New research on the financial impacts of fossil fuel divestment

Our partners in 350 have shared some recent research on the financial impacts of fossil fuel divestment with us (thesis PDF,thesis summary PPT). This research was undertaken by Alison Shulz of the University of Kassel, Germany. It should be noted that the primary focus of the divestment-reinvestment campaign is on social impacts: discrediting the fossil fuel industry to remove their social license to operate. So financial impacts, where they exist, are in a sense a bonus. Here are some of the headline conclusions of the paper:

– The direct, short-term impact of divestment (if any)…

• Theoretically, a direct effect of divestment should result from limited risk sharing (Merton) and the fact that assets can only be sold at a discount (Miller)

• Empirically, announcement to divest from a specific company has no effect on this specific company’s stock price

• This effect is however present for coal firms which mainly operate in markets of the Global North

• Divestment announcements are found to have a negative impact on stock prices of the whole fossil fuel sector

• This effect is even more pronounced for financially motivated divestment and large divested sums

The long-term impact is still unclear.

It should be noted that this is an under-researched area. It’s our impression that this research does not include the likely additional positive impacts of capital which is diverted from fossil fuels directly into renewable energy or other ethical investments.

Fossil Free UCT campaign submits testimony on divestment to the UCT Institutional Reconciliation and Transformation Commission

The aims of the UCT Institutional Reconciliation and Transformation Commission (IRTC) include making ‘recommendations on institutional culture, transformation, decolonisation, discrimination, identity, disability and any other matters that the university community has raised over the past 18 months, or may wish to raise in the future.’

In the light of this mandate of the IRTC, we offer a submission from the Fossil Free UCT campaign (which includes the Green Campus Initiative and Climate Action Project, supported by Fossil Free SA) arguing that the University of Cape Town needs to move quickly to ethical and responsible management of its investments. In particular, in the light of the massive human rights crisis posed by climate change, UCT must immediately adopt bold targets for ending its investments in fossil fuel companies.

Summary of recommendations

We note that UCT is to be commended for being the first African university to adopt a responsible investment policy, but that the university can and should act more whole-heartedly. UCT should become a pro-active and visionary leader on issues of ethical and responsible investment. It must take specific, urgent measures (outlined below in our recommendations) to end its tacit support of fossil fuel corporations, and initiate divestment from fossil fuels. It should also address other ethically questionable investments, such as those in tobacco, while accelerating work to reduce on-campus environmental impacts.

Continued inaction, especially as the divestment movement grows in SA, threatens to leave UCT looking tardy and unresponsive given how long it has been aware of the issues.

The full document, including detailed recommendations for action, can be downloaded here (pdf): Submission to the UCT IRTC from the Fossil Free UCT campaign

 

Divest Fest – local climate action

 

Glen Tyler of 350:– The first Divest Fest in South Africa wasted little time in getting down to climate solutions. A group of 18 people came together in Cape Town to learn and take action for fossil fuel divestment. The organiser, David Le Page from Fossil Free South Africa (FFSA) set the scene and underlined the urgent need for action by giving an overview of the threat of climate change – unfortunately a relatively easy job in a city that is experiencing a crippling drought.

I then outlined some examples of global divestment campaigns and the strategies and tactics used in those, and the successes that came from those campaigns – did you know that New York recently divested $390 billion worth of its employees’ pension funds? We then got busy with the good stuff – talking about how we can move the divestment conversation in South Africa forward.

It was fantastic to hear about the steps that the people there had already taken – from asking their finance managers about divestment, to buying into investment houses in order to ask them to divest. There are very few real options for people in South Africa who are looking to divest from fossil fuels, two such options are a basket of shares on the Easy Equities platform, and a fund put together with WWF, although this is still not a fully divested fund. One step Fossil Free South Africa is taking to change this is their petition, asking asset managers to offer a divested fund. If you haven’t signed it already, please do!

At the event, the participants wrote a joint letter to Sygnia asset managers, explaining divestment and asking them to offer a divested fund. There is a sense that once one such fund is offered, other asset managers will follow. It was fantastic to see real action happening, with participants writing to asset managers and institutions in their own capacity on the day.

