Many investors are acutely aware of the risks from global warming including sea-level rise, storm surges, droughts, wildfires, extreme heat, and extreme weather events. Consequently, many ethical and sustainable investors have focused on reduction in industrial carbon emissions among other measures to hasten progress to a carbon-neutral economy. Fossil divestment is one approach. However, some investors argue that engagement with fossil companies is more effective in promoting essential change.
Investor motivations can include risk management or a moral position. Exposure to climate risks could undermine company valuations. On the moral question, it became clear in the 1960s that continuing CO2 emissions would progressively damage the climate. At this point, the major carbon producers could see that they were marketing harmful products. The philosopher Henry Shue argued that by failing to address these harms over the subsequent half-century, fossil fuel firms have additional responsibility to correct the damage done.
This article outlines divestment and explores what engagement with fossil firms should involve. It suggests limits to the length of time spent talking with companies if there are no meaningful signs of progress.
Download Fossil Fuels: Divest or Engage?
Q G Rayer (2020), Fossil Fuels: divest or engage? The Private Investor, the newsletter of the UK Shareholders’ Association, issue 209, December, p14-15, 27th December 2020. 2020-12-27 TPI 209 div or eng – AS PUBLISHED