Di­vest in a bet­ter fu­ture

Financial Mirror (Cyprus) - - FRONT PAGE -

Some­times the best mea­sure of a move­ment’s mo­men­tum is the re­ac­tion of its crit­ics. When, in early Oc­to­ber, the Aus­tralian Na­tional Univer­sity (ANU) an­nounced that it would sell its shares in seven fos­sil-fuel and min­ing com­pa­nies, it trig­gered a cho­rus of crit­i­cism from the coun­try’s con­ser­va­tive politi­cians.

Th­ese nom­i­nal cham­pi­ons of the free mar­ket were quick to tell the univer­sity what it should do with its money. The Trea­surer of Aus­tralia, Joe Hockey, dis­par­aged the ANU’s decision as be­ing “re­moved from re­al­ity.” Oth­ers chimed in, call­ing it “a dis­grace,” “very strange,” and “nar­row-minded and ir­re­spon­si­ble.”

Never mind that the sums in­volved were rel­a­tively small – mak­ing up less than 2% of the univer­sity’s es­ti­mated $1 bln port­fo­lio.

As the drive to di­vest from fos­sil fu­els picks up speed, such pan­icky re­sponses are be­com­ing in­creas­ingly common. The out­rage of Aus­tralia’s con­ser­va­tives re­minds me of the re­ac­tion I re­ceived when I tes­ti­fied be­fore the US Congress in 2013 that we should “keep our coal in the ground where it be­longs.” David McKin­ley, a Repub­li­can con­gress­man from West Vir­ginia, in the heart of Amer­ica’s coal coun­try, replied that my words “sent a shiver up [his] spine,” then changed the sub­ject to the crime rate in Seat­tle, where I was Mayor.

Even ExxonMo­bil ap­pears shaken. The company re­cently pub­lished a long, de­fen­sive blog post re­spond­ing to what it de­scribed as a “full-throated en­dorse­ment” of fos­sil-fuel di­vest­ment by Mary Robin­son, United Na­tions Sec­re­tary­Gen­eral Ban Ki-moon’s spe­cial en­voy for cli­mate change. The fos­sil-fuel in­dus­try clearly sees the di­vest­ment move­ment as the po­lit­i­cal threat that it is. When enough peo­ple say no to in­vest­ing in fos­sil-fuel pro­duc­tion, the next step has to be keep­ing coal, oil, and gas in the ground.

That is a nec­es­sary step if we are to head off the most dan­ger­ous con­se­quences of cli­mate change.

To pre­vent world tem­per­a­tures from ris­ing above the 2 de­grees Cel­sius thresh­old that cli­mate sci­en­tists be­lieve rep­re­sents a tip­ping point beyond which the worst ef­fects could no longer be mit­i­gated, we will need to leave ap­prox­i­mately 80% of known fos­sil-fuel re­serves un­tapped.

Oil and coal com­pa­nies and their po­lit­i­cal al­lies warn us of fis­cal catas­tro­phe if we do that – as if heat waves, droughts, storms, and ris­ing seas did not bring their own fis­cal and so­cial catas­tro­phes. As Mayor of Seat­tle, I sup­ported the cre­ation of en­ergy-ef­fi­cient build­ings, the de­vel­op­ment of so­lar, wind, and hy­dro­elec­tric power, and a shift to­ward walk­ing, bik­ing, and pub­lic tran­sit as al­ter­na­tives to driv­ing – strate­gies that can help to build a more re­silient econ­omy and pro­vide vi­able al­ter­na­tives to fos­sil fu­els. But they can­not pre­vent the worst of global warm­ing, par­tic­u­larly if they re­sult in coal and oil sim­ply be­ing sold else­where.

As im­per­fect as our gov­er­nance sys­tems are, at some point the pub­lic and its lead­ers may de­mand that we con­front the truth about global warm­ing. At that point, they will put in place the reg­u­la­tory or le­gal con­trols needed to re­duce fos­sil­fuel use dra­mat­i­cally.

If you are a pru­dent and cau­tious in­vestor, con­tem­plate that pos­si­bil­ity for a mo­ment. Stock val­ues in the fos­sil-fuel in­dus­try – which are based on the as­sump­tion that com­pa­nies will be able to ex­tract and burn all known re­serves – will plum­met. In­vest­ing in th­ese com­pa­nies, it turns out, is ex­traor­di­nar­ily risky. As any­one who re­ceives in­vest­ment state­ments knows, “past per­for­mance is no guar­an­tee of fu­ture per­for­mance.”

That re­al­ity im­plies another com­pelling case for di­vest­ment. To be sure, some will claim that the world will never change and that we will con­tinue to de­pend on fos­sil fu­els for­ever. But one has only to look to Seat­tle, where gay cou­ples marry in City Hall and mar­i­juana is sold in li­censed re­tail out­lets, to see the hu­man ca­pac­ity to re­ex­am­ine deeply held as­sump­tions.

The pru­dent in­vestor, and the wise business leader, will look where the econ­omy is headed, not where it has been.

The ANU’s decision looks like a sage one to any­one not in thrall to oil and gas com­pa­nies, and it will only look wiser with the pass­ing of time. Good on them. When I put Seat­tle on the path to di­vest­ment in 2013, my decision was well re­ceived by the young peo­ple who will have to live with the con­se­quences of global warm­ing, as well as the gen­eral pub­lic. As the po­lit­i­cal pres­sure mounts, the univer­sity’s ad­min­is­tra­tors need only lis­ten to the stu­dents.

We need more courage like that shown by the ANU. Its lead­ers bucked the power of coal and oil in­ter­ests, which wield enor­mous power in Aus­tralia. If they can do it to popular ac­claim, oth­ers can, too.

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