DIVESTING FROM FOSSIL FUELS/INVESTING IN HEALTHY ENERGY

Ryan Glasgo

Current Oxford MBA student Ryan Glasgo gives his perspective on the Skoll World Forum seminar session ‘Divesting From Fossil Fuels/Investing in Healthy Energy’.

“Climate change is fundamentally a public health issue,” Gary Cohen, Executive Director of Healthcare Without Harm, began a stimulating lunchtime session on Divesting From Fossil Fuels.

The link to public health is essential to divestment, he argued. “Seven million people per annum die from causes related to burning fossil fuels – five hundred thousand in China alone. That’s more than malaria, TB and AIDS combined.”

Mark Campanale, Founder of Carbon Tracker, expanded upon Gary’s argument: “the divestment movement also has a financial underpinning to it. 92% of oil sands projects need to have oil prices above $95/barrel to make money.”

With current WTI crude oil prices currently at $55, the argument for divestment is gaining momentum not only among University Endowment fund managers who receive significant pressure from their constituents, but also from Wall Street analysts who answer to Ben Franklin first and foremost. As a result, 98% of shareholders in BP recently voted for a resolution that climate change should be on the immediate agenda due to increasingly alarming risks of stranded assets. Shell’s shareholders have expressed similar sentiments.

For Mark, divestment doesn’t necessarily equate to exiting a company entirely. It could simply mean encouraging large oil and gas players to liquidate unprofitable investments and pay out dividends in the coming years.

Ben Caldecott, director of Oxford’s Smith School of Enterprise and the Environment Stranded Assets Programme, continued to say that fossil fuel divestment is “by far the fastest growing divestment campaign”. This proliferation is largely thanks to social media and people like Bill McKibbon at 360.org. However, it’s not the selling of shares alone that has the greatest impact – the indirect affect of selling shares is what’s key: stigma can have an enormous impact on policy and regulation changes, political influence of fossil fuel companies, recruitment and retention, cost of capital and supplier relationships.

Josh Karliner, also from Healthcare Without Harm explained that for 18 years there was basically zero discussion of health in climate change conversations. Now it’s engrained in the climate agenda in a big way: recently, the U.S. Surgeon General stood next to Obama to articulate the health impacts of climate change. Why are we so familiar with the surgeon general? Because of tobacco risks. Highlighting tobacco risks to doctors eventually led to divestment; the same is happening in with the fossil fuel industry now. “Clean air resonates more than polar bears,” Josh quipped.

During the discussion, many unanswered questions bubbled to the surface:

  • Will Oxford’s endowment divest? The proposal is currently on the table.
  • How will divestment detrimentally affect oil rich, developing countries?
  • With China burning more coal than the rest of the world combined, how can we address the issue there immediately? According to Qi Ye, Director of the Brookings-Tsinghua Center, “In China, it is not a question of why, we know why; it is a question of how.”
  • How will divestment affect government resources (particularly countries like the UK where fuel excise duty at the pump is currently 25 billion pounds per annum)?
  • Why aren’t CEOs of major energy companies willing to invest significant resources in renewable forms of energy instead of being forced to pay out dividends and potentially even wind down? As free cash flow becomes increasingly limited due to low oil prices, the time for new direction from business leaders may be now or never.

Although these questions may leave gaps and hurdles in the exact path and timeline of our energy future, Gary Cohen concluded with a simple message, “climate change is the existential issue of our time.”