At this time last year, building on the momentum generated by Climate Week and the New York People’s Climate March, divestment advocates made an ambitious announcement: a plan to triple the $50 billion in assets individuals and organizations had pledged to divest from fossil fuels by the time of the 2015 Paris UN climate negotiations.

That was an ambitious plan.

But in the year since, according to a new report from Arabella Advisors, the divestment movement exploded in scope and scale increasing fifty-fold, bringing the total combined assets of those divesting to an incredible $2.6 trillion.

It’s safe to say that no one, not even the most optimistic divestment dreamers, could have anticipated this outcome.

So what’s behind the global momentum for divestment?

Climate Change Means Financial Risk

This exponential growth has, in part, to do with the increasing awareness that climate change means financial insecurity.

The risk to investment comes mostly in the form of what are called stranded assets: those fossil fuel reserves that will not be exploited due to efforts to limit climate change.

As Arabella Advisors notes in its new report, concerns about stranded assets and the devaluation of fossil fuels in a carbon constrained world, has been a focus of powerful financial institutions such as Citigroup, HSBC, Mercer, the International Energy Agency, the Bank of England as well as the respected Carbon Tracker Initiative which pioneered analysis on “unburnable carbon.”

HSBC warned investors the movement of investment dollars to the clean energy sector could mean fossil fuel companies will be worth much less in the future.

It turns out investors are realizing that divestment doesn’t mean financial losses. Thanks in part to plummeting global oil prices and the booming clean energy economy, divested portfolios have been outperforming those with investments in fossil fuels.

Climate change also increases the risk to investments by destabilizing the climate, meaning more extreme weather bringing storms or wildfires that, in turn, flood cities or destroy homes. Many international insurance groups have also warned that climate change threatens the value we hold in all kinds of assets.

A large 'carbon bubble' on Wall Street during the 2014 Flood Wall Street event. Photo: Zack Embree.

Divestment Movement Full of Unusual Suspects

If you think divestment is for dogged climate activists, think again.

What the explosion of the divestment movement shows is, far from attracting a small group of political lefties, divestment has been taken very seriously by pension funds and private companies.

At this time last year, Arabella notes the divestment movement relied on the support of NGOs, foundations, student-led movements on university campuses, and other “mission-driven organizations” like climate advocacy groups.

Now, amazingly, over 95 per cent of the assets committed to divestment are held by large pension funds and private-sector businesses like insurance companies.

But that doesn’t mean those original divestment groups aren’t still growing the movement.

In June 2015 Pope Francis released his encyclical, making a strong moral argument for climate action. Faith organizations represent $24 billion in divestment assets.

Universities are also steadily joining the divestment movement. In the last year university divestments have tripled and major institutions, like the University of California, which holds a $98 billion portfolio, are joining on.

In addition, local governments and public pensions are also building the divestment movement. For example, earlier this month the California General Assembly voted to divest its $476 billion public employee pension fund from companies generating 50 per cent or more of their revenue from the coal industry.

Finally, major foundations from around the world are also divesting, recognizing redirecting their investments can be used as a powerful tool for achieving their organization’s mission. So far, Arabella reports 116 foundations have pledged to divest a shared $10 billion in assets.

Global Divestment Movement. Image: Arabelle Advisors.

Divestment Has Gone Global

Divestment is no longer a U.S. preoccupation.

In 2014, 78 per cent of divesting institutions were based in the U.S., according to Arabella. Today only 57 per cent of these institutions are based in the U.S. with divestment hot-spots popping up all over the globe.

Notably Canada is second after the U.S. as a leader in divestment.

Altogether, the estimated 436 groups supporting divestment represent more than 646 million individuals worldwide.

Signage from the 2014 Flood Wall Street event. Photo: Zack Embree.

Clean Energy is All the Rage

Divestment doesn’t just mean pulling your investments from fossil fuel holdings — it also means redirecting investment dollars to alternatives like clean energy, green tech and climate solutions.

In 2014, investment in clean energy skyrocketed to $310 billion globally.

That number is expected to continue growing with an estimated $785 billion in divested assets being pledged to finding climate solutions.

Bill Gates personally pledged to invest $2 billion in renewable technologies, saying “in addition to mitigating climate change, affordable clean energy will help fight poverty.”

Although companies like the coal monolith Peabody Energy argue fossil fuels are necessary to bring electricity and opportunity to developing nations, the divestment movement is working to bring clean and renewable energy directly to these places in a move that skips right over highly-polluting energy sources (this is known as leapfrogging).

And this makes a lot of sense, given renewable energy is now cost-competitive with fossil fuels and much more popular. Renewable energy is seen as the most effective way to both reduce and alleviate poverty in many countries while simultaneously working to cool the climate.

Arabella concludes that the divestment movement shows political leaders that the world is more ready for meaningful climate action than perhaps previously realized.

In December nations will meet in Paris to sign a global climate agreement. The Arabella report shows that leaders have the political cover needed to take bold steps at this important meeting.

But also, perhaps most significantly, the report shows that despite what the top leaders of the world decide, the momentum behind the divestment and climate movement is likely to continue on regardless. 

All photos by Zack Embree.

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In less than a decade, climate change-induced sea level rise could force thousands of people to migrate from some small island developing states (SIDS), according to the executive director of the United Nations Environment Program.

The world’s 52 small island developing states (SIDS) increasingly share sea level rise and other escalating environmental threats that are further aggravated by economic insecurities, Achim Steiner added.

“What makes this situation even more grievous is that the climate change threats facing many SIDS are by-and-large not of their own making,” Steiner wrote in The Guardian. “Their total combined annual carbon dioxide output, although rising, accounts for less than 1% of global emissions.”

