The United Nations Framework Convention on Climate Change (UNFCCC) has endorsed the divestment from fossil fuels movement. The IPCC reports have made it clear that we must back away from fossil fuels if we are to make a serious attempt at tackling climate change.
The UNFCCC is the latest of more than 180 organizations that currently support divestment. This support is particularly meaningful as we approach COP 21, the UN Climate Summit in Paris at the end of the year.
The UN explained that it was lending its “moral authority” to the divestment campaign because we cannot combat climate without radically reducing our fossil fuel use. “We support divestment as it sends a signal to companies, especially coal companies, that the age of ‘burn what you like, when you like’ cannot continue,” said Nick Nuttall, the spokesman for the UNFCCC. Unsurprisingly the coal industry has criticized the UNFCCC move.
Science indicates that anywhere from half to four fifths of all known fossil fuel reserves must be left in the ground if we are to have a chance at curbing climate change.
“Everything we do is based on science and the science is pretty clear that we need a world with a lot less fossil fuels,” Nuttall told the Guardian. “We have lent our own moral authority as the UN to those groups or organisations who are divesting. We are saying ‘we support your aims and ambitions because they are fairly and squarely our ambition’, which is to get a good deal in Paris.”
Even the UN secretary general, Ban Ki-moon, sent a message to investors last November, urging them to reduce their investments in “the coal and fossil fuel based economy and [move] to renewable energy.”
The economic argument in support of divestment arises from the realization that we are burning through our carbon budget. Investors are justifiably concerned about a carbon bubble and stranded assets.’
Concerns about the risks posed by plummeting oil valuations have been expressed by the World Bank, Bank of England, HSBC, Goldman Sachs and Standard and Poor’s. All of whom have warned that only a fraction of known fossil fuel reserves can be safely burned. Investors should be wary as companies keep pouring money in fossil fuel exploration.
With the goal of taking away the fossil fuel movements social license the divestment movement has come of age.
As a matter of self interest nations that continue to be heavily reliant on fossil fuels will have to rethink the viability of such a strategy.
A David and Goliath campaign that started out as little more than a symbolic gesture has grown into a truly global movement that continues to gain momentum.
Not only is there a moral imperative, divestment from fossil fuels and reinvestment in cleaner forms of energy is also a smart reallocation of resources.
Fossil fuel investments are like the tobacco industry and or apartheid era South Africa. While fossil fuels once provided good ROI they are now high risk and as such they are being shunned by both the morally engaged and bottom line oriented investors.