Investors must step up pressure on oil firms in climate fight
For the 27th time, fossil fuel lobbyists – over 600 at Sharm-el-Sheikh – and petrostates managed to get a crucial decision postponed: the displacement of fossil fuels by renewables. Since the burning of fossil fuels is predominantly responsible for the climate crisis, there is an urgent need to phase out all fossil fuels by shifting investments to renewables.
Persistent delay of this decision has enabled the climate crisis to wreak havoc in the Global South, which now rightfully demands a “loss and damage” fund. As a result, tackling the impacts of the climate crisis eclipsed tackling its root causes in Egypt.
However, tackling root causes is key to limiting even more devastating consequences. Therefore, paying reparations and investing in renewables should go hand in hand: the Global North should not only finance reconstruction, but also help developing countries leapfrog to renewables.
Big investors, like pension funds, need to consider the consequences of their investment decisions on their entire portfolio. Investors know the costs of runaway climate change will be eye-watering. According to reinsurer Swiss Re, rising temperatures could slash the global economy by as much as 14 per cent (about US$23 trillion a year) by 2050 if the world fails to rapidly phase out fossil fuels.
The climate crisis poses a systemic threat that could wipe out assets worth trillions of dollars; this would place many investors, like pension funds, at risk. Therefore, investors that voted in favour of climate resolutions at oil majors surged from 2.7 per cent in 2016 to 15-39 per cent in 2022. These climate resolutions, filed by shareholder group Follow This, urge Big Oil to drive down emissions.
The technology and the public will to transition to a sustainable economy are widely available. Big Oil has the billions to accelerate the transition. Since politicians are unashamedly hesitant, shareholders must take decisive action and urge this industry to shift their investments to renewables.
Mark van Baal, founder, Follow This