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Power The Almighty Buck Businesses Science Technology

Fossil Fuel Divestment Has Doubled In the Last 15 Months (vice.com) 263

An anonymous reader quotes a report from Motherboard: A little over a year ago, it was big news that thousands of people and hundreds of institutions controlling more than $2.6 trillion in total assets had pledged to remove their investments from stocks, mutual funds, and bonds that invest in fossil fuel companies. A year later, that number has doubled. According to a report by DivestInvest, a philanthropy helping to lead the movement, more than 688 institutions and 60,000 individual investors worth $5.2 trillion have pulled their investments from fossil fuel companies and have reinvested a portion of their assets into clean energy companies. In September 2015, 436 institutions and 2,040 individuals worth $2.6 trillion had divested. For comparison, the total net worth of investors who had pulled out of the fossil fuel market was just $52 billion in September 2014. Divestment is increasingly seen as one of the stronger moves that private citizens and companies can take to support the move to clean energy. The movement started in earnest in 2011 when college students began petitioning their institutions to remove their assets from stocks, bonds, and mutual funds that invest in fossil fuel companies. What was seen as a gimmick at the time appears to be gaining real momentum a year after the Paris Climate Treaty was signed.
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Fossil Fuel Divestment Has Doubled In the Last 15 Months

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  • by K. S. Kyosuke ( 729550 ) on Monday December 12, 2016 @09:34PM (#53473199)
    Sorry, couldn't resist...
    • by creimer ( 824291 ) on Monday December 12, 2016 @09:40PM (#53473219) Homepage
      The only way Trump is going to get coal miners back to work is to use taxpayer money to give every American a sack of coal for Christmas.
      • Well, that's also a way to put "coal" and "sack" into one sentence...
        • Well, that's also a way to put "coal" and "sack" into one sentence...

          There's also: "When I visited New Zealand, I saw the Coalsack."

      • Re: (Score:2, Insightful)

        by BlueStrat ( 756137 )

        The only way Trump is going to get coal miners back to work is to use taxpayer money to give every American a sack of coal for Christmas.

        Seems like Stein and Cankles already got their coal for Christmas from Trump!

        Wisconsin recount: Trump picked up an additional 162 votes!

        The Wisconsin recount found "no widespread voter counting errors or hacking.â

        Be careful what you ask for, you just may get it!

        Strat

        • Well, if **Scott Walker** says it's on the up-and-up, it MUST be squeaky clean!!!!
        • That effort confirms there are not "thousands of people" voting multiple times or "thousands of dead people" voting for someones candidate. So now the Republicans can stop inciting that paranoia during elections.

      • So, he's a democrat?

  • Contra-Indicated. (Score:2, Interesting)

    by Anonymous Coward

    If you divest, you are not a stockholder. You have no say in how the companies invest or spend their money. Much wiser to invest and help to steer the company by participating. "If you are not part of the solution, you are part of the problem."

    • by Anonymous Coward

      Buy 1000 shares of Exxon. Congratulations, you now own 0.000025% of Exxon! Now get out there and exert your influence!

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      "If you are not part of the solution, you are part of the problem."

      Yeah, no. You can be not part of the solution and not part of the problem.

    • You think the shares Joe Average can buy in the Royal Dutch Shell Oil Corporation will ever get him enough votes to convince them to stop being an oil company ?

      No hope there.
      But if Joe Average and a lot of his friends sell their shares, move their retirement funds to ones that won't invest in shell etc. etc. - that drives Shell's share price down, every time somebody divests - it increases supply without an commensurate increase in demand and the value of the company drops.

      Enough people divest and the compa

    • How is that interesting? It is totally dumb to believe you could change their course by owning some stocks. You have to have a majority of stocks with voting rights in your pocket. Furthermore, why should you invest money in a company where you disagree with their goals? It makes more sense in investing money in the future than try to help coal and oil industry to understand that their business model is phased out.

    • by Goaway ( 82658 ) on Tuesday December 13, 2016 @08:54AM (#53475087) Homepage

      Similarly, we shouldn't lock murderers up, we should join in them in their murder sprees, while trying to convince them to stop murdering, or at least murder a little bit more nicely.

  • by xtal ( 49134 ) on Monday December 12, 2016 @09:42PM (#53473229)

    By this metric, I "divested" myself last year of a substantial amount of energy sector stocks and reallocated to "green" electric utilities.

