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Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

348 points by melling 7y ago

Synaesthesia 7y ago
Eliminating or reducing government subsidies for oil and coal companies probably would have a climate impact. Even if divestment has “zero impact” as Gates suggests (which I doubt, but ok), it would have a symbolic importance and possibly spur others on to change their approach.
- DennisP 7y ago
  And to that point, it reduces the number of influential rich people with an incentive to lobby against climate action.
- sremani 7y ago
  >> symbolic importance Do the symbolic with your money, I have respect for that. But a bunch of about to be retired people, who may need every penny of their return, will get reduced return because some fund manager wanted to feel good and have better PR all the while collecting the same big check for his services... No Bueno!
voisin 7y ago
By divesting, the cost of capital for these firms increases which makes the marginal projects no longer economically feasible. By then putting money into cleantech, like Gates suggests, we reduce the cost of capital for these firms which is obviously a good thing. His actual quote is that it has probably had zero impact to date which may be true but is largely irrelevant to the proposition that we should divest and increase the cost of capital for these firms.
- triceratops 7y ago
  Or it reduces the stock price of those firms giving better returns to those who are not so morally-driven in their investing decisions.
  - kelnos 7y ago
    Not sure I understand. If large-scale divestment of fossil fuel investments lowers their stock prices, how will that give the non-morally-driven investors higher returns? (Assuming we both agree that "morally-driven" investors will tend to invest in renewables.)
    - andylei 7y ago
      this explains it pretty well. https://www.aqr.com/Insights/Perspectives/Virtue-is-its-Own-Reward-Or-One-Mans-Ceiling-is-Another-Mans-Floor https://www.aqr.com/Insights/Perspectives/Virtue-is-its-Own-...
      - shkkmo 7y ago
        It's a bit wordy, but the relevant argument is here: > everything still gets owned by someone. So, clearly the group without such qualms, call them the sinners, have to own more than they otherwise would of the sin stocks. How does a market get anyone, perhaps particularly a sinner, to own more of something? Well it pays them! In this case through a higher expected return on the segment in question.
        gowld 7y ago
        The article's loose language is confusing. The full analysis has 3 parties: virtuous boycottor investors, vicious (as in vice) investors, which the article incorrectly calls "sinner", and the evil corporation. The conclusion is that the virtuous boycottor investors' weapon is forcing the evil company to pay the vicious investors a premium return, until the corporation is bankrupt, and the vicious investors laugh all the way to the bank while the virtuous investors take pride that their financial sacrifice improved the world.
        shkkmo 7y ago
        The specific question being answered was: > how will that give the non-morally-driven investors higher returns? Which is why I only quoted the section that applied directly. The argument doesn't say that "sinful" companies will be forced into bankruptcy, it goes more like this: 1) virtuous boycotting of a company means the stock has to offer higher returns to "sinful" investors so they buy more shares. 2) Higher returns mean that the bar for the expected return of "sinful" capital expenditures by companies will be higher and thus there were be fewer choices by companies to expend capital in "sinful" ways. I think the second stage of this argument is... weak and conditional. For a company like BP that offers significant dividends, a lower stock price directly correlates to a higher return without costing the company anything. There is only a downside if that company is selling stock to raise capital. Since BP has been buying back stock for years, it seems like this is actually a benefit to BP as well.
- graeme 7y ago
  If prices are based roughly on economic value, then how would divestment by a portion of the market affect capital access? You'd need virtually all capital to have an impact. Otherwise amoral investors could swoop in and capture the profits. I could see divestment in early stage funding being more impactful when things are less liquid.
  - rocqua 7y ago
    Prices are set by supply and demand. Divestment reduces demand. Probably, the falling prices also increase demand, but fundamentally, if fewer people want something the price should drop.
    - graeme 7y ago
      Does this work in liquid markets though? Demand could obviously drive up price beyond fundamental value in a bubble, or below fundamental value in a panic. But in the ordinary course of things, we would expect the price of a security to match its value in the long run. If you are a rational, amoral investor, and you see a security worth $100, you would be prepared to pay up to $100 for it, and to buy it in as large a quantity as you could if it was selling for less. Assuming there is more than one such investor in the market, we would expect them to bid roughly to the expected value of the stock. I suspect this was the reasoning underlying Mr. Gates' comments. As long as customers buy the oil then the security has value for investors.
