Business Green reports that the New Zealand city of Dunedin has become the latest entity to commit to divesting from fossil fuels.
This is a very important development:
Of course, the numbers are tiny compared to the global fossil fuel money machine, but that doesn't really matter. Viewing them in isolation is ridiculous.
Dunedin City Council (DCC) yesterday approved a new ethical investment policy that will see it divest around NZ$2m from fossil fuel extraction investments and block a planned NZ$75m from going ahead. The city announced that it will also now block munitions, tobacco, gambling and pornography industries from its investment portfolio, with divestments taking place over the next two years.
I laughed the other day when NPR downplayed Stanford's coal divestment. Not only did their take—that University endowments are just a drop in the bucket—ignore the symbolic significance of shunning an unethical industry. (Note above that fossil fuels are listed alongside tobacco, gambling, pornography and arms.)
They also failed to see the potential collective impact of a larger divestment movement. With Norway considering divesting from oil and coal, the Church of England using its economic muscle to fight the "great demon" of climate change, and the Bank of England receiving warnings over a carbon bubble, divestment is by no means limited to liberal universities anymore.
Desmond Tutu is arguing for investors to shun fossil fuels (he knows a thing or two about boycotts). The UN climate chief is urging religious leaders to dump oil and coal. And perhaps most importantly, the conversation is moving beyond ethical concerns: some analysts say that $1tr of oil investments are at risk as the clean energy transition picks up pace.
In an increasingly competitive energy sector, brand perception (yes, popularity does matter!) and access to affordable capital should be a major concern for any serious player. The genius of the divestment movement is that it effectively attacks both of these leverage points, and it does so at the same time as more and more corporations make the shift to clean energy.
There's a long way to go in the battle for clean energy, and victory is by no means inevitable, but investors in oil and coal might do well to at least start planning an exit strategy before it's too late.