What is divestment?

stock trading data graphy on screenDivestment defined, our brief guide to the climate change concept that focuses more on financial risk than ethics – its a game changer.

The fossil fuel divestment movement is gaining momentum across the world.  The movement shines a light on the need for institutions and individuals to consider whether they are investing responsibly. Critically, it applies the logic of economics and financial risk, to challenge the strategy of holding assets in resources that mankind simply cannot afford to burn.

Divestment is the opposite of investment and involves stopping the purchase of any new investments in unsustainable or unethical industries, together with the selling off any such investments that already exist. It prompts responsible investment, which seeks both financial and sustainable value.
The known reserves of fossil fuels represent five times the amount of carbon that can be used to stay within the 2°C global temperature limit, set by the Paris Agreement. This means that the value of these assets is potentially greatly over valued and ethics aside, represents a serious financial risk to invest in. Divestment effectively highlights the fact that climate agreements will increasingly turn a large percentage of all fossil fuel reserves into liabilities at some point in the future.

Taking action against climate change, until now, has been viewed as a kind of discretionary ethical and social concern. By creating a clear and direct link between climate change and economic loss, divestment effectively makes climate change a mandatory issue. Fossil fuel assets now potentially represent what are becoming known as stranded assets.

Organisations like Fossil Free UK and 350.org are making great strides in promoting divestment within large institutions such as county and city councils, universities and health organisations. Ethical consumer magazine can also assist when it comes to divesting your personal situation with their guidance on Personal Carbon Divestment. Check out their YouTube video.

To date most of the divestment activity is focused on the financial sectors such as banking and pension funds plus large institutions such as city councils and universities.  The Naturesave Campaign for Insurance Divestment is very specifically targeted at one of the biggest fossil fuel investors in the world – the Insurance Industry.

By harnessing the power of those who choose to insure with us, Naturesave aim to demonstrate the demand for environmentally sound insurance and use that to lobby for divestment from within the industry.

Green insurance doesn’t have to cost the earth

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