In his commentary, published in advance of this week’s third international conference on Small Island Developing States in Samoa, Steiner said small island states are suffering disproportionately from acts of environmental negligence of which humankind is collectively guilty.

“Larger economies, until recently, have managed better than small ones to mask the impacts of exhausting their natural capital and contributing heavily to greenhouse gas emissions, but the consequences of this neglect are catching up with them too,” he said.

Steiner said that recent Intergovernmental Panel on Climate Change estimates indicate that if average global temperatures increase by approximately 4 C, sea levels could rise as much as one metre by 2100.

That scenario, he added, “would see nations such as Kiribati, Maldives, Marshall Islands and Tuvalu become uninhabitable, while a large share of the population of many other SIDS could be displaced or otherwise.”

Addressing the conference, UN Secretary-General Ban Ki-moon said in a press release Monday that the world needs to listen to small islands as their issues have global consequences.

“I see small island developing states as a magnifying glass,” Ban said. “When we look through [their] lens, we see the vulnerabilities we all face. And by addressing the issues facing small island developing states we are developing the tools we need to promote sustainable development across the entire world.”

Ban added that the plight of small island developing states highlights the moral case for climate action. “By failing to act, we condemn the most vulnerable to unacceptable disruption to their lives.”

He also urged governments to commit to significant action at the Sept. 23 climate summit in New York.

“Small island developing states will have an important role. You can tell the largest emitters what action you expect from them. And you can show how you are working to build resilience and create the green economies of the future,” he said.

Samoan Prime Minister Tuilaepa Aiono Sailele Malielegaoi said global action is required to deal with sea level rise caused by climate change.

“Climate change is a global problem, yet international action to address it, remains grossly inadequate,” the Samoan prime minister said.

In addition to dealing with the ramifications of climate change, the conference is addressing environmental degradation and access to energy.

Photo: Easa Shamih via Flickr

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Aggressively tackling global warming through better public transportation and increased energy efficiencies could increase global GDP by between $1.8 trillion and $2.6 trillion annually, a new report has found.

Released on Monday, the report by the World Bank and the ClimateWorks Foundation said tackling global warming now would also save as many as 94,000 lives a year from pollution-related diseases and reduce crop losses.

The report — Climate-Smart Development: Adding Up the Benefits of Actions that Help Build Prosperity, End Poverty and Combat Climate Change — shows the potential gains from scaling up pro-climate policies.

“The report’s findings show clearly that the right policy choices can deliver significant benefits to lives, jobs, crops, energy, and GDP — as well as emissions reductions to combat climate change,” World Bank President Jim Yong Kim said.

Written in advance of UN Secretary-General Ban Ki-moon’s Climate Summit in New York in September, the report looks at benefits that ambitious climate mitigation policies can generate across the transportation, industry and building sectors, as well as in waste and cooking fuels. It focuses on Brazil, China, India, Mexico, the United States and the European Union.

By 2030, the report said, pro-climate government policies on clean transport and improved energy efficiency in factories, buildings and appliances could increase global GDP growth by an estimated $1.8 trillion to $2.6 trillion a year.                                                                  

Those policies could prevent the production of greenhouse gas emissions roughly equivalent to taking two billion cars off the road, the report said, while accounting for 30 per cent of the total emissions reduction needed in 2030 to limit global warming to two degrees Celsius.

“This report shows that well-designed climate mitigation efforts can result in important economic and social benefits, and provides a frameworks for assessing those benefits,” ClimateWorks Foundation president Charlotte Pera said.

Meanwhile, another major study published Tuesday showed that the U.S. economy already faces multiple and significant risks from climate change.

The study — Risky Business: The Economic Risks of Climate Change to the United States — said it's clear that staying on the current business-as-usual path will only increase the nation’s exposure to climate-change-related risks.

“The U.S. climate is paying the price today for business decisions made many years ago, especially through increased coastal storm damage and more extreme heat in parts of the country,” the study said.

“Every year that goes by without a comprehensive public and private sector response to climate change is a year that locks in future climate events that will have a far more devastating effect on our local, regional and national economies.”

Former New York mayor Michael Bloomberg, former U.S. Secretary of the Treasury Hank Paulson and Tom Steyer, retired founder of Farallon Capital Management, co-chaired the Risky Business project.

“Damages from storms, flooding and heat waves are already costing local economies billions of dollars — we saw that firsthand in New York City with Hurricane Sandy,” Bloomberg said in a statement. “With the oceans rising and the climate changing, the Risky Business report details the costs of inaction in ways that are easy to understand in dollars and cents — and impossible to ignore.”

Concurring, Paulson said the U.S. economy is vulnerable to an overwhelming number of risks from climate change.

“If we act immediately, we can still avoid most of the worst impacts of climate change and significantly reduce the odds of catastrophic outcomes — but the investments we’re making today will determine our economic future,” Paulson said.

Steyer said climate change is nature’s way of charging the nation compound interest for doing the wrong thing.

“The longer we wait to address the growing risks of climate change, the more it will cost us all. From a business perspective, given the many benefits of early action, it would be silly to allow these risks to accumulate to the point where we can no longer manage them,” he said.

Looking at climate impacts from now to 2100, the study notes that carbon dioxide and other greenhouse gases can stay in the atmosphere for hundreds or even thousands of years, leading to higher temperatures, higher sea levels and shifts in global weather patterns.

“By not acting to lower greenhouse gas emissions today, decision-makers put in place processes that increase overall risks tomorrow, and each year those decision-makers fail to act serves to broaden and deepen those risks,” the study warned.

Photo by kaffeeeinstein

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