Al Gore called them “subprime carbon assets.” More and more banks, companies, countries, pension funds, universities, churches, and many others are beginning to understand the considerable investment risks in the constellations of fossil fuel companies. The Norwegian Government Pension Fund Global (GPFG), the world’s biggest and most efficient sovereign wealth fund, last week jettisoned 32 coal mining companies, 5 tar sand producers, 2 cement companies and 1 coal-based electricity generator from its $850 billion portfolio. The Guardian quotes a GPFG rep here: “Our risk-based approach means that we exit sectors and areas where we see elevated levels of risk to our investments in the long term.”
The fund is managed by Norges Bank. In issuing its first Report on Responsible Investment, the bank’s CEO said: “Our role is to think long-term and protect value for future generations.” Clearly, they don’t think the value can be maintained by further participation in these carbon budget-busting companies.
Meanwhile, Deutsche Bank has just come out with a report, “Peak carbon before peak oil.” In it they point to the primary driver of the oil price implosion we’ve been seeing for almost a year: decreased demand due to the growing concern about climate change. Here’s a good summary from the Green Market Oracle. (HT for the graphic above.) The report itself is pretty unequivocal: If we are really going to get at global greenhouse gas emissions – and the signs are more hopeful every day – then “Oil will become constrained by the level of demand allowed under CO2 emission limits and this will have implications for the behaviour of countries, companies and consumers alike.” The recent price drop may be “the first rumbling of this upcoming profound change.” Demand destruction of oil is not a myth.
So, I said that many global companies, multilateral development banks, countries and others are more and more about decarbonizing assets. In my quiet little corner of the world, New York City, we’ve just seen a major university, The New School, announce its divestment. I’m proud today to say I’ve got my MS in international affairs from the New School. Meanwhile, I’m teaching at NYU and I’m equally proud of the NYU Divest movement.
And we’re very much a part of the global movement. In fact, Global Divestment Day is coming up in a few days. If you’re looking for an event, come on down to Wall St. this Friday. Or check in with any of the hundreds of events that will be staged all over the world. And check out this video which lays out the issue quite neatly.