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.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

This is a guest post by Andrew Gage, Staff Counsel and head of the Climate Change program at West Coast Environmental Law, and Michael Byers, the Canada Research Chair in Global Politics and International Law at the University of British Columbia. This article originally appeared in the Globe and Mail.

Climate change is no longer a distant threat. Peer-reviewed science has already linked climate change to drought in Texas and Australia, extreme heat in Europe, Russia, Japan, and Korea, and storm-surge flooding during Hurricane Sandy and Typhoon Haiyan.

Climate change is already causing about $600-billion in damages annually. Here in Canada, the National Roundtable on the Environment and the Economy estimated that climate change will cost Canadians $5-billion annually by 2020.

Canadian oil and gas companies could soon find themselves on the hook for at least part of the damage. For as climate change costs increase, a global debate has begun about who should pay.

Nobel Peace Prize laureate Desmond Tutu recently called on global leaders to hold those responsible for climate damages accountable. “Just 90 corporations – the so-called carbon majors – are responsible for 63 per cent of CO2 emissions since the industrial revolution,” Tutu said. “It is time to change the profit incentive by demanding legal liability for unsustainable environmental practices.”

So far, the fossil fuel industry has successfully opposed litigation for climate damages, brought in the United States by victims of hurricanes and sea level rise. But new areas of litigation often fail at first; in the 1980s, tobacco companies were still boasting that they “have never lost a case to a consumer, have never settled, and do not expect that picture to change.” As the tobacco industry learned, changes to the interpretation and application of laws sometimes occur quite rapidly.

Nor is litigation in the U.S. or Canada the only thing the fossil fuel industry should worry about. It is becoming increasingly likely that companies could be sued by victims of climate change overseas, in countries with quite different legal systems. There, they might face lawsuits based on constitutional rights to a healthy environment, strict liability for environmental harm, or any number of other legal principles that don’t currently exist in Canadian law.

Once a foreign court has ordered a Canadian company to pay for climate damages, that order is a debt – which Canadian courts can be asked to enforce. Chevron is currently fighting court actions in Canada, the United States and Brazil that seek to enforce a $9.5-billion award handed down by the supreme court of Ecuador – for pollution caused by oil spills.

Moreover, new laws could be introduced to facilitate climate litigation. When Canadian provinces encountered impediments to their ability to sue tobacco companies for public health costs, they eliminated those impediments by passing new laws. It’s not hard to imagine countries impacted by climate change enacting new laws to clarify the liability of greenhouse gas producers.

Five companies traded on the Toronto Stock Exchange are among the “carbon majors” – Encana, Suncor, Canadian Natural Resources, Talisman, and Husky currently are collectively responsible for about $2.4-billion a year of global climate damages.

Canadians are broadly supportive of the “polluter pays” principle – the idea that those who cause pollution should pay for the harm. But because climate change has seemed far off, there has been relatively little discussion about who should pay. It has been assumed – by industry, politicians, even some environmental activists – that oil and gas companies can continue producing with impunity, at least until a global climate agreement is reached.

But rising climate costs cannot be born only by taxpayers and by those who suffer the impacts of climate change. We believe that a new global awareness of the moral and legal responsibilities of the carbon majors will lead to a wave of climate litigation. Foreign lawsuits – with damage awards that are potentially enforceable in Canada – will be difficult and expensive to defend.

Image Credit: Zack Embree

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Although the heads of 125 states are gathering at UN Headquarters in New York today to discuss global commitments to reducing greenhouse gas emissions that cause climate change, Stephen Harper will be elsewhere.

Instead Canada’s prime minister will arrive in New York in two days time to attend the UN’s Every Woman, Every Child event on September 25th.

The UN Climate Summit is intended to “galvanize and catalyze climate action” in advance of the Paris COP climate talks in 2015 where countries will form binding agreements to address global warming.

President Barack Obama will announce a new executive order today that directs all federal agencies to include climate concerns in international aid and development initiatives.

China’s president Xi Jinping, India’s prime minister Narendra Modi and Australian prime minister Tony Abbott have also announced they will not attend the summit.

China announced vice premier Zhang Gaoli will attend in the president’s place and Canada will send environment minister Leona Aglukkaq in Harper’s stead.

