1 January, 2021
Since times of industrial revolution where the demand for energy to run the industries grew drastically, the use of fossil fuels has increased many folds. These are categorised as conventional sources of energy and include coal, crude oil, gas. Burning them leads to release of energy which in turn is used for different purposes in driving industries. This has been the trend now for many ages. Though its a promising way of fulfilling our needs like energy for electricity, running turbines, running automobiles, it poses huge danger to the environment of the only place which we call home i.e. Earth. You all must be aware of the following facts:
- More than 1 million species are at risk of extinction because of climate change.
- The 20 warmest years on record have been in the past 22 years. 2019 being the second warmest year
Indeed, it does present a grim picture of the planet earth. Anything which harms our environment, harms us all collectively. This is one of the crisis which can spiral into other many crises. Current pandemic stands as an evidence to it. When nature is recklessly handled, consequences can be disastrous.
But here is a good news. Our future is in our hands. One way of dealing with the environmental crisis is to move away from our fascination for fossil fuels as the primary source of energy.
One way to do it is through divestment. Divestment simply means ‘not investing’. It may also be referred to as disinvestment. In a broader sense it means to get rid of stocks, bonds, investment funds of the companies that are work in fossil fuels.
In terms of environment, there is a global movement for fossil fuel divestment. This movement demands people and institutions to move their money out of companies that deal in conventional sources of energy like oil, coal and gas for both moral and financial reasons. These institutions can be universities, pension funds, local authorities and banks.
There have been some successful global divestment campaigns in the past as well. Like the ones which have targeted tobacco and gambling industries and companies funding the violence in Darfur, Sudan. Divestment also was very popular for its role in the fight against apartheid in South Africa.
Arguments for Disinvestment:
There are two main arguments for divestment. The first one is a moral argument which argues that in order to keep international target limit of global warming to 2 degree Celsius rise and preventing disaster risk levels of climate change between two thirds and four fifths of fossil fuels need to remain in the ground.
But here comes the worst part, people and leaders do not seem to be serious about it still. As a result fossil fuel companies are extracting these reserves and selling them without any restriction. In doing so they are setting the human race on a route to a irreversible change in climate that eventually will cause water levels to rise across the globe, increase in droughts, rising pandemics thus leading to increased conflicts and swelling the number of refugees.
The financial argument states that if international agreements on climate change are met, the investments on fossil fuels will become worthless. Such investments will then be treated as stranded assets which could lead to another global economic crisis.
As of 2019 it is estimated that more than 11 trillion dollars in assets have been committed to divestment from fossil fuels.
But global banks still continue to finance the fossil fuel industry with 2.7 trillion dollars. These banks include majority of the US banks, some of the European Union banks and Chinese banks which are investing heavily in the fossil fuel industry. A total of 975 billion dollars was the bank financing for 100 key oil, coal and gas companies between 2016 to 2019.
According to a recent report of the climate related Market Risk Sub committee ( body under the Commodity Futures Trading Commission, an independent agency of the U.S. government), climate change poses a major risk to the stability of the US financial system.
Living W/ Creator 