About 5 years ago, a small group of smart and bold folks in Vermont put their heads together to launch an ambitious student-driven people’s campaign in response to climate change, taking a fundamentally financial approach. I wasn’t one of those people (hats off to the 350.org founders) but at some point in 2013, I began to better understand phrases like “financed emissions” and “climate finance” and the relationships between big banks and the fossil fuel industries.
Since then, a significant body of follow-the-money-trail research and work has happened, the fruits of which include recognition of pressure points that people (and the institutions they comprise) can access via their direct and indirect fossil fuel investments, and relative agreement around a specific grouping of companies from which they could start to divest.
An expanding and amorphous fossil fuel divestment movement needed something concrete to work with at the move-your-money implementation level; that thing became the top 200 coal, oil and gas companies as ranked by their carbon reserves (DivestInvest Pledge benchmark criteria). Thank you Carbon Tracker Initiative, thank you Fossil Free Indexes.
Along the way, phrases like “portfolio decarbonization”, “low carbon investing” and “fossil free investing” became useful (though imperfect) in movement dialectic, investment planning, and the design and marketing of a range of financial products and services. There are now more investment options for carbon-conscious investors than ever before, from the mouths of activists and asset owners to the strategies and stock selections of advisors and asset managers.
There has been a rapid and logical evolution to the fossil fuel divestment movement, which – as a primarily social movement tied up with political, economic and financial discourse – changes as we collectively talk about, reflect on and maximize its utility. Some investors and investment professionals have done better than others at keeping up with the urgency of the issue and the pace of change.
We are currently amidst a movement evolution worth pausing to notice, as divestment now also refers to shifting capital out of big banks that finance a continued global dependence on fossil fuels. Large banks finance fossil fuel companies and their infrastructure projects in various ways including but not limited to buying shares, providing loans, and extending lines of credit. Add this to the list of complaints about Wall St. banks.
While big banks are not among the benchmark 200 coal, oil and gas companies that many movement advocates and adherents have focused on, they nevertheless play a key role in energy landscapes and are being held accountable by shareholders, consumers and other investors in various ways.
Any sector that provides billions of dollars in fossil fuel infrastructure financing year after year, despite a deepening climate crisis, is vulnerable to criticism and waning interest from carbon-conscious investors and consumers. Large insurance companies, for example, can expect increasing pressure for their role in extending the life of our fossil-fueled past.
As people and institutions seek to invest and bank in alignment with their values, many want to better understand why and how energy finance decisions are made in relation to climate risk and cleaner opportunities so that they can make more informed choices about where they put their money. Ongoing global attention to the injustices of the Dakota Access and other tar sands pipelines demonstrates that when these financial relationships are exposed, shareholders, consumers and other investors are ready to demand and take action.
At this stage, untangling your personal or institutional finances completely from any and all fossil fuel-related investments is complicated. As typically behind-the-scenes financial relationships become more transparent, we may decide to close accounts at certain banks, and we may learn that other investments keep us in financial relationship to those very banks. It’s not a reason to panic or give up; it’s a reason to become more actively engaged with the movement.
For example, investment funds or strategies marketed as low carbon or fossil free may hold or overlook one or more “pipeline banks”, or another company heavily reliant on fossil fuels but not excluded via a predetermined fossil fuels screen. Remember that you have more options than 1. doing nothing or 2. immediately pulling those investments. Discuss it with a few people you trust, ask questions, do some research, send an email, call a representative, track public or client communications addressing the issue, etc. It’s important to find a balance between being patient and pushing for more action — neither of which will look the same in all cases. This is a key part of what makes the movement dynamic and social.
As what is meant by fossil fuel divestment and related calls to action shifts, we should trust investment leaders that have demonstrated trustworthiness to execute due diligence and remain responsive. And as we collectively layer in complementary strategies to shift bank behavior around energy financing, do not underestimate the power in focusing on personal banking action. It’s a realm you have direct control over, an action that benefits you and others, and there are various tools out there to help you learn how to bank in alignment with your values.
Director, DivestInvest Individual
A seasoned grassroots leader, Vanessa has directed the campaign engaging individual investors in the global DivestInvest movement since June 2014. She has played lead roles with Clean Water Action, the National Diesel Clean-Up Campaign, the Campaign for Safe Cosmetics, the Boston Cyclists Union, and Rainforest Action Network. She holds dual Masters degrees in Social & Political Ethics from Utrecht University and the Norwegian School of Science and Technology. Since December 2016, she has been coordinating efforts across 45+ organizations in the US and Europe, focusing consumer and investor pressure on banks that finance fossil fuels and other industries destructive to people and communities.