      - olau 7y ago
        > Does this work in liquid markets though? Well, I think the idea is to try to the make the market for these stocks less liquid. And it might work, because the long run you're talking about isn't actually looking too bright due to the technological developments with renewables and electric vehicles. These stocks are not retirement stocks, unless you're retiring in a couple of years.
        solveit 7y ago
- nradov 7y ago
  Divesting only (marginally) increases the cost of capital for firms which seek additional financing through secondary stock offerings. That doesn't apply to most oil companies.
- Nicholas_C 7y ago
  It’s a bit more complicated though as oil prices will rise if firms don’t take on projects. This in turn would cause those marginal projects to look a lot better down the road and oil prices for consumers will be a lot higher (which might be a good thing if it lowers fuel usage). I think this might be happening right now. There isn’t a lot of reserve replacement going on as everyone is focused on cash flow and the capital markets for energy remain closed due to ESG concerns from investors. If so, the prices will rise eventually and new projects will start.
andrewtbham 7y ago
Divestment of fossil fuels will probably end up being good financial advice. German utilities lost value fast when renewables were implemented. I would put my retirement money in an S&P 500 index fund that excluded fossil fuels.
- gruez 7y ago
  >Divestment of fossil fuels will probably end up being good financial advice. German utilities lost value fast when renewables were implemented. How do you know whether that's already priced in?
- golemiprague 7y ago
  If German utilities lost value it means that moving to renewables didn't work, isn't it? Not that the fossil fuel companies lost value. Which I think indeed what happened there, they had to go back and use coal because the whole renewable thing didn't work so well for them and just made everything more expensive without really providing enough energy.
- clomond 7y ago
  Well, although this is not financial advice - there does exist an index fund that does just that (SPYX). It holds the S&P 500 less any company which "holds fossil fuel reserves". Still some "fossil fuel" companies in there, but for retail investors with the context of an index fund its probably as close as you're gonna get at least today.
triceratops 7y ago
You can't fix a tragedy of the commons with individual action.
- zackmorris 7y ago
  Also I would argue that the smug truisms that people spout such as "divestment won't solve climate change" have a very damaging effect on causes that require concerted action by the public. For example the "Penn & Teller Bull$#!@: Recycling" episode left many viewers under the impression that recycling is a waste of time because it's not mature yet and is sometimes mismanaged. That probably lowered global recycling by some small percentage over several years. A tremendous negative impact in the scheme of things, for a couple guys trying to be funny. It's generally bad form to undermine causes via pedantry, for example: * Nobody should listen to Al Gore about global warming because he flies a private jet! * We can't raise taxes on cigarettes because people will just buy them anyway no matter how much they cost! * Why bother preventing deforestation when nature does what it wants with forest fires anyway! Yet we hear these sorts of arguments right here on HN on practically every submission. Better to at least try to be part of the solution than use criticism as an excuse to do nothing, IMHO.
  - triceratops 7y ago
    I'm not saying "do nothing". I think legislation is a better tool to fix this problem and everyone's time would be best spent on working on that. > Nobody should listen to Al Gore about global warming because he flies a private jet! Well, I think we should still listen to him. He could also fly first-class and set a better example. But average Joe passenger won't fly less just because "it's good for the planet". He will fly less if it starts to cost more because of a carbon tax. > We can't raise taxes on cigarettes because people will just buy them anyway no matter how much they cost! That's not true in the slightest; cigarette consumption is inversely correlated to taxes. A cigarette tax is the opposite of individual action. I'm strongly in support of a carbon tax. > Why bother preventing deforestation when nature does what it wants with forest fires anyway! That's...a super-weird statement to make in the context of what I said. Preventing deforestation can't be accomplished with individual action e.g. by boycotting Amazon-grown soy or something. You need laws and tariffs. FWIW I also recycle and try to keep up with the latest and greatest on plastic sorting. But I also know it doesn't do anything in the big picture. Add a $10 fine for badly sorted recycling and the problem will fix itself.
