Jordi Albacete: How the divestment movement can battle global warming

Environmental journalist Jordi Albacete examines the current state of play on global climate action in the lead article of a special series from Cosmopolita Scotland - find out more about the Cosmopolita's work here

2016 WAS a decisive year for the global commitment against climate change. Three events in November highlighted a critical moment in the global action against global warming. 

Firstly, the Paris Agreement came into force on 4 November. Secondly, the Agreement was ratified at the Marrakesh Conference between the 7th and 18th. Finally, Donald Trump won the election on 9 November, after proclaiming in his campaign that the United States may withdraw as a subscriber of the Paris Agreement. 

Given the new political uncertainties in the climate agenda, a new strategy has been consolidated to put pressure on the markets to reduce carbon dioxide emissions. 

The divestment movement has resulted in 688 institutions and 58,399 individuals across 76 countries.

The divestment movement has resulted in 688 institutions and 58,399 individuals across 76 countries. Some governments, have even committed to "divest" their savings from fossil fuels to meet global warming mitigation targets. This means £4.1 trillion has been moved from funding fossil fuels to funding sustainable sectors such as renewable energy or social housing.

Global warming is already a reality. 2016 has been recorded as the hottest year in history (at least, as far back as weather records are available).

Exploitation of fossil fuels is the leading cause for the acceleration of climate change, and has been since the 1950s. These fossil fuels, specifically petrol, have become the main source of carbon dioxide emissions. This gas is mainly responsible for the greenhouse effect (1) and consequently, global warming.

Simultaneously, exploitation of fossil fuels has become the primary driver of the global economy. Eighty-five per cent of the global energy supply comes from fossil fuels (oil, coal and natural gas), and energy is crucial for economic development.

Global warming is already a reality. 2016 has been recorded as the hottest year in history (at least, as far back as weather records are available).

Currently, economic growth in most countries is linked to the affordability of these fossil fuels. The international relations and many of the political conflicts, particularly in the Middle East, are influenced by the access to and trading of petrol.

However, despite the fact that national and international politics is impregnated with oil, the ordinary citizen does not know how this industry is financed.

But recently there has been a promising change. There are signs that this economic paradigm is slowly shifting in a different direction. Influential countries like Germany are investing in alternative energy systems and emergent countries like Brazil — highly dependent on and successful within the petrol industry — are now collapsing.

Nicholas Stern, chief economist of the World Bank between 2000 and 2003, points out that economic growth and climate change mitigation are bound to meet.

Financial speculation and fossil fuels

The shares in fossil fuel industries are quoted in the stock market according to the number of available reservoirs, whether or not these are exploited.

This overvaluation of the extractive capacity of fossil fuel companies generates more appetite in the investors, who see these companies as having great profitability in the long term.

Ecological campaigns have labeled this speculative maneuver "the carbon bubble".

The logic of financial markets, and the encouragement of fossil fuel investment, goes against the warnings of scientists.

The logic of financial markets, and the encouragement of fossil fuel investment, goes against the warnings of scientists.

The fact that untapped reserves are valued as an asset implies that untapped fuels have to be traded at some point. This, in turn, helps maintain the value of the fuels extracted.

If these companies were valued solely for the fuels in real exploitation, their prices would fall, and thus they would lose investors who would move their capital to other industries with better possibilities of development like renewable energy production technologies.

This capital shift would significantly affect the prestige of companies with more untapped reserves, which could see their ability to attract investment hurt, according to a study by Oxford University in 2013.

Faced with this scenario, scientists are demanding that the industry limit exploitation below 20 per cent of current reserves and keep the rest of the fossil fuels underground to avoid catastrophic effects derived from global warming.

The current dependence of our society and the economy on the fossil fuel industry, both globally and locally, is disproportionate from what is required to begin the transition to a new energy model.

However, warnings from the scientific community clash with economic reality. The current dependence of our society and the economy on the fossil fuel industry, both globally and locally, is disproportionate from what is required to begin the transition to a new energy model. The withdrawal of investment in fossil fuel companies based on their untapped reserves would cost €2 trillion, according to a Carbon Tracker study.

Some economists point out that any radical measures taken at this time to move to a new energy model would produce a new financial debacle more intense than that of 2008, when the real estate bubble exploded in the United States.

In recent years, a number of initiatives have emerged to recalculate the stock market value of fossil fuel companies. For example, the Environmental Investment Organization (EIO) created a stock index (2) known as the Carbon Ranking to assess the environmental impact and carbon footprint of companies (total emissions of carbon dioxide caused by fossil fuel consumption).

