Divestment in fossil fuels

What do you mean by Divestment movement in Fossil fuels?

• Divestment is the process by which money put into stocks and bonds of certain companies is withdrawn. A divestment is the opposite of an investment.
• For example, recently Goldman Sachs announced that it would no longer finance new oil drilling in the Arctic National Wildlife Refuge and coal mines such as mountain-top mining
• In this case, divestment has been directed against companies that extract, refine, sell and make profits from fossil fuels.
• The purpose is to restrict fossil fuel companies’ ability to function to limit their impact on climate change.
• As of 2019, it is estimated that more than $11 trillion in assets has been committed to divestment from fossil fuels.

What is the role of Climate activist in divestment process?

• Systematic organised drives for divestment from fossil fuel companies have been undertaken by a large network of activists including Rainforest Action Network, 350.org, Go Fossil Free, university students and faculty etc.
• They systematically attacked equity, investments, loans, or credit, available to the fossil fuel industry.

What are the challenges?

• After the Paris Agreement of 2015, where countries agreed to try to limit average global warming to well below 2oC, global banks continue to finance the fossil fuel industry.
• Finances has been increasing to fossil fuel sub-sectors such as oil from tar sands, Arctic oil ang gas etc. For example, coal power financing led by Chinese banks.
• Companies might be divesting not for ethical reasons but because it considers fossil companies to be risky.

What is the way forward?

• India’s contribution to the stock of greenhouse gases is less than two tonnes of CO2/capita.
• Yet, with the costs of production and storage of renewables are falling policymakers should utilise this oppurtunity and foresee to make a just transition away from coal in the near future.
• This process will be complex and necessarily involve many sectors and activities including land restoration, local jobs, and timely transfer of storage technologies for renewable energy, apart from dealing with entrenched vested and political interests