We heard more from FFSA management committee member Mellony Sparks about the divestment landscape in South Africa. Her presentation led to a number of interesting conversations around the mechanics of investing and divestment, green jobs and the social repercussions of divestment, as well as other environmental issues that we could take into account when talking about divestment.

FFSA outdid themselves by providing vegan pizzas and raw chocolate fudge for lunch. It was a fantastic event, and already there are plans for future ‘fests! We hope you’ll join us at one!

Feel like you missed out? FFSA has a range of easy actions you can take on their website – check them outOur thanks to Glen for this summary of our event, and we include some of the feedback from participants below:

“Very stimulating questions and conversation! Really enjoyed it”

“I really appreciated the space: Connecting like minded people A quieter space would’ve been more pleasant or maybe just microphones. The seating arrangement could have been made more interactive”

“I think the content is so informative, necessary and interesting but perhaps adding elements of entertainment and having it later in the day could coax more people into joining.”

“A good session. Less jargon”

“You encouraged me to take action and get moving to lobby”

“I found the introduction to the cause and what you guys are going awesome. The practical approach to further our own campaign was also very cool.”

“It was a well informed group of people, so possible to take the conversation to another and needed level of detail that will inform advocacy action. Really important and thanks to organisers and contributors. Might be good to develop a basic alternative investor’s guide for divestors because most people just leave this sort of decision making to their advisors.”

Announcing our first-ever Divest Fest (24 February, 9.30am at 75 Harrington St, Cape Town)

Desmond Tutu: People of conscience need to break their ties with corporations financing the injustice of climate change.

Welcome to 2018, and the slightly mad state of play in South Africa right now: Day Zero is rapidly approaching in Cape Town, while cities and institutions of the stature of New York and Lloyds of London (the world’s oldest insurance market) are divesting from fossil fuels – but South Africans still aren’t widely questioning why we allow companies like Sasol to continue pumping out enormous amounts of climate-breaking greenhouse gases without committing to science-based targets for reductions as genuinely responsible companies are doing.

So please save this date: On 24 February, Fossil Free SA, with 350 Africa, will be hosting our first Divest Fest, from 9.30am to 1.30pm, at 75 Harrington Street, Cape Town.

Click here to RSVP. Click here  to add to your calendar.

Divest Fest will be a morning of practical online climate and divestment action, with videos, mini-talks, brainstorming, and ample time to take practical action to push ahead fossil fuel divestment in South Africa (followed by lunch, possibly even with water!) More details to follow…

Bring your laptop or tablet, send us any suggestions you may have in advance, and let’s get stuck in demanding ethical, safe, low-carbon and divested investment funds.

And – if you haven’t already, please join the over-900 people who have already signed on to support our Amandla.mobi petition calling on top asset managers to create divested funds in South Africa.

Click here to RSVP. Click here  to add to your calendar.

Hope to see you soon!

David, Glen, Mellony, Ahmed, and the FFSA/350 Africa teams

Have your say on our energy future

1: Sign our Petition

Firstly, if you haven’t yet signed up to our Fossil Free SA petition calling for SA’s top asset managers to create fossil fuel free funds, please do so NOW.

Then, there are some key activities coming up in the next weeks for those who want to have their say in South Africa’s energy future, led by various coalitions, including the Campaign for a Just Energy Future, working to ensure that all South Africans have clean, safe, accessible and affordable energy.

2: Join public meetings and protests on Tuesday 21 November…

searle_1

07h00–08h30: Protest against nuclear on the Roodebloem Road, Woodstock bridge into City.

09h30–12h00: Join the public observers when the Parliamentary energy oversight committee quizzes our latest energy minister on his dodgy plans. (Bring your ID to get into Parliament.)

14h00–17h00: Civil society leaders dialogue (Heinrich Boell Foundation,

3: … and Wednesday 22 November:

07h00–08h30: Picket in front of Parliament

09h00–11h00: Gather outside St Georges Cathedral

11h00–13h00: Political party public platform at St Georges Cathedral

14h00–17h00: Energy Justice protest at Parliament

For more info and updates from this campaign, please check Facebook.com/JustEnergySA or Twitter.com/JustEnergySA. Or email Vainola Makan, vainola2 at gmail.com.