    What actually happened is the price of oil tanked, there's no limit on supply, the floor went out on the returns and there is no sign of a rise in price in the futures markets.

    I'll be more impressed if this trend continues when oil goes on the upswing after growth in consumption rebalances with supply glut. I've got $0.02cdn on this "trend" fast reversing if that's the case - and my $0.02 isn't worth what it was a few years ago for the same reason.

    • by msauve ( 701917 )
      Which is the cause, and which is the effect? If there's really been so much sell-off of fossil fuel stocks, perhaps this is a good time to buy low!
      • > perhaps this is a good time to buy low

        It may be. But you could have said this for the last couple years with the declining prices of energy stocks, and you'd have been wrong.

    • by mlts ( 1038732 )

      I get nervous when people say that oil supplies are something not to worry about. All it will take is Iran deciding to mine the strait of Hormuz, some terrorists blowing up a refinery, or some well publicized happening to the oil/gasoline infrastructure. We will be back to 2008 gas prices in no time, if not far worse. We might even something like OPEC's oil embargo.

      Which is why even though oil seems stable, being able to rely on energy that isn't dependent on countries that don't like us is a good thing.

      • by mlts ( 1038732 )

        Minor correction: "We might even wind up getting hit with something like OPEC's oil embargo." One never knows what might happen on the international stage, and being able to not worry on the whims of other nations can contribute a lot to national stability.

      • Your comment could be used to call for a diversion from fossil fuels or for a "drill baby drill" domestic oil policy. If the goal is to reduce reliance on foreign oil then there is more than one way to do that. One way is to develop electric vehicles, nuclear power, and other means to remove fossil fuels from the economy. Another way is to pull out all the stops on fossil fuel exploration within the borders of the USA.

        I believe you are correct that we should fear an Iran that can disrupt world oil suppli

    • by Mashiki ( 184564 )

      By this metric, I "divested" myself last year of a substantial amount of energy sector stocks and reallocated to "green" electric utilities.

      Useful tip: Get out of "green energy" in the next 12 months, the market is about to crash on those, since governments are pulling funds out of FiT programs and loans/allocations to solar and wind power. The green energy market it at peak, just like it was in 2008. You can take my warning or not, but don't cry over it when it does happen and you did nothing.

      I gave the same warning to people who were heavily invested in property in Vancouver around 5 months ago, people said that the 15% foreign tax wouldn'

  • by belthize ( 990217 ) on Monday December 12, 2016 @09:44PM (#53473245)

    The article isn't clear but it implies that most of the divestment comes from removing fossil fuel companies from stock portfolios.

    If so then the companies aren't buying those stocks back, somebody else is buying them. It doesn't effect the company one bit, other than maybe drive the price down minutely while it's a sellers market. All that really does is minutely help the buyers who are now taking on the risk and the reward of owning that stock.

    Either I'm confused about what they're doing or they are.

    • You're confused about what they're thinking. They're *caring*, not thinking. What mostly matters, to them, is what they're *feeling*. It doesn't matter much whether it works or not, it's mostly about the emotions, the math is beside the point.

      That may come across as critical; it's not meant to be. Liberals criticize conservatives saying conservatives don't care. The liberal parody of a conservative is an accountant type, working the numbers quite dispassionately. There is a grain of truth to that. We do

      • I get the caring, I was doing something similar to this long before they started. In 2007-8 I intentionally avoided moving toward the very safe fossil fuel market.

        It was more the tone of the article slanted toward the idea that they were in some way inflicting financial pain that I found confusing which is differeng than doing it for altruistic or ethical reasons.

        The post below supplies some evidence that is in fact cutting into their bottom line and forcing the companies to buy back stock at 6x the norma

      • by Moofie ( 22272 )

        You say "caring", I say "having integrity". But hey, you've got the only correct value system, right?

      • by tlhIngan ( 30335 )

        There's a class of mutual funds you can buy at any financial institution called "ethical funds". These funds basically try to stay away from environment-harming or social harming companies, thus will not invest in oil and cigarette companies, for example. They will traditionally have lower returns than a traditional fund in the same category because well, face it, oil and tobacco make a lot of money.

        These funds are surprisingly popular, because people know they get lower returns, but on the flip side, know

      • The liberal parody of a conservative is an accountant type, working the numbers quite dispassionately.

        I'm going to go out on a limb here and guess you don't know many liberals.

