Should We Divest or Engage to Eliminate Fossil Fuels?

Each little dent in the idea of oil and gas as the shiny promise of the future helps to shift the paradigm and move things forward.

A View of the SK Corporation oil refiner on March 16, 2006 in Ulsan, South Korea.

Chung Sung-Jun/Getty Images

Treehugger design editor Lloyd Alter recently reported on how the recent losses for oil majors are not necessarily terrible for National Oil Companies (NOCs). He's right, but it's also fair to say the broader context for recent investor-owned oil company defeats is that a growing and influential segment of society now sees fossil fuels as the past, not the future, and is making investment decisions accordingly. 

 But what should those investment decisions be? 

There’s long been a debate in climate-minded investment circles about whether divestment or engagement is the best course for seeking change. In other words: Is it better to withdraw money, and withdraw consent, or to use the money you are investing as leverage for influence? 

It’s an interesting discussion. Yet, as usual, it’s probably not a case of either/or—but rather which tool is right for which specific job. In fact, the recent defeats in courtrooms and at oil company AGMs could be argued to validate both approaches. 

On the one hand, Exxon’s board now looks significantly different from what it did just a few weeks ago, and it does so because investors demanded that the company change. On the other hand, it’s hard to imagine those investors demanding change without the reputational and financial pressures of other entities withdrawing their money. 

Similarly, the defeat of Shell in Dutch courts may not have been directly caused by the divestment movement, but divestment has played a role in vilifying and isolating oil majors, shifting public opinion as a result. And public opinion can and does influence legal decisions. (Judges are members of the public after all.)

In many ways, this comes back to the idea of the importance of finding your niche. It’s hard to envision a scenario in which investor-owned oil companies—or NOCs—are eliminated overnight. So it makes sense for some parts of the climate movement to engage with them, influence them, and seek to shift their resources from the production of destructive fossil fuels to a more diverse and cleaner set of technologies. Yet it’s basically impossible to create a world where oil companies continue to drill for oil for decades to come, and we also successfully manage to slow the climate crisis.
And so we each play our part. Some help to blunt fossil fuel objections to climate action, while others help to ensure that that dampening of objections is not used to water down regulation. Some help influence investments in renewables, while others fight to make sure these investments aren’t used to distract us from the need to keep them in the ground. 

And this leads us back to Alter’s thoughts on NOCs too. Sure, neither divestment nor investment is going to—by itself—bring about change. But they can and do help change broader dynamics on the demand side too.

As my friend, activist Meg Ruttan Walker, pointed out on Twitter recently, divestment doesn’t ever happen in isolation. Instead, it’s one part of a broader conversation about how and if we want to interact with the monsters that are killing us: 

I am, by nature, a fence sitter. I equivocate. I "both sides" of things. And I can be really uncomfortable with conflict. And that’s not at all always a good thing. But in this instance, for once, I’m fairly confident in saying that each little dent in the idea of oil and gas as the shiny promise of the future helps to shift the paradigm and move things forward. 

We need a diverse array of tactics. And a diverse set of actors. 

Luckily, that’s exactly what we have.