Divestment and protection of the planet

The experts of the Intergovernmental Panel on Climate Change and researchers on climate change all over the world urge governments to decarbonise their economies.

Decarbonisation implies ending the activity of fossil fuel exploitation to satisfy the energy demand, which would reduce carbon dioxide emissions. To meet the resulting deficit in energy, an increase of investment in the renewable energy sector will be indispensable.

Contrary to warnings from climate change experts, Donald Trump, in his election campaign, promised just the opposite: increase investment in the fossil fuel industry and withdraw subsidies from renewable energy.

One of the tactics that environmental activism has taken is to stop the activity of fossil fuel companies via divestment from fossil fuels.

One of the tactics that environmental activism has taken is to stop the activity of fossil fuel companies via divestment from fossil fuels.

This practice consists of revealing the chain of investment from one extractive company through their shareholders and asking them to drop their shares in these companies. Generally, alternative options are presented to them, for example, social housing or renewable energy, in which they can obtain a similar or equal profit.

One of the most common strategies used by divestment campaigns is to identify the investments in fuel industries held by pension funds.

Samuel Arregocés (left) and Danilo Urrea (right) from Colombia raising awareness of the investments of the pension funds from the Scottish Parliament in La Guajira (Colombia). Photograph by Ric Lander

In Scotland, the environmental organisation, Friends of the Earth Scotland has demanded that the Scottish Parliament change their pension funds scheme, which has investments in BHP Billiton, the company responsible for the exploitation of the largest open-cast (3) charcoal mine in the Colombian Guajira. 

Colombian activist groups have identified how the activity of this company in Cerrejon has displaced local communities, violated their rights and degraded the ecosystems of the area. We reported on this case in a previous article.

In 2015, and after 20 years, 192 states and the European Union committed to stopping the forecasted and imminent climatic cataclysm by signing a non-binding (4) legal document, the Paris Agreement.

The original aim of this agreement was to keep global warming below 2 degrees Celsius until 2100. This limit would reduce the risk of severe environmental catastrophes. After the countries met, they agreed on an even stricter limit of 1.5 degrees.

A large part of the scientific community demands a more ambitious challenge: not only to reduce the effect of greenhouse gas emissions, but to absorb these emissions with large scale technology. This is what is known as geoengineering or climate engineering. For instance, by installing big carbon hoovers to capture emissions and store them hermetically in place, we would avoid its concentration in the atmosphere.

Environmental activism and divestment

Many environmental groups worldwide have coordinated a global campaign to support local divestment initiatives to raise awareness within local communities about the effects of fossil fuel investment from pension funds and universities.

The 350.org movement coordinates divestment initiatives worldwide. Its name is a reference to the fact that the atmosphere can only tolerate a concentration of carbon dioxide of 350 parts per million. Below this level, it can effectively filter all the sun’s radiation as well as the gas emissions from the earth into the atmosphere.

Protest from activists of the group BP or not BP demanding the Theatre Festival in Edinburgh to divest from the oil company. Photograph by Ric Lander

The presence of carbon dioxide in the atmosphere has already surpassed this optimum point. At this moment, levels have already reached 400 parts per million. Moreover, this proportion is increasing by two parts per million a year. To surpass this increase would provoke a climate turning point with consequences that are completely unpredictable and extremely hazardous for the planet, says Dr. Jansen Hansen, former director of Space Studies at the Goddard Institute and one of the world’s most respected climatologists.  

In 2012, 350.org launched the campaign Go Fossil Free!. They urged universities and high schools, as well as cities, religious institutions and pension funds, to withdraw their investments from the oil, charcoal and gas companies.

The movement has grown gradually beyond the divestment from institutions thanks to the work of big and influential organisations from new sectors which are selling their assets in fossil fuels. Currently, the big pension funds and private companies represent more than 95 per cent of the assets that are being divested.

The campaign Divest-Invest unites the most important divestment initiatives and organisations — among them 350.org — aiming to transfer funding from fossil fuel industries to the renewable energy sector. 

In addition, other organisations such as Friends of the Earth Scotland, People and Planet, Fossil Free, and Move Your Money use the divestment strategy with the same goal. These groups organise divestment campaigns to lobby universities and institutions.

In 2016, the divestment movement doubled and more than 600 institutions and more than 50,000 people have divested $3.4 trillion in companies dedicated to the business of fossil fuels since the start of this campaign.

Divestment in Scotland

The environment and decarbonization agenda in Scotland, developed during successive governments in Scotland, is one of the most ambitious in the world and shows its interest in sustainable development. 

