, and after nearly 10 years, it's evident that the collective power of investing is catching on as a means of taking personal responsibility over global outcomes.
First, the fossil fuel divestment movement aims to promote care about the environment and raise awareness about the global and local problems that fossil fuels cause. This is often done through educational campaigns supporting of a more sustainable and resilient Earth.
Broadly speaking, the Divest/Invest Movement aims to shift trillions of dollars from fossil fuel adjacent companies to more sustainable companies over the next 20 years. Although there are several large and ambitious goals, the progress that's been made in the effort to completely divest from fossil fuels is truly impressive.
To date, more than 1,500 members have announced their adoption of the D/I Movement and its principles. Some of these members include:
- Wallace Global Fund (USA)
- Rockefeller Brothers Fund (USA)
- JJ Charitable Trust (UK)
- Mark Leonard Trust (UK)
- Ashden Trust (UK)
- San Francisco State University Foundation (USA)
- Santa Fe Art Institute (USA)
Additionally, 135 cities/municipal sectors have also joined the fossil fuel divestment movement, some of which include:
- Cape Town (South Africa)
- Auckland (New Zealand)
- Berlin (Germany)
- Copenhagen (Denmark)
- Kansas City (USA)
- Le Mans (France)
- Melbourne (Australia)
- Oxford (UK)
- Paris (France)
- San Francisco (USA)
- Stockholm (Sweden)
- Sydney (Australia)
- New Orleans (USA)
While governments aren't doing enough to protect the planet we all live on, fossil fuel divestment movement members have a clear goal that they're working towards to assume more agency over the outcomes sought.
Why is the Work of the Divest/Invest Movement Crucial for the Planet?
The effects of climate change are already felt in most major areas of our lives. Public health care will become even more important with the global degradation of health and traditional food systems are at risk.
This sort of trajectory will inevitably raise questions about human rights and how to deal with the ever-increasing life difficulty of billions of people worldwide. Participating in the Divest/Invest movement creates a path forward where our financial systems can work towards better global outcomes rather than against them.
The biggest impact that can be made regarding the topic of climate change is divesting from fossil fuel companies AND investing in the many climate solutions that are at our fingertips.
How to Effectively Join the Fossil Fuel Divestment Movement
Numerous institutions, companies, and organizations are developing climate solutions that limit the use of fossil fuels and avoid other harmful humanitarian outcomes. Switching your financial portfolio of investments and banks to versions that are 'Good for the World' has never been easier.
Institutional investors may have greater access to alternatives like sustainable energy solutions, zero-carbon transport, reforestation, water management, and environmental improvements that will positively affect the climate. But remember: Anyone can participate in this movement! It's not just for the big institutional investors, pension funds, and city funds.
Those who want to begin the Divest/Invest process need to consider their available assets and respective allocation strategies. If you have significant holdings in dirty fossil fuel companies and you can't afford the tax implication of selling out of those securities, that's OK! Do what you can and move into the harder investments when it makes sense for you. You can adopt a more stringent plan for any new investments to make sure you're portfolio is starting to move the right direction.
Now is the perfect time to use the money to join the climate initiative and the Divest/Invest movement! Here are the three steps you'll want to be aware of in order to get started:
- Take stock of where you are now - When it comes to something as delicate as money, it's not wise to move too quickly. Take a look at your entire financial profile to see where you have investments and where you hold your bank deposits. Also understand what sort of money you'll have to invest in the future, whether it's an annual bonus from your employer or a steady 401K allocation.
- Identify short-term and long-term opportunities for improvement - Once you have a better sense for your existing financial profile, you can identify areas where you can make immediate changes and areas that will take a bit longer to accomplish. That may mean postponing unwinding certain assets to avoid the tax liability, but instead using a sustainable bank that uses your money to invest in the clean economy. Or it may mean setting up a new investment account with a provider that aligns with your values.
- Choose the most appropriate consultants, banks and fund managers - As you look to transition your financial self into greater commitment towards climate, you'll want to find the right partners to help you. There are a handful of banks that specialize in this work. Atmos provides climate-positive banking to individuals through which 100% of every dollar is used to support renewable energy. There are dozens of money managers and fund products to help you take the right steps.
Final Words
Our over-reliance on fossil fuels over the last 50 years in particular has directly contributed to climate change and global warming. Cities, government, business and individuals are looking for ways to divest from fossil fuels and commit to community protection and a clean energy tomorrow. The divest invest movement is the embodiment of this initiative to increase investment to protect the climate and other socially responsible assets.
More and more organizations are getting involved and it's easier than ever to join this movement. Whether you're a college student, professor at a school, an international money manager for pension funds or large corporations, it's more important than ever to divest from fossil fuels and invest in the solutions of tomorrow.