4. CPLO and Project 90 by 2030 discuss the Just Energy Transition

If you’re in Johannesburg on 28 November, you could join the Project 90 by 2030 Just Energy Transition Roundtable discussion on the topic of “Renewable Energy Jobs – The Reality and the Potential”. Please see this doc (pdf) for more details.

Divest Fest!

Our team is about to hit Rocking the Daisies, and this is what we’ll be asking festival-goers to do for the divestment cause –  here we list five quick ways you can take action right now to push South Africa towards a more safe and prosperous future and away from the deadly fossil fuels – coal, oil and gas – that threaten our climate, our health and our savings.

HOW MANY ACTIONS CAN YOU TICK OFF?

Five quick and easy divestment actions (1–2 minutes)

Please work your way through this list of fast, easy actions.

ACTION: SIGN PETITION: Sign our “We Are Ready to Divest!’ petition: For a safer climate and secure future, tell the biggest SA investment managers – Allan Gray, Coronation, Investec, Old Mutual, Stanlib and the Government Employees Pension Fund – to offer funds divested from coal, gas and oil.

 ACTION: SIGN PETITION: Are you a University of Cape Town student, staff member or alumnus? Sign our petition calling on UCT to divest.

ACTION: SIGN PETITION: Are you a Stellenbosch student, staff member or alumnus? Sign Fossil Free SU’s petition calling on SU to divest.

ACTION: GET NEWS UPDATES: Sign up for the Fossil Free South Africa newsletter to get news and updates on our progress in divesting South Africa and abroad.

FF-logo SA Smallest.jpg

ACTION: DONATE: Become a once-off donor via Snapscan or register as a repeat donor to Fossil Free SA. Even just R20/R50 helps out. (You can read more about our young organisation here.)

And three Tweets!

Tweet: @Investec We are Ready to #DivestNow! Give us fossil-free investments for a safer climate & secure future https://goo.gl/t942Nd

Tweet: @OldMutualSA We are Ready to #DivestNow! Give us fossil-free investments for a safer climate & secure future https://ctt.ec/Vcf4o+

Tweet: @Stanlib We are Ready to #DivestNow! Give us fossil-free investments for a safer climate & secure future https://ctt.ec/Vcf4o+

Keen for more? Click through to our full DIVEST FEST page.

Two new South African divestment commitments

We’re delighted to announce that another two South African institutions have committed to fossil fuel divestment.

Two Catholic organisations, the Archdiocese of Cape Town and Catholic Welfare and Development (CWD), have made these commitments as part of a larger coalition of 40 faith institutions on five continents.

As our partners 350.org note:

This is a big moment for both the global divestment movement and faith community, and we need to keep this momentum going strong. This commitment well and truly quadruples the one announced in May, when nine Catholic organizations divested. We need to celebrate it and also seize the opportunity to build upon this moment.

In the words of Domenico Sorrentino, the bishop of Assisi-Nocera Umbra-Gualdo Tadino:

“St. Francis (Pope Francis) encouraged us to live humbly, simply, and with true reverence for the Creator and Creation. Divesting from fossil fuels and making new investments in clean energy sources is our way of following St. Francis’s example.”

Pope Francis has prominently voiced his concerns about climate change and the fossil fuel industry. But while Vatican officials have acknowledged the call for fossil fuel divestment, the Vatican has not committed to divest its money from the industry that is destroying Creation — yet.

In the wake of this announcement, people from all over the world are uniting during the Season of Creation and urging the World Bank to stop financing fossil fuels and support for renewable energy instead. Please join and add your voice to the global call.

Now more than ever we need institutions to stand together on the right side of history against an immoral industry whose climate impacts we see and experience daily.

As we celebrate this inspiring show of moral leadership, let’s make sure the World Bank puts its mouth where its money is and stops funding the fossil fuel industry and climate disasters.

Another exciting dimension to this announcement is that no less than four African Catholic bodies are making divestment commitments: besides the South Africans, the St Patrick’s Missionary Society in Kenya and Sierra Leone Young Christian Student movement are, so far as we know, the first African institutions outside of South Africa to divest.

Further details