In 2015, the executive secretary of the UN Framework Convention on Climate Change (UNFCCC), Christiana Figueres, called Scotland’s "advances" in the face of climate change "exemplary". Scotland is second only to Sweden in reducing carbon dioxide emissions.

Occupation of Edinburgh University in 2015 by activists demanding divestment from fossil fuels to the educational institution. Photograph by Ric Lander

Some of the major Scottish institutions, especially universities, have been pioneers in the divestment of fossil fuels. The University of Glasgow was the first university in Europe to disinvest in the oil industry. This historic University withdrew the equivalent of €23m in fossil fuels from big companies like BP, Chevron and Shell. 

The University of Edinburgh has been one of three universities, along with Cambridge and Oxford, with more capital invested in the fossil fuel industry. In 2015, it withdrew its investments from three large companies after an intense campaign orchestrated by its students and the environmental group People and Planet.

Friends of the Earth Scotland is leading a campaign for the withdrawal of pension fund investment from the Scottish Parliament in the shares of one of Britain’s biggest fossil fuel companies, BHP Billinton. 

Friends of the Earth Scotland is leading a campaign for the withdrawal of pension fund investment from the Scottish Parliament in the shares of one of Britain’s biggest fossil fuel companies, BHP Billinton. 

A total of £1.7bn from Scottish pensions are invested in mining and exploitation activities, emitting more carbon to the land and polluting places like the Arctic and the tropical forest of Borneo. These activities are destroying the livelihood (6) of the inhabitants in the areas where these companies operate, according to the organisation.

In October 2015, Friends of the Earth Scotland invited two Colombian activists to "report the evictions, the uprooting and cultural extermination that is taking place in the Colombian Guajira", explained Danilo Urrea, a member of Friends of the Earth Colombia CENSCAT Agua Viva. 

In an interview with Cosmopolita Scotland during his visit, he added: "We came to share experiences with European organisations and to ask for solidarity with the Guajiro people. Specifically, to ask pension funds and investors more responsibility in Cerrejón (a Colombian holding where different companies like BHP Billinton, AngloAmerican and Glencore participate with shares).

Colombian campaigners with members of Friends of the Earth Scotland demanding divestment from pension funds investing in the Cerrejon coal mine in La Guajira, Colombia, in Edinburgh, in 2014. Photograph by Ric Lander

In 2013, the British newspaper The Guardian ranked BHP Billinton as one of the 90 companies responsible for 63 per cent of the greenhouse effect from the start of the industrial era until 2010.

The mining model in the Colombian Guajira that the company has established "affects the rights of the population while it has the financial support of the Colombian government and the investors where the pension funds have their shares" said Samuel Arregoces, one of the displaced peasants in an interview with Cosmopolita Scotland in 2015.

Scotland is the ancestral land of Donald Trump (his mother was born in a Scottish village) and, as in Ireland, the American tycoon and president owns businesses including golf courses. In April 2012, Trump urged the Scottish Parliament to cancel a proposed offshore wind farm, as wind turbines would ruin their sight from their golf resort in Aberdeen.

"They are ugly, noisy ... if Scotland does this, Scotland will have serious problems, it will lose tourism that will go places like Ireland, and they will laugh at us," he said.

When asked for evidence for his claims about the negative impact of turbines on tourism, Trump said: "I am the evidence, I am a world-class tourism expert." Finally, in December 2015, the Scottish Supreme Court ruled against him, which meant his third legal defeat in the case.

Divestment in Spain

In Spain, the divestment movement has less force than in northern Europe or the United States. There is a difference between the economic reality in these countries, which could explain their different perceptions of investment. For example, in 2016 the purchasing power per capita (aka. disposable income) [this means the income without taxes and social security contributions, including received transfer payments per person] in Spain was €13,840 whereas in the UK was €21,141. Disposable income is the income without taxes and social security contributions, including received transfer payments per person.

In Barcelona, there is the platform 350.orgBCN which is linked to the global movement 350.org.

On the Global Day of Divestment 2015, this platform organised an action against the Catalan savings bank, La Caixa, one of the most popular savings banks in Spain. The action consisted of a flash mob in the social and cultural center of the Obra Social La Caixa, in Barcelona.

The organization chose this entity because it was the largest shareholder of the oil company Repsol, the Spanish oil company with the most exploitations in Latin America. At that time, La Caixa held a 11.7 per cent interest in Repsol. 

In addition, this bank is one of the main shareholders of Gas Natural Fenosa with a significant share of 35 per cent, according to data from the environmental group. They called for the withdrawal of investment in this gas company.

In May 2016, 350.orgBCN organised a demonstration in Barcelona on the occasion of the global action #BreakFree [from fossil fuels].

