29 Apr What is Divesting?
Globally, divesting from fossil fuels is gaining traction, with divestments from fossil fuels recently surpassing $8 trillion. However, the fossil fuel industry isn’t the only sector seeing an exodus of investors. Divesting is happening on a broader spectrum, from arms manufacturers to private prisons to junk food.
There are two main motivators for divestment. The first is financial; investors are waking up to the real risk of ‘stranded assets.’ The International Energy Association has estimated that more than $1 trillion in oil assets is set to become stranded in the ground – these are lost sales made by oil companies to the end consumer. This risk is making investors think twice before investing in fossil fuel companies, which traditionally were considered a safe investment.
The second motivator for divesting is ethical. Investors are increasingly looking to align their investments with their values. For example, investors that are environmentally conscious are more likely to divest from fossil fuels.