    • by skids ( 119237 )

      The companies (and their CEOs) are indeed buying back their stock:

      The current report also found fault with share repurchases, a controversial practice of public companies buying back shares of their own stock. Critics say this artificially inflates a company's share price. In 2014, 23 of the top 30 fossil fuel companies spent a combined $38.5 billion repurchasing shares, a figure six times larger than the $6.6 billion all corporations spent that year on research into renewable energy, according to the report.

      https://insideclimatenews.org/... [insideclimatenews.org]

      The divesting institutions also repress the stock price by not buying any more or back in... leaving a smaller demand for the stock.

    • When there are more sellers than buyers, the price goes down.

      If a company buys its own stock to prop up the price, that company runs the risk of running out of cash. Lower stock prices make it more difficult to raise cash.

      Also, the execs own lots of stock. When the price goes down, their own finances suffer.

    • The article isn't clear but it implies that most of the divestment comes from removing fossil fuel companies from stock portfolios.

      If so then the companies aren't buying those stocks back, somebody else is buying them. It doesn't effect the company one bit, other than maybe drive the price down minutely while it's a sellers market. All that really does is minutely help the buyers who are now taking on the risk and the reward of owning that stock.

      Either I'm confused about what they're doing or they are.

      You forget that the divested funds are then being invested into clean energy technology companies. I have little doubt that such companies can make really good use of additional funding, and that improvements and breakthroughs are already being made because of it.

      You'd be correct if the funds in question were only divesting, but they're not. They divesting and re-investing the money into another, more desirable (and potentially very lucrative) area, and that's the part you seem to have missed.

      Yaz

  • by fozzy1015 ( 264592 ) on Monday December 12, 2016 @09:58PM (#53473317)
    Divestment doesn't do anything except put said stocks on sale for another buyer. If you want to hurt the business of fossil fuel companies then stop buying their products.
  • by Solandri ( 704621 ) on Monday December 12, 2016 @10:08PM (#53473361)
    By divesting in these companies, you decrease demand for their stock. That drives the stock price down. Which allows the company to buy back its stock at a lower price. When it pays dividends, it gets to keep more of those dividends instead of having to distribute them to shareholders, because it owns more of its own shares. So by divesting from these companies, you're allowing the people running them who are gung-ho about fossil fuels to keep a larger percentage of their profits to reinvest into more future fossil fuel production.

    OTOH if you buy up as many shares of the stock as you can, you gain voting power at annual shareholder meetings. Usually this means you get more votes for who gets elected to the board of directors who oversee the top officer of the company. Most of these companies aren't fossil fuel companies; they're energy companies. They dabble in renewables and nuclear power, it's just that most of their operations are in fossil fuels. If you can get enough shares to elect anti-fossil fuel people to the board of directors, they would have the influence to get the corporate officers to decrease future fossil fuel operations and invest more heavily in renewables.

    I guess the hope is that instead of investing in fossil fuel companies, you can invest the money in renewable energy companies. And that eventually the renewable energy companies will drive the fossil fuel companies out of business. But as I said, most of these fossil fuel companies are actually energy companies. Unlike pro-renewables people who are mostly anti-fossil fuels, the pro-fossil fuels people are not anti-renewables. They simply prefer fossil fuels because they're cheaper. If renewables become cheaper than fossil fuels (whether naturally or after government subsidies), they will simply shift their operations more towards renewables. So I'm really skeptical the "drive them out of business" plan would work.

    So the best course of action would seem to be to invest heavily into fossil fuels companies, elect directors sympathetic to your cause, and have them exert pressure on the corporate officers to steer these companies away from fossil fuels and towards renewables.
    • TL; DR version: Thanks for the cheap shares, chumps.

    • That's a great explanation except that, you know the value of their shares has gone down. This affects shareholders, which includes executives, who want to sell and turn their shares into cash at some time in the future. They will get less cash.
      • That's a great explanation except that, you know the value of their shares has gone down.

        Only temporarily from the selling, and even then only if there are not more buyers looking for even a minor bargain.

        It's still smart to invest in companies that produce energy from oil today, because they will be a huge source of renewable energy tomorrow. As they are experts on energy distribution, they have a giant head start and the ability to buy up smaller renewable energy companies...

