environmentally sound insurance
Investing Responsibly
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.
Taking action against climate change
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 significant economic loss, divestment effectively turns climate change into a mandatory issue for business leaders. Fossil fuel assets now potentially represent what arebecame known as stranded assets, these are assets that society agrees and accepts cannot ever be used due to the damage that would follow their use.