Nasrudith 7y ago
Really divestment is something which seems intuitively to be threshold based for its impact. If there is a robust investment pool any leaving will just be auto-filled by those seeking opportunities. However if it gets below a critical mass from enough divestitures they will find new investments hampered and those who are "late to the exit" will find it hard to get value out of it.
- imtringued 7y ago
  The company still earns the same amount of income from selling fossil fuel products.
- gruez 7y ago
  >However if it gets below a critical mass from enough divestitures they will find new investments hampered and those who are "late to the exit" will find it hard to get value out of it. ...only if the company actually needs more capital and can't raise it any other way (eg. bonds). If there's any sort of leak, then you're giving the holdouts outsized returns.
  - ClumsyPilot 7y ago
    What do you mean by the leak? What mechanism would drive outside returns?
    - gruez 7y ago
      >What do you mean by the leak? non-divesters who are willing to invest or extend credit to the company. >What mechanism would drive outside returns? It's been explained by other comments in this thread. Basically divesting worked, it would suppress demand, allowing non-divestors to purchase the company (and thus the future earnings) at a cheaper price.
kerkeslager 7y ago
I'm pretty unclear on how anyone even thinks divestment works, actually. When a company sells stock in an IPO, buying stock from them allows them to raise capital, so it seems clear to me that you shouldn't buy stock from a fossil fuel company. But that's non-investment, not divestment. Divestment is about selling existing stock. It's true that divestment drives down the stock price. This could mean that if a company has retained stock, it would limit their ability to sell that stock to raise capital in the future. However, if you drive down the stock price, it's just as likely that you'd be allowing the company to buy back its own stock at a bargain price, which could help the company by allowing them to retain greater control. It's not guaranteed that you're hurting the company by driving down the price of their stock--in fact, you may be helping them. It might be possible to look at the needs of individual companies and divest from those companies to drive down the stock price if and only if you think they will be attempting to sell stock in order to raise capital in the future. But this strategy has risks, and I've also never heard anyone talk about this strategy when talking about divestment.
- bcoates 7y ago
  I think it assumes that large investors aren't really passive, but intervene on behalf of their investments. If you convince someone to divest from X, then they have the luxury of remaining neutral when you propose that X be destroyed.
  - gbrown 7y ago
    Exactly, carbon regulation will be a lot easier to pass if the direct impact to peoples' finances is lessened.
    - facorreia 7y ago
      But some other investor bought the stock, didn't they?
      - gbrown 7y ago
        Perhaps, though most people don't buy stock. If you can get institutional investors to divest, that limits most people's direct exposure. Do I expect it to necessarily make a big difference (especially in the short term, without becoming a broader movement)? No. I do believe, however, that it's not nothing, and that we need to pursue everything. There's also a personal aspect - I want nothing to do fossil fuel stocks. I try to limit my emissions in my personal life, so why not exercise that preference in whatever small way I can in my financial life?
beatpanda 7y ago
Divestment also means asking banks and institutions to commit to not investing in new fossil fuel infrastructure, not just selling stock in existing oil and gas companies. Making it more difficult for new fossil fuel infrastructure projects to access capital absolutely has an impact.
nabla9 7y ago
Fossil fuel divestment is basically subsidy for those who don't care. Divestment causes stock price drop and it increases ROI for those who invest into the company.
- dannypgh 7y ago
  It's really "threat that more people will want to divest or remain divested when they would have otherwise invested" that can cause change. The board answers to the shareholders, and shareholders generally want to be able to sell their shares at a profit. If shareholders start to believe that the market for the shares is going to continuously decline because of some activity the company engages in, that creates an incentive to pressure the company to change behavior.
  - shkkmo 7y ago
    Rising stock prices is not the only way or even the primary way that companies generate returns for their investors. Many oil companies pay dividends to their stockholders and these can outweigh the gain from increasing stock prices. BP, for example, uses a significant amount of their cashflow to pay dividends and buy back stock. Their current dividend return is ~6% and has varied between ~2% and ~8% over the last 10 years meanwhile their stock price has fluctuated (by a significant amount) in the 30s and hasn't produced any meaningful gains in value for the average "Buy and hold" investor. Long term holders of BP stock make their money from dividends, not from increases in value in the BP stock. Making that stock cheaper just means that the dividend rate of return goes UP.
