Divesting from oil won’t affect climate change
Regarding “California is wary of taking this big step to fight climate change. One Democrat says it makes them ‘hypocrites’ ” ( Joe Garofoli, SFChronicle .com, Feb. 12): As Joe Garofoli points out, California pension funds are reluctant to divest from fossil fuel companies because divestment will have almost no impact in fighting climate change.
When someone sells a share of stock it does not take funds away from the company. Rather, they sell it to some other investor who supports the actions the company is taking. To fight climate change we must focus on actions that actually affect the behavior of firms.
The best way to judge which actions are having an impact is to watch how much money corporations spend to fight those actions. Fossil fuel companies are spending very little to block divestment. But they are spending millions to fight “engagement.” California pension funds are using their ownership stake to force firms, not just fossil fuel companies, to reduce their carbon footprint. While this process is slow, it is having an impact, and the pace of that impact is increasing.
Legislatures in Texas, Florida and other red states have passed legislation to block their pension funds from using environmental, social or governance criteria to guide their investment and engagement activities. They would not be doing this unless it was having an impact. Regulators in Texas have blocked banks doing business in the state from using the carbon footprint of a company as part of the criteria they use in granting or denying loans.
Cutting off the flow of funds to a corporation that is fueling climate change forces them to change their behavior. Selling their stock does not. Douglas Orr, Berkeley