State Treasurer Fiona Ma called for CalPERS and CalSTRS to divest, saying “It’s time to take the next step in climate action. Divestment sends a message to companies that have shown little interest in seriously addressing a problem that places human existence in peril for the sake of profits: time’s up.”
Divestment is a moral issue. We divested from companies doing business in Apartheid South Africa because we thought profiting from racial oppression was immoral. We divested from tobacco companies because knowingly selling and promoting a product that causes cancer is immoral. There is a global fossil fuel divestment movement because fossil fuel companies are using their tremendous political power to block desperately needed climate legislation – around the globe and right here in California. Their own scientists knew the harm their product was causing but the companies kept that knowledge secret and publicly denied it – even as they were extending the legs of their drilling rigs to deal with sea level rise.
Arch Bishop Desmond Tutu said “People of conscience need to break their ties with corporations financing the injustice of climate change.” “It makes no sense to invest in companies that undermine our future. To serve as custodians of creation is not an empty title; it requires that we act, and with all the urgency this dire situation demands.” Continuing to invest public funds in fossil fuel companies helps delay government action on climate change by perpetuating the myth that these companies are good corporate citizens. Which in turn makes it easier for politicians to take fossil fuel companies’ campaign contributions and do their bidding.
Large institutional investors, like CalPERS and CalSTRS, claim that they are addressing climate change through shareholder engagement. But there is very little to show for over twenty years of engagement. Former SEC commissioner Bevis Longstreth said, “Indeed, engagement is likely to assist Big Oil and Big Coal in postponing the day when governments limit the burning of fossil fuels. And “Engagement with institutional investors like Harvard gives the fossil fuel giants the protective cover they need to stretch out the transition process to renewables for as long as they can. It legitimizes talk over action.”
You might be saying, ok, I get the moral argument for divestment, but does it really accomplish anything? Yes it does! The University of Oxford, Stranded Assets Program studied a number of divestment movements and concluded that almost all had been successful in ultimately winning restrictive legislation against their targeted industries. That is the goal of divestment. Divestment is the start of a process of freeing our political system from the undue influence of the fossil fuel industry and thereby making it possible to act on climate change. Think about how the tobacco divestment movement finally made it unacceptable for politicians to take their contributions and that in turn made it possible for the first time to pass public health legislation aimed at reducing smoking. Think about how the divestment movement from South African Apartheid in the 1980s make Apartheid unacceptable. And this in a country that has long turned a blind eye to racial oppression at home and oppression by U.S. supported regimes around the world. Twenty six states, 22 counties and over 90 cities had taken some form of divestment action against companies doing business in South Africa. As a result the divestment movement had great power to shape public opinion and sway politicians. In 1986 Congress passed the Comprehensive Anti-Apartheid Act which banned new U.S. investment in South Africa, and sales to the police and military. President Reagan vetoed the act but the Republican controlled Senate overrode the veto. That was the power of the divestment movement.
We are slowly starting to see this happen with fossil fuels. Nationwide over 3,700 politicians have signed a pledge not to take campaign contributions from the fossil fuel industry, including most notably President Biden and Vice President Harris. The California Democratic Party recently voted not to take fossil fuel money.