There’s a big push in some quarters at the minute for faith groups (and others) to divest investments from fossil fuel companies. It’s been going for a year or so, led or at least strongly encouraged by Bill McKibben and the 350.org campaign, and has now spread to Australia and the UK. Operation Noah’s Bright Now campaign, launched last September, is encouraging UK churches to do the same. So far the Quakers have signed up. The most recent figure to argue for this course of action is Christiana Figueres, the UN Climate Chief, both in a Guardian article and at an event at St Paul’s Cathedral I attended on Wednesday night.
There is a clear case in favour, made in Bill McKibben’s well-known Global Warming’s Terrifying New Math article of July 2012. On his figures, if we are to stay under a rise of 2 degrees C we can emit only 565 gigatons of CO2 into the atmosphere by the middle of the century. However, proven reserves of fossil fuels come to 2795 gigatons. To avoid dangerous climate change, most of this needs to stay where it is. (Although there is a fair degree of uncertainty over these figures, whatever they are, “most” still applies.) The companies that own these reserves, however, are assuming they can extract and sell them: they have no financial value otherwise. Moreover, they are continuing to invest vast amounts ($1.8 billion a day in total) in exploration, far more than they invest in renewable energy.
So the moral case is this: putting our investments into these companies is effectively funding runaway climate change: churches should put their money where their principles lie, remove them from fossil fuel companies and invest in (amongst other things) renewable energy instead.
However, many are not convinced. Peter Pereira Gray of the Wellcome Trust, who also spoke at the St Paul’s event explained his group’s reluctance: I understand the Church of England’s investors hold a similar view. Firstly, as shareholders they have an influence over what the companies do, and the ability to encourage them to shift more into renewables, which many are beginning to do. Secondly, by getting out of a major sector, they are constraining the returns they can get, and possibly damaging their ability to do good in other areas. Thirdly, is there that much of a moral difference between investing in a fossil fuel company and investing in a company whose business model depends on buying and using fossil fuels – and there are few that do not!
You can clearly argue with these principles. But it is instructive to step back and take a wider view. An interesting article by Christopher Hayes “The New Abolitionism” draws parallels between the divestment movement and the abolition of slavery in the USA. His central point is this: while there was a clear moral case for the abolition of slavery and increasing public support for it, there was an economic case against it. Freeing slaves would deprive thousands of Southern slaveholders of valuable property, and require a major transition in the economy which needed handling carefully.
Historically we know that much of the South ended up poor for decades, and many former slaves struggled economically, although much of this was due to the effects of the war, and it is debated how much better things could have been handled. We also know that in the build-up to the war, when it was clear that there was a shadow over slave-holding, those who supported it became more militant and belligerent and constructed new arguments in favour of it.
Hayes sees similar trends today. Fossil fuel companies know that if their reserves become written off and worthless, their value will drop considerably: Hayes estimates something like $10 trillion over the entire industry. They are fighting hard to stop this happening, but even if they weren’t, our still-fragile globalised economy with a network of investments would be hit hard if there was a sudden drop in value of this form. And, much of the funding for renewables that is coming out of the big energy companies is presumably dependent on the money coming from fossil fuels. We would like greater cross-investment but there is a risk of it stopping.
Now, this doesn’t mean we shouldn’t be calling for divestment: there is a moral case for it, just as there was for calling for the abolition of slavery but we need to be clear on the consequences. As Hayes writes:
In fact, the parallel I want to highlight is between the opponents of slavery and the opponents of fossil duels. Because the abolitionists were ultimately successful, it’s all too easy to lose sight of just how radical their demand was at the time: that some of the wealthiest people in the country would have to give up their wealth. That liquidation of private wealth is the only precedent for what today’s climate justice movement is rightly demanding: that trillions of dollars of fossil fuel stay in the ground. It is an audacious demand, and those making it should be clear-eyed about just what they’re asking.
A rider to this. It may become necessary for money to be paid to the fossil fuel companies for them to agree to abandon their assets. This happened when British-owned slaves were freed (the slaves themselves got nothing!), and there are modern parallels: at least one country has asked for foreign funding in return for leaving its rainforest alone. Something I heard at a talk by a descendent of William Wilberforce this week gave me pause for thought: one of the larger amounts paid in recompense went to the Church of England, and in particular the Bishop of Winchester. What would the current Church do in this scenario? Would it be prepared to give up its apparently ill-gotten gains, or give them to support adaptation work in some area of the world hit by climate change?