And they are not alone...
As the United States was fixated on the political upset in Alabama, there were several chunks of good news coming out of the Paris One Planet Summit—a conference designed to follow up on the Paris Climate Accord, with a specific focus on finance. Principal among these announcements, I think, was news that the World Bank will stop financing upstream oil and gas projects from 2019 onwards. (The bank did say rare exceptions may be made for gas in the poorest of countries.) Also worthy of note was insurance giant AXA announcing it would divest a further 3 billion euros from coal and tar sands projects, quadruple green investments to 12 billion euros by 2020, and also stop insuring new coal construction projects or oil sands businesses.
Alongside the many, many other such commitments from corporations, nation states and non-profits, it's fair to say that—regardless of what's happening in Washington, D.C.—strong messages are being sent about the direction of travel of the world's economy. Of course, it's also fair to say that this news comes at a time of record wildfires in California and unprecedented sea ice melt in the Arctic, so even the ambitious levels of commitment currently emerging will need to be ramped up further.But let's not underestimate the significance.
Whenever I write about the growing fossil fuel divestment movement, critics tend to offer two counter arguments:
1) The scale of divestment is too small to make a difference
2) Divesting is meaningless, because someone else will invest instead
The first of those arguments is already seeming moot, given the obvious scale of divestment that's already taken place, and the growing number of institutions willing to jump onboard. But a new study from the School of Environment, Enterprise and Development (SEED) at the University of Waterloo suggests the second argument is inaccurate too. You see fossil fuel divestment announcements are having a statistically significant impact on the price of fossil fuel shares. And because low share prices increase the cost of capital, this means there is a direct impact on a company's capacity for exploration and new production.
Yes, we have a long way to go before the divestment movement topples Big Energy. And yes, divestment and investment must always go hand in hand. But don't let anyone tell you it doesn't make a difference:
The markets are shifting, and they are shifting in our direction.