The word “divestment” might sound familiar, popping up in your newspaper as you’re having your morning coffee. But what does it really mean and why has it suddenly become so popular?
Divestment is essentially the opposite of investment; it means to sell off assets or subsidiaries.
The goal of fossil fuel divestment is to reduce carbon emissions (yes, the stuff that causes climate change) by placing an emphasis on the renewable energy transition instead. If you haven’t already heard, Canada has just launched a HUGE green energy infrastructure project called the ‘Smart Renewables and Electrification Pathways Program’ (SREPs). It will provide up to $1.5 billion over eight years for smart renewable energy and electrical grid modernization projects! Read more about it here.
Divestment usually involves putting public pressure on companies or organisations to stop investing in assets that are directly or indirectly connected to fossil fuel extraction. Universities, religious organizations, pension funds, and other institutions have been putting billions into these fossil fuel investments to generate income and this has allowed these fossil fuel companies operate.
The harms of fossil fuel extraction might seem like a far stretch and irrelevant to you. But think about the constant combustion leading to the worsening of climate change, to a worsening of your future retirement.
The divestment space is constantly evolving but here is a short and sweet overview of what is happening right now:
Many universities and organizations have made commitments to divest from fossil fuel investments. Did you know that Glasgow University was the first in Europe to do so in 2014! Since then, fossil fuel divestment campaigns have emerged on campuses with students putting pressure on their administrations to turn endowment investments in the fossil fuel industry into investments in clean energy and communities. In October 2021, a total of 1,485 institutions representing $39.2 trillion in assets worldwide had begun or committed to divestment from fossil fuels. 39 trillion is FIVE THOUSAND TIMES larger than our world population!
If you were curious about the type of institutions that are divesting – you can see that faith-based organizations are taking the lead at 35.2%.
You’ll be relieved to know that our local university – the University of Toronto – announced that it would divest its $4 billion endowment from fossil fuel investments alongside its commitment to net zero carbon emissions by 2050. Significant momentum has been created in the divestment space as individuals are realizing the power of their money to help fight climate change.
Now enough about universities… what’s happening in the medical space? The Canadian Medical Association (CMA) is a voluntary association that consists of 70,000 physicians and physicians in training. CMA announced that it would “divest its reserves of investments in energy companies whose primary business relies upon fossil fuels.” With its primary mandate to advocate on national health matters and drive positive changes in health care, it is living the values of the medical oath to do no harm. Other organizations around the world have also announced full divestment such as the American Public Health Association, British Medical Association, and World Medical Association.
Yes we know you don’t have quite as much money as a University… but have you thought about what your pension fund is investing in and the impact it makes?
While the divestment movement alone may not solve the climate crisis, divestment must be considered within the broader ecosystem of climate action. Ultimately, finance, policy, and public discourse are all areas that are impacted as a result of fossil fuel divestment.
If you’re interested in learning more about fossil fuel divestment read more here or if you’d like to see a comprehensive database of commitments made by institutions globally, click here. Let’s invest in a future we would actually enjoy.
UPDATE 2023-01-18: 2022 Canadian Pension Climate Report Card
Article by Kate Fan, Sustainability Coordinator