    - dannypgh 7y ago
      It is true that stocks are assigned some value based on expected future dividends, but this only one component of the value of a share, and for any company undergoing a divestment campaign, this will shift. A publicly traded Ponzi scheme can maintain a 10% yield for 10 years with only an IPO.
      - shkkmo 7y ago
emckay 7y ago
Divestment also results in less shareholder oversight of emission heavy companies because environmentally conscious investors are selling their shares to investors with less scruples. This isn't just theoretical. According to Fossil Free, asset managers with about 10 trillion under management have committed to divesting. If you assume 10% of that is tracking something like the S&P 500, then these investors have sold about 80 million shares of Chevron. In 2018, shareholders introduced a proposal asking Chevron to limit its methane emissions. That proposal failed with 46% of the vote. 80 million shares would have been enough to swing the vote to 54% in favor. I quit my job a couple of months ago to fix this problem. You can learn more at greengovernance.org or by emailing me at (hn username)@greengovernance.org (typed this from my phone on a plane but I will add citations later when I get to my computer)
- TheGallopedHigh 7y ago
  Could you talk a bit more about your company?
  - emckay 7y ago
    We're creating an S&P 500 index fund that aggressively uses shareholder engagement to get companies to reduce emissions through their supply chains.
    - veezbo 7y ago
      This seems like a great idea in theory- potentially better than the so-called luxury ETFs that only invest in what the fund manager deems as socially-responsible companies. If your expense ratios are low, and you allow me to have a meaningful say in how I or the fund as a whole votes for better climate outcomes, I would be personally interested. I'd love see how you guys do it, and will be following your progress.
      - emckay 7y ago
        Exactly! Thanks for the kind words.
jsingleton 7y ago
This is the report mentioned in the article: https://www.gatesfoundation.org/goalkeepers/report/2019-report/ https://www.gatesfoundation.org/goalkeepers/report/2019-repo...
scohesc 7y ago
Wow, that's absolutely insane that I have to go through half an hour of 'opting out' from different ad networks in order to visit the actual website I was going to in the first place without being tracked. Thank developers for ad-block technology.
- bcaa7f3a8bbc 7y ago
  BTW, these opt-out options work by adding unique cookie identifiers to your browser (opt-out tracking is implemented by tracking you?). If you block 3rd-party cookies or ads, it won't work, and you'll need to redo everything if you clear cookies or change browser. I'd say these "opt-out" options are not gonna work in practice.
mushufasa 7y ago
If you agree that the real solution is for investors to engage with your portfolio -- to own what you own -- we've built www.yourstake.org to help you do so. If you take action (or decide not to), I'd love to hear your feedback : (patrick) @ yourstake.org.
omegaworks 7y ago
Fossil fuel divestment has zero climate impact, says a billionaire with capital invested in the fossil fuel economy. >Those who want to change the world would do better to put their money and energy behind the disruptive technologies that slow carbon emissions and help people adapt to a warming world, Mr Gates told the Financial Times. Divesting from the fossil fuel industry doesn't prevent people from investing in alternative, disruptive technologies. In fact, it frees up more money to be invested in those technologies!
Angostura 7y ago
So divest from fossil fuels and reinvest in disruptive technologies that slow carbon emissions. Got it.
nullc 7y ago
For a while I've wondered if the math might work out such that the most cost effective way to fight greenhouse gas emissions is simply to buy up and horde oil on the open market. The oil has carbon already trapped in an efficiently storable form, it's absurdly dense, it's quite inexpensive... and buying it up would have a secondary effect of driving up the price, which would incentivize efficiencies and alternatives. Bonus, as a government program it would be more appealing to climate change deniers than alternatives because at the end of the day you'd have oil, which could later be used if we figure out some better solution (or that the problem didn't exist in the first place).