The platform also made a documentary, Corazones Verdes Facing Climate Change, with the participation of experts in economy, energy and food sovereignty. The documentary aimed to raise awareness about the importance of responsible consumption as well as the importance of activism in social movements.

Corazones Verdes / Green Hearts Against Climate Change - Trailer English from Corazones Verdes on Vimeo.

 

Divestment in Latin America

Some Latin American countries like Brazil and Colombia are major exporters of fossil fuels to the international market.

Brazil’s economy is dependent on the export of natural resources and fossil fuels. The country has a long history of opposition from environmental groups against the interventions of large extractive companies and their effect on the natural environment.

The Petrobras oil company has a large participation in the financing of the Brazilian public sector. Fifty-one per cent of its shares are in the hands of the Brazilian state, the largest shareholder, as energy sources are one of the country’s major public interests; the remaining percentage belongs to private entities. 

The company is ranked as the fourth largest global mixed-capital (public and private) international oil company. Petrobras is also the largest company in Latin America.

Picture by Friends of the Earth Scotland available at Flickr (all rights reserved)

Colombia, like Brazil, is a great exporter of natural resources. In terms of fossil fuels, the country has the world’s largest open-cast coal mine, El Cerrejón. This mine obtains investment from the pension funds of the Scottish Parliament.

Other Latin American countries like Venezuela and Ecuador present situations similar to those of Brazil and Colombia: a high dependence on their exports and a large participation of the fossil fuel industries in the public sector. On the other side of the spectrum is Chile, the country in South America with most energy dependence.

The political will of governments is necessary to appease (7) investors’ short-sighted appetite and redirect the energy transition. For that, the levels of consumption must fall and the countries must ensure their competitiveness and growth among them. That is why international treaties such as the Paris Agreement are fundamental, says UN Secretary General Ban Ki Moon.

The insatiability of investments and consumption may have to be tempered to provide a real adaptation, which is likely to be complex, to ensure the energy transition. There is still a long way to go to bring the planet closer to a transition that is required with urgency. Regulating demand is the key.

What can I do?

  • In Scotland

There are several divestment initiatives in Scotland, some of them led by students

- Join the Reinvest Scotland campaign co-organised by Common Weal, Unison Scotland and Friends of the Earth Scotland. The aim of this campaign is for the Scottish territorial councils to withdraw their pension funds invested in shares of the fossil fuel industries and reinvest them in social housing and renewable energies.

- If you are a university student you can join the People & Planet group. This group has a presence in different Scottish universities including Edinburgh, Glasgow and Aberdeen. They have managed to mobilise their universities to withdraw all or part of all the money invested in fossil fuels.

Any of these organisations named above may provide you with information if there is a campaign group in your locality.

You can also take steps personally, such as:

- Change your bank account or savings account to an ethical banking bank. The options available will vary depending on where you reside.

- Change the supply company or join a community electricity production network.

  • In Spain

In the Spanish state the movement for divestment in fossil fuels started in 2014. There are also many other options to keep the flow of money safe from uncertain speculations. Here are some of the actions you can take to gain more control over how your money is invested

- Join the campaign for disinvestment in fossil fuels, especially through the group 350.orgBCN.

- Participate and inform yourself about how to participate in ethical finance. Divestment campaigns are not new in the Spanish state where organisations such as SETEM, among others, have asked for the divestment of companies that invest in the arms industry in a broader campaign of ethical finance.

- Use exchange systems in time banks and use local currencies. In the Spanish State there are also several initiatives of local currencies that do not enter the circuit of investments in the stock market.

- Change supply to a community energy supply project.

  • In Latin America

In many Latin American countries, such as Colombia or Brazil, the fossil fuel industry is financed by investments from pension funds or other financial assets of European countries or other countries with more developed economies. There are many actions that can be carried out such as signing petitions or participating in local campaigns. Some examples of actions may be:

  • In Colombia

- Contact the group of Friends of the Earth Colombia CENSAT Agua Viva.

- Sign petition to avoid diversion of Bruno Brook in La Guajira Colombiana. The multinational Cerrejón has received all the permits of the government to divert it in order to extract more than 35 million tons of Coal that is in the bed of the stream. During the last 30 years in the peasant communities of La Guajira have suffered very tragic impacts due to the displacement caused by the exploitation of El Cerrejón, the largest open pit coal mine in the world. El Cerrejón mine has obtained investment from the Scottish Parliament’s pension funds.

- From the UK you can also participate in some solidarity groups. Get in touch with London Mining Network to see how you can support this campaign.

  • In Brazil

- Participate in the campaign to stop fracking with the group 350 Brazil.

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