Divestment – as opposed to investment – means selling stocks, bonds, or investment funds for financial, ethical, or political reasons. Divestment campaigns demand that institutions such as universities, states, or companies stop investing in those companies whose activities are considered harmful. For instance, several groups worldwide demanded divestment from companies that traded, or had operations, in South Africa to pressure the country’s government to end the apartheid system.
“We need an apartheid-style boycott to save the planet,” demands South African human rights activist, Anglican minister, and Nobel Peace Prize winner Desmond Mpilo Tutu. In a guest editorial in The Guardian, Tutu becomes more precise: “We must stop climate change. And we can, if we use the tactics that worked in South Africa against the worst carbon emitters […] People of conscience need to break their ties with corporations financing the injustice of climate change […] It makes no sense to invest in companies that undermine our future”.
In light of the climate catastrophe, campaigns like ‘Fossil Free’ demand divestment from the fossil fuel industry, especially coal companies. Via public pressure, they try to persuade investors to withdraw their capital and profit interests from the coal markets. They expose how interwoven the fossil industry, financial industry, and politics are. This way, direct and indirect financiers and profiteers of climate-damaging activities, who usually prefer to take a back seat, are held accountable. Investors and profiteers are just as responsible for human rights violations, environmental destruction in mining areas, and the climate crisis as coal companies!
South African environmental and human rights activist Kumi Naidoo, Secretary-General of Amnesty International, reflects on ‘Fossil Free’: “This campaign, on its own, will not deliver the solution that we need. But the beauty of it is the capacity to energize broader climate action, especially amongst a constituency of people who tend to be very informed and concerned: youth. There are now 400 campuses in the US alone that have divestment groups. This is a potentially powerful contribution to the climate struggle because it signals to investors in oil, coal, and gas that they may face a future of massive stranded assets leading to serious financial losses. Slowly, investors are beginning to look at climate as a financial risk. The divestment campaign has real potential to bring in a new constituency of heretofore silent parties— investors—to exercise substantial pressure on the fossil fuel industry”.
European NGO alliances campaigning for rapid coal phase-out, like ‘Europe Beyond Coal’, demand European banks to divest from coal companies.
The organisation, Urgewald, supports those campaigns, as well as investors, to identify coal companies from which capital should be withdrawn. Their Global Coal Exit List (GCEL) is a public database with key statistics not only on coal companies, but also companies that engage in coal-related business activities. As a divestment tool for the finance sector, the list shows which companies should no longer be financed. Its publications are well suited for further research.
However, the power of divestment campaigning has limits. As mentioned earlier, it is questionable whether this demand is fast enough and radical enough in view of the climate catastrophe. The impacts are usually felt very slowly. However, in addition to political pressure and actions aimed directly at decision-makers and companies, approaching investors is another lever to make the dirty business of coal more difficult.
Divestment campaigns confronting insurance companies
Insurance companies also play a major role in the financing structure of the value chain around hard coal. In debates on the climate crisis, they are often regarded as “savers”, as they insure against financial losses caused by extreme weather events. Insurance companies have warned about climate risks since the 1970s, but continue to enable further coal projects through insurance coverage.
Without insurance, almost no new coal mines and power plants could be built, and most existing projects would have to be phased out. It is therefore necessary to focus on the crucial role of insurance companies.
The network, Unfriend Coal, try to convince insurance companies: “Our best insurance is to keep fossil fuels in the ground”.
By naming and shaming, Unfriend Coal expose those insurers enabling further coal projects, like those in Poland that are backed by major European insurers such as Germany’s Talanx, Britain’s Lloyds, and Poland’s PZU.