- omegaworks 7y ago
  Artificially propping up the price of oil won't have the intended effect: It would incentivize the extraction of oil, which at present requires infrastructure that damages the surrounding environment. A lot of the oil is in the ground now because it doesn't make financial sense to extract it; the cost of extraction is less than the revenue generated from its sale on the market. There's plenty of oil hoarded in the ground now in private wells. People sitting on land rights waiting for the right time to sell that oil on the open market. A massive government program that artificially props the price of oil up is the perfect setup for a massive wealth transfer to people that do nothing but hold title. That extracted oil would need to be transported or piped away from the extraction site and stored in perpetuity, all of which the land was already doing for free! Techniques for extraction like fracking destroy the quality of adjacent groundwater and externalizes that cost onto the surrounding community. We don't want a government program that incentivizes poisoning groundwater on a hotter planet with diminishing glacial melt surface water. Planet Money did an excellent series on the crude economy: https://www.npr.org/sections/money/2016/08/26/491342091/planet-money-buys-oil https://www.npr.org/sections/money/2016/08/26/491342091/plan...
biehl 7y ago
Divestment is a practical prerequisite for effective regulation of fossil fuel companies. Right now tough regulations will directly hurt pensioners with pensions invested in fossil fuel companies. After divestment will not hurt those people in the same direct way. So: Step 1) - Divest Step 2) - Regulate to fully compensate for externalities caused by fossil fuel companies without worry of collateral damage
- anonuser123456 7y ago
  Right and here's the problem. Pension funds are notoriously underfunded and filled with people that don't give one iota of a rip about where it's invested. Pension managers will not leave those yields on the table or they'll fave a revolt.
noneckbeard 7y ago
Investors divesting from fossil fuels sounds a lot like sanctions in that they “don’t work until they work.”[1] It would take an overwhelming number of investors to make divestment really hurt, which is unlikely. And I definitely agree that focusing on supporting climate change impact is better than starving the polluters. But it seems intellectually dishonest to say that divestors are “wasting their time.” And there’s no reason you can’t do both. 1. https://qz.com/1072581/sanctions-dont-work-until-they-do-the-art-of-pressuring-north-korea/ https://qz.com/1072581/sanctions-dont-work-until-they-do-the...
- paulsutter 7y ago
  Wouldn’t it be better to reduce demand? Even just now where supply was literally taken out with missles (or were they drones?) that doesn’t affect how much fossil fuel is used. Why would divestment work any better? To reduce demand you should either create cheaper ways to store alternative energy or make carbon based fuels more expensive with a carbon tax.
  - noneckbeard 7y ago
    Can’t it be both? Those aren’t mutually exclusive, and in fact are hardly even related in terms of implementation. And taking out supply to drive up cost of fossil fuel will absolutely have an impact. At least a few people will opt for the fuel economy version of their new car in the next few days after seeing the new sticker price of a gallon of gas.
- la_barba 7y ago
  >Investors divesting from fossil fuels sounds a lot like sanctions in that they “don’t work until they work.”[1] Sure, but you can say that about any cause. Sounding like something is vague, and thats the larger point from the article. People need to quantify the actual impact of their actions w.r.t. divestment. Whereas, its easier to quantify the impact of other more positive/creative actions (e.g. transitioning from petroleum to clean energy). >And there’s no reason you can’t do both. Oh, there are more than two ideas that activists have. There is "no reason" you can't do a third, fourth, fifth, sixth, seventh and more and more. You only have limited resources to expend here - your free time, energy and motivation.
antibland 7y ago
Climate change is solved with neither divestment nor technology, but with hard-stop policy reforms. Considering just 100 corporations are responsible for 71% of global emissions [0], we know who's doing the damage and how they're doing it. [0] https://www.theguardian.com/sustainable-business/2017/jul/10/100-fossil-fuel-companies-investors-responsible-71-global-emissions-cdp-study-climate-change https://www.theguardian.com/sustainable-business/2017/jul/10...
scrooched_moose 7y ago
> However, Mr Gates questioned the divestment movement’s “theory of change”, arguing that investors who want to use their money to promote progress will have better results by funding innovative businesses such as Beyond Meat and Impossible Foods, two alternative protein companies he has backed. I must be missing something, but isn't that exactly what "divestment" is? You sell off shares in fossil fuels and reinvest the money in other industries which are more climate conscious? It sounds like he's saying people are getting their money back from fossil fuels and hiding it under the mattress.
