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Divesting for the future
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Divesting for the future
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Divesting for the future
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Articles
1 October 2017

Divesting for the future

The divestment movement is only getting bigger. Here’s why you should get on board.

Written by Simon Sheikh

Behind extraordinary ideas, there are extraordinary people. Dumbo Feather is a magazine about these people.

There’s a movement rapidly gaining momentum through Australia—through the world. In fact, according to an Oxford University study, it’s the fastest growing boycott-based movement in the history of social movements.

Divestment.

Divestment (the opposite of investment) is a movement calling on institutions and individuals around the world to move their money away from the fossil fuel industry. It goes hand in hand with re-investment—re-investing in the industries that will power our future.

Institutions like the Rockefeller Brothers Fund, which once made all their money from selling oil, have divested their $860 million portfolio from fossil fuel companies. Globally, 749 institutions and over 58,000 individuals have done the same.

Australians, in particular, are world-leaders. We’re divesting in droves by switching to fossil fuel banks and super funds. Perhaps knowing that we are also world-leading emitters per capita has increased our hunger to support genuine climate solutions.

The motivation to divest comes down to two things. First of all there is the moral reason. The coal industry is building mega-ports along the Great Barrier Reef. The gas industry is spoiling Australia’s prime agricultural land. And all the while, they are polluting our atmosphere and fuelling dangerous climate change. The moral reason is simple. If we believe it’s wrong for these companies to harm the planet, then it must be wrong to invest in these companies and profit from that wreckage.

Second is the financial case. The world has agreed that we need to limit global temperature increase to two-degrees. With the Paris Agreement, virtually every major economy on earth has committed to curb their emissions. The movement to a low-carbon economy presents many opportunities, but also risks. Just this year the finance industry watchdog, APRA, warned that the physical and transition risks from climate change could threaten the entire financial system.

Here’s why.

The fossil fuel industry owns 2,795 gigatonnes of carbon in reserves, ready to extract. But for the world to stay under two degrees, we can only ever burn 565 gigatonnes of carbon. Anything beyond that will tip us over the edge. That means 80 percent of those reserves must never been burned for the world to stay under the limit. And yet the share price of these companies is based on them burning all of it.

As the world continues to take action on climate change, economists are predicting that there will be a moment when investors realise the fossil fuel industry won’t be able to burn all of their reserves—and therefore their share prices may be overvalued. This risk has been dubbed the “carbon bubble.”

In Australia, divesting our superannuation is particularly important. For many of us, it’s the biggest lump sum of money we control. And no prize for guessing what industry the typical super fund invests in. Future Super is the first superannuation fund in Australia that has completely divested, which means we screen out companies that have material exposure to the fossil fuel industry—companies that extract, transport, burn or finance fossil fuels.

The divestment movement is only getting bigger. It’s exciting. And it’s easy to take the first step. If you are interested, learn more at www.myfuturesuper.com.au.

Simon Sheikh

Simon Sheikh is the former national director of GetUp! and one of the co-founders of Future Super.

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