Is the tide turning on fossil fuel divestment? Climate Week featured promises, by some big mainstream investors, to start divesting from fossil fuels. Notable announcements included the Rockefeller Brothers Fund, which was built on the Standard Oil fortune. Europe has more than nine fossil fuel divestment campaigns underway. And now Bank of England governor, Mark Carney, has called for investors to report the long-term environmental impacts of their decisions along with their financial results. He warned that fossil fuel companies cannot burn all the reserves on their existing books if the world is to avoid catastrophic climate change.
Unburnable fossil fuels
According to news reports, Carney told a World Bank seminar on integrated reporting that the “vast majority of reserves are unburnable” if global temperature rises are to be limited to below 2C. The seminar was held during the World Bank’s annual informal climate ministerial on carbon pricing, which for the first time was also attended by representatives from the corporate community. Unburnable reserves would have little value, suggesting that many fossil fuel investments may be over-valued at current market prices. Meanwhile, the World Bank is leading an initiative with 73 national governments, 11 regional governments, and more than 1,000 businesses and investors to build support for a global price on carbon emissions. A world wide price on carbon would also be expected to affected the market price of fossil fuel companies.
Fossil fuel divestment spreading
According to a September report from Arabella Advisors, 181 institutions and local governments and 656 individuals representing over $50 billion dollars have already pledged fossil fuel divestment. The Rockefeller Brothers Fund’s immediate focus is reported to be on limiting its exposure to coal and tar sands, with the goal to reduce these investments to less than one percent of the total portfolio by the end of 2014.