The burning issue in climate change

Encouraging people to withdraw their investments from fossil-fuel industries is the next important step for climate justice, according to environmental NGOs


The idea of ethical investment has been around for several decades. High-profile campaigns saw charities withdraw their investments from the armaments and tobacco industries, for example, and from South Africa under the apartheid regime.

Ethical investment has had a new target in the past few years, as environmental campaigners have encouraged charities, universities and other public-interest organisations to exclude fossil-fuel industries from their investment portfolios. They see fossil-fuel investments as adding to the risk of dangerous climate change and, therefore, as unethical.

Scientific evidence clearly points to the burning of fossil fuels – coal, oil and gas – as a major contributor to greenhouse-gas emissions, which warm the global atmosphere.

In Paris last December, at the United Nations’ COP21 conference on climate change, politicians from more than 185 countries agreed to reduce their emissions to keep the rise in global temperature below two degrees.

The problem, according to environmental campaigners, is that, much like the tobacco industry, the fossil-fuel industry is not about to stop selling coal, oil and gas, nor to stop exploring new territories to extract fossil fuels from in the future.

Last month Trócaire, Maynooth University and St Patrick’s College Maynooth organised a workshop, Investing Ethically for People and Planet: Ending Irish Investments in Fossil Fuels.

“We all have a role to play personally and professionally. As consumers we aren’t articulate enough about what funds our pensions are invested in,” says Joanne McGarry of Trócaire. “There was great momentum last year, with new climate legislation” – the Climate Action and Low Carbon Development Act – “the global agreement on climate change in Paris and thousands of people marching for action on climate change. A campaign to divest from fossil fuels is a natural extension of our climate-justice campaign.”

Eamonn Meehan, Trócaire’s executive director, says: “The challenges are the complexity of the financial instruments, the availability of viable alternative investments and moving on from the current financial orthodoxy. Yet there is no doubt that a change is coming. Climate change is the greatest injustice of our time.”

The divestment campaign has strong international backers, including the former archbishop of Cape Town Desmond Tutu, the former Irish president Mary Robinson and Bill McKibben, founder of the climate movement, which launched its fossil-fuel divestment campaign in 2012.

Robinson has said: “By avoiding investment in high-carbon assets that become obsolete, and by prioritising sustainable alternatives, we build capacity and resilience, particularly for more vulnerable people, while lowering emissions.”

Some African countries are moving directly to renewable-energy technology for electrification, skipping the use of fossil fuels.

But it’s easier to convince environmentalists than financial markets. The keynote speaker in Maynooth was Mark Campanale of Carbon Tracker, a think tank that analyses the effect of climate change on capital markets and investment in fossil fuels, “mapping risk, opportunity and the route to a low-carbon future”.

“The governor of the Bank of England, Mark Carney, has said that climate change is the biggest issue of our time. Pension-fund managers need to ask what the world will look like if we continue to burn fossil fuels,” Campanale says. “They also need to ask themselves who are the most important members of their funds: the younger ones who have recently joined or the older ones who are about to cash in their funds.”

Carbon Tracker has examined the economic impact on fossil-fuel industries of countries keeping within their carbon budgets. “From our research, fossil-fuel industries are overstating their energy demands and underestimating the role of renewable energies, which are becoming cheaper,” Campanale says.

“There is a clash of wills between what’s best for the planet and society and for the fossil-fuel industry and financial sector. We’ve got to contract the fossil-fuel sector and cancel and stop new fossil-fuel projects so we can decarbonise our economy.”

According to Campanale, fossil-fuel divestment is gaining momentum. “As of December 2015, 500 institutions had divested $3.4 trillion from fossil-fuel industries. Of these, 28 per cent are foundations, including the Rockefeller Brothers Fund; 23 per cent are faith-based groups, including the World Council of Churches; 15 per cent are pension funds, including Norway’s state pension fund; and 10 per cent are educational institutions, including many top universities.”

Ian Halstead, a consultant at L&P Investment Services, also spoke at the workshop. “Most asset managers realise the fossil-fuel industry can’t expand within the climate-change targets. What they are concerned about is what will happen to the fossil-fuel sector during the transition.”

Halstead says there is a growing interest in dual-mandate investments, which is to say those with a social, environmental or developing-world return as well as a financial one. “You can now ask your pension-fund managers about your options, and it will be the scale of the investment that will make a real difference.”

Environmental NGOs will lobby the new Irish government to divest from fossil-fuel industries in the Ireland Strategic Investment Fund (formerly the National Pensions Reserve Fund), which is controlled by the National Treasury Management Agency.

The NGOs also plan to ask banks to offer their customers investment options that exclude fossil-fuel industries. “We need to create demand that will give us the necessary scale,” says McGarry. “The global divestment movement has already moved $3.4 trillion out of the fossil-fuel industry. We can capitalise on that movement here in Ireland.”

At the coalface: the jargon explained

Unburnable carbon:

Carbon budgets: These are nationally devised records of how to reduce carbon emissions. The Environmental Protection Agency is responsible for our carbon budgets by recording emissions by industry, transportation, agriculture and buildings, and devising mitigation plans to reduce greenhouse-gas emissions.

Carbon bubble: This refers to the combined proven reserves of oil, gas and coal currently on the books of fossil-fuel companies. If consumed, these will produce far more than the accepted levels of carbon dioxide, causing the bubble to burst.

Stranded assets: This concept refers to the coal, oil and gas reserves that might lose their value if carbon budgets are stringently upheld. Stranded assets can also refer to assets whose value reduces because of regulatory changes – or, indeed, because of their destruction by flooding or drought.


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