        • It's still smart to invest in companies that produce energy from oil today, because they will be a huge source of renewable energy tomorrow. As they are experts on energy distribution,

          Depending on who you are talking about, good luck with that. The distribution that will matter in the future are the electrical grids. The companies that run the grids tend to be heavily regulated, so things probably won't change too much for them.

          The companies with expertise in moving oil, natural gas and coal? That expertise

    • Also, for the company to buy back its own shares requires cash, and that has a cost which will reduce the amount of money available to pay dividends or reinvest.
    • The point of the divestment campaign isn't to make money elsewhere, it's to avoid losses that will happen. See that's the thing, when stocks go down they go down fast often it's a one day move that will wipe out 50% of the stock or more. You can't time these moves and fossil fuels are on the way out long term. If you want to take the risk that when the collapse in stocks comes that you will be out before it happens go right ahead but what the divestment movement is really about is making sure your retiremen

      • Not if the fossil fuel companies have anything to say about it. That's why they put so much effort into attacking AGW climate change, and they now have a President who makes GWB's flip flopping on AGW look like a positive endorsement of the science. The fossil fuel companies, particularly the large ones, are probably in the best position they've been since the early 1990s to basically get whatever they want. Sure, they know their product is fucking the planet up, but let's remember here that the larger inve

    • by shilly ( 142940 )

      Good Christ, have none of you idiots heard of the cost of capital? If investors selling stock were a net positive, investments wouldn't work. You sound like a Brexiteer crowing about the short-run effect of a lower GBP on exports.

  • Big Oil, or they'll buy up all the...

    Whoops. Standard Oil 2.0 (with the Trump Stamp of Approval).
  • by RhettLivingston ( 544140 ) on Monday December 12, 2016 @11:23PM (#53473657)

    It's easy to jump on the bandwagon when it's finally rolling to riches. Wind and solar are now both under the cost of coal and will continue to drop as technology already in the pipeline matures and volume keeps increasing.

    I saw someone post that we'd still be using oil in 2050. They are right, but it won't be for energy. There are many other uses that won't succomb as quickly. By that point, we'll probably be spraying solar cells onto everything around us for pennies on the dollar compared to deriving energy from petrochemicals.

    We didn't reach peak oil so much as we reached critical mass on true renewables. If we keep resisting the inevitable, the only result that will come from it is being left behind as other countries rake in the bucks from the new businesses created.

    • I worked on a solar powered race car in college so I know just how hard it is to turn sunlight into usable energy. You might be able to "spray" solar panels on a surface but to turn that into something that can power a light, run a motor, or do anything else useful requires a lot of hardware besides the solar panels themselves. You can't "spray" a power point tracker into existence, or the wires to connect it all.

      Wind and solar are now both under the cost of coal and will continue to drop as technology already in the pipeline matures and volume keeps increasing.

      You are so wrong on that. Solar power might be cheap when the sun is shining but it's real e

      • by shilly ( 142940 )

        The irony of someone complaining that renewables advocates aren't taking into account issues beyond money, and then suggesting nuclear as an alternative...

        • Do you know what physicians call "alternative medicine" that works? It's called "medicine". "Alternative energy" is energy that doesn't work. You want to prove me wrong? Go right ahead. Nuclear power is not "alternative" as it right now provides 1/5th of the electricity consumed in the USA.

          Nuclear power is here, it's now, it's working. All we need is more of it.

  • The problem is that what the "oil" companies these people envision from 20 years ago no longer exist - they're now energy companies and also one of the largest investors in renewable energy. Isn't this kind of contradictory to their goals?
    • It isn't, because currently they're making every possible effort to stymie any attempt to reduce emissions. Yes, they may invest heavily in renewables, but in a way this is a huge conflict of interest, as they hold the cards in two decks. With their vast and now much greater political clout, they can basically hand any politician, even a high ranking one, their ass if they apply any serious effort to a meaningful action to reduce emissions (like, say, a carbon tax), but then when the effects of climate chan

  • Divestment is increasingly seen as one of the stronger moves that private citizens and companies can take to support the move to clean energy.

    Unfortunately, it's not going to work. Stocks don't respond like pork bellies to supply and demand.

  • Why the hell is it still legal in the US to invest in and own securities based on oil as a commodity. There are exempt items that are deemed too important to have investors screwing with the prices. If I remember one example, it's this little heard of product called food. So why not make it illegal to invest in physical oil or gasoline itself on markets? That'd overnight reduce gas prices, which of course would do nothing to promote green technologies but still.

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