China is the number one emitter of greenhouse gas emissions, followed by the U.S. and India. Canada and Australia are eighth and fourteenth, respectively, according to data released by the European Commission.

In the lead up to the summit UN Secretary General Ban Ki-moon said “this is the time for decisive global action.”

“I have been pleased to see climate change rise on the political agenda and in the consciousness of people worldwide,” he said. “But I remain alarmed that governments and businesses have still failed to act at the pace and scale needed.”

UN climate chief Christiana Figueres said the absence of a few world leaders will not affect the credibility or outcomes of the summit.

“This is not something that will stop on September 24,” Figueres said, adding, “rather what is important is the strength of commitments and action of all governments moving forward up and until we deliver a new universal agreement in Paris.”

On Sunday an estimated 400,000 people participated in what is being heralded as the largest climate march in history. Support for the People’s Climate March came from across many sectors of society, showing a growing climate concern from religious, youth, business and investment groups.

Figueres said that growing involvement in cross-sector climate action is also represented in climate summit participants.

“The inclusion of business at the summit and over the past few years is frankly a recognition that climate change is not a one person or one sector issue,” she said.

“It cannot be solved by one country, one sector or one level of government. Climate is an every-person issue, and it requires everyone to work collaboratively in order to reach the solutions to the level and at the speed we need to find.”

Recently prime ministers Harper and Abbott hosted a press conference in Canada where they criticized government actions to make polluters pay for carbon emissions.

At the press gathering Harper said, “No country is going to undertake actions on climate change, no matter what they say, no country is going to [take] actions that are going to deliberately destroy jobs and growth in their country. We are just a little more frank about that, but that is the approach that every country is seeking.”

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As a Canadian and a celebrated actress known for her roles in Lost and The Hobbit, Evangeline Lilly has a lot to contribute to current conversations about Canada, the country’s international reputation, and recent criticism leveled against the Harper government for its failure to meaningfully address climate change.

Critics expressed concern when Stephen Harper announced he would not be attending the U.N. Climate Summit in New York City, beginning tomorrow, even though world leaders are gathering to discuss international commitments to reducing greenhouse gas emissions worldwide in preparation for U.N. climate talks taking place in Paris in 2015.

Lilly said Canadians deserve to know their country is represented in the global movement to reduce emissions and limit climate impacts.

“I’m here in New York City at the People’s Climate March and I feel that I’m here as a representative of all those Canadians who care about their natural wilderness and care so much about global warming, and who don’t have a government representative here to represent them on a worldwide stage.”

“Of course, Mr. Harper has decided to avoid the event and he’s not here to make any commitments on behalf of Canada to do our part in making the world a greener, safer, healthier, more beautiful place. But I know at the heart of Canada is a massive groundswell of people who care so much about this issue.”

“And I stand here as a Canadian saying: as Canadians we care, and we’re here and we’re represented.”

Lilly told a massive crowd gathered on the street that she wants to lend her celebrity to support the individuals within the movement: “I’m showing my face in support of all of you people who are gathered here.”

Addressing the crowd at the march, Lilly said being a part of the environmental movement is about celebrating.

“One of the things I love the most about being part of an environmental movement is that a lot of us in this group are really angry, we’re really mad about a lot of the things we see going on in the world, a lot of the injustices and a lot of the horrible abuses of our natural world. And yet somehow we always manage to show up with smiles on our faces and love in our hearts.”

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“I think it’s because we remember at the core of all of this what we’re really doing is we’re celebrating the beauty of mother nature, we’re celebrating life on planet earth,” she said.

“We say, let’s do it right, let’s be positive, let’s focus on the future, let’s focus on our children, let’s focus on clean energy.”

Lilly said she was recently asked by a journalist what she hopes to accomplish by attending the march.

Lilly said “with conviction, I was able to look him in the eye and say I’m actually not here for the people who are listening or who aren’t listening. I’m not worrying about whether my action is the most powerful action in the world that will change the course of history. What I’m worrying about is looking my son in the eye when he’s 15 and saying, ‘I did what I was convicted to do. I did everything I knew how to do in that moment.’”

Lilly ended by encouraging march attendants to get involved with the organizations behind the event.

“And don’t forget to smile, and dance and kick up your feet,” she said. “Don’t forget to love mother nature through your joy, because I think she’s joyful right back at us today.”

Image Credit: Carol Linnitt

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