Divestment

There is a movement building up to persuade some of the big investment funds to dis-invest from the ‘sin’ stocks of mainly fossil fuels but also tobacco, pornography and arms.

Divestment from fossil fuels is the most established campaign and targets the huge local authority pension/endowment funds, big bank funds, even the Church of England (£7.9 billion in case you were curious).

Some of these organisations have been slow to respond and some have embarrassed themselves. The Wonga scandal in the case of the Church of England being a classic example. Some have maintained that they need to stay invested so that they can take part in engagement. This means that they think that they can change the minds of these big companies by meeting with and voting against (on certain matters) them as shareholders.

Not wanting to beat the CofE too much but General Synod seems to be taking this exact stance which betrays a degree of naivety. An oil company will no doubt meet with interested groups and wring their hands lots, they might even write a CSR policy on recycled paper and promise to be good. Tomorrow they will still be an oil company and will still have the same shareholders. There is a mile and a half of tarmac between Lambeth Palace and the City of London and moral chasm 40,000 leagues deep. Big corporations will only properly engage once you have hit them in the pocket by walking away from their stock. Then you have their attention.

Ignoring morals for a minute though, there is probably a very good investment reason for divestment. Whether you hail from the Jonathon Porritt or Donald Trump school of climate change thought, can it ever be a good idea to invest in a resource that is running out and that is getting more expensive to reach? Possibly if there is no energy alternative but the pricier it gets to extract the more compelling it becomes for all of us to drive electric cars charged at home from our solar panels. I don’t know of an oil firm that is going to manage the energy change the world needs to make over the next few years.

As an individual investor there are also things that you can do as we highlighted last year here.

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