New York City leads global fossil fuel divestment campaign
Thursday, January 25, 2018
NASA recently reported that 2017 was the second-hottest year on record. Climate scientists did not expect this since El Niño was not a factor in 2017, as it was in the two record-setting previous years.
Add to this recent reports that natural disasters cost the U.S. $306 billion in 2017 alone, and we don't need to look far for a solid climate change action argument.
The new normal of unusually-high record-setting temperatures could lead to pessimism in the face of looming climate catastrophes. But for New York City officials, including Mayor Bill de Blasio, it is high time the city lead the nation and the world in fossil fuel divestment and industry accountability measures.
Recently, de Blasio announced a "two-pronged attack" on the fossil fuel industry. First, the city has launched a lawsuit against "five major oil companies, seeking to collect billions of dollars in damages to pay for city efforts to cope with the effects of climate change."
Part two of the attack on Big Oil is divestment. In the next five years, de Blasio plans to divest $5 billion from the city pension fund (worth $189 billion overall) investments in fossil fuels.
Since New York City is an international city, this news is speculated to spur "the global shift required to reduce emissions and stave off the worst consequences of climate change."
Fossil fuel divestment grows popular as climate change's impact grows more visible. In 2015, 400 institutions worth $2.6 trillion and a coalition of individuals, including celebrities like Leonardo DiCaprio, pledged to divest from fossil fuel companies.
According to The New Yorker, "about eighteen percent, of the $36.8 trillion in professionally managed assets in the U.S. is involved in socially responsible investing."
But divestment does have its critics.
Divestment adequately calls attention to unethical business practices — as in the cases of anti-South African apartheid, anti-tobacco and anti-firearms campaigns. However, it can backfire when an institution dumps its shares for an affordable rate and someone swoops in and purchases it.
This was witnessed in oil company divestment in the Sudan: "The divestment campaign served to benefit certain unethical shareholders while failing to alter the price of the stock."
New York City's divestment approach is definitely a highly symbolic action signaling that the city is preparing for a fossil fuel-free or reduced future, with its eye on developing alternative energy options.
But beyond symbolism, this move signals a concrete shift with global ripple effects. Other cities, such as Paris, Berlin, Sydney and Stockholm, have committed to a similar divestment approach. New York City is jump-starting a real shift here that should not be diminished. If enough large investors view Big Oil as a taboo investment, companies may change how they do business and cities may change how they invest.
The Guardian reports that the Norwegian Central Bank, operator of the largest sovereign wealth fund, has "proposed dumping shares in oil and gas companies." Rockefeller Brothers Fund and Oxford University have joined this divestment movement, which activists estimate can add up to $6 trillion in divested dollars.
Simply stated, ethical concerns about the planet's future now rival with surefire investments as a top priority.
New York City's lawsuit against Royal Dutch Shell, Exxon, British Petroleum, Chevron and Conoco Phillips will take years to settle — echoes of Big Tobacco here. But the city makes a compelling case that fossil fuel burning has cost it billions of dollars, including Hurricane Sandy recovery efforts.
The city's general argument is that the industry knew for decades that fossil fuel burning harms the environment, but companies covered this information up.
Whether divestment and legal action against such a profitable and influential industry will have a notable effect in the long run, it is clear that climate change, and its publicly visible impact, is not going anywhere. More and more individuals and institutions may heed the warnings of 2017's record-setting temperatures and natural disaster events — which include historic wildfires, destructive hurricanes, mudslides, tornadoes and drought that cost billions.
New York City appears ready with its two pronged attack. A legal challenge to Big Oil's culpability in ecological destruction could complement financial divestment well, so long as momentum continues to build and attract large-scale investors while providing viable alternatives.
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