- cptskippy 7y ago
  You can both keep existing investments in fossil fuels and invest new funds innovative companies. It isn't any either or proposition.
  - pavon 7y ago
    Moreso, if the fossil fuel investments are profitable, you can use the returns to fund more progressive companies than you would have been able to otherwise.
- angstrom 7y ago
  This has always been my interpretation. I was unaware the idea was to sell C02 heavy companies.
- Kye 7y ago
  The article does seem to operate on the premise that they aren't doing this. Until now, I assumed the point was to divest from fossil fuels and reinvest in growth industries: renewables and sustainable production. But maybe they aren't. The article might have a flawed premise, or maybe it's a call to action for organizations that are divesting to invest in the future. I only skimmed the article, so I don't know if they explored this. At a glance, I see no mention of where the money went after they pulled it out of fossil fuels.
jchw 7y ago
> The idea is not to starve companies of capital but to remove their “social licence to operate” Per this description, the basic idea behind divesting seems similar to the concept of creating social stigmas and perhaps even “cancel” culture. I’d argue that this isn’t even very effective as a vehicle for positive change amongst individuals, and seems extremely unlikely to be effective amongst corporations. Honestly, it doesn’t seem like the idea of corporate social responsibility has held up well in the modern era, period.
- mxcrossb 7y ago
  Basically, think of divesting as an advertisement. Every time a major player does it, the public hears a pro environment message, and leaves thinking climate change is something to act on now, and that green energy is the future. And public perception does have an impact on the future. Let me emphasize the cynicism of this point. As you said, no individual corporation is going to change here (other than running more advertisements to boost their image), because it’s not like they can stop being a fossil fuel company. There’s no carrot to match the stick.
Havoc 7y ago
I think he underestimates the wrath of a market that has judged a market sector unpopular
- anonuser123456 7y ago
  One markets unpopularity is anothers arbitrage. The underlying value is what drives the asset in the long run. Oil companies play the long game.
  - Havoc 7y ago
    > Oil companies play the long game. Except in the long run these companies are dead unless they pivot.
jes5199 7y ago
Even if this is true, there’s a moral dimension to what you invest in - do you really feel okay about making money off of fossil fuels?
- colanderman 7y ago
  Indeed I thought this was the entire point of divestment. Not to profit off of unethical activities. I'm surprised anyone would think this would impact climate change.
sarah180 7y ago
He's probably right that there are much more effective ways to focus resources & energy, but you'd have to believe that markets and elasticity don't exist to believe the impact is zero. If you reduce the pool of investors, the cost of access capital goes up. This means companies that would start a new fossil fuel project will have to give up more money to get investment or loans. Most projects will be unaffected, but this will be the difference between some marginal projects happening and not happening. This is pretty basic economics, though perhaps Gates has a reason in mind not to believe this will apply.
crankylinuxuser 7y ago
This, I would believe is a false hit piece that is trying to protect coal, oil, and gas. https://www.newyorker.com/news/daily-comment/money-is-the-oxygen-on-which-the-fire-of-global-warming-burns https://www.newyorker.com/news/daily-comment/money-is-the-ox... "It has become the largest such campaign in history: funds worth more than eleven trillion dollars have divested some or all of their fossil-fuel holdings. And it has been effective: when Peabody Energy, the largest American coal company, filed for bankruptcy, in 2016, it cited divestment as one of the pressures weighing on its business, and, this year, Shell called divestment a “material adverse effect” on its performance."
bartimus 7y ago
Why is nobody concerned about the next 100.000 years lasting ice age which is already overdue by roughly 4000 years?
- quickthrower2 7y ago
  Because we can biohack that hypothetical problem by burning fossil fuels.
- input_sh 7y ago
  Maybe because we see 0 evidence of an ice age happening any time soon, while we see the opposite catastrophe happening in a timespan from yesterday to within a few decades, depending on where you live?
ahupp 7y ago
There's an efficient markets reason to believe this. Say you have some estimate of the value of all future earnings of some business, and then a group of people divests and pushes down the share price. The future earnings haven't changed, so this pushes down the P/E ratio and makes the stock that much more attractive to buyers who aren't divesting. It's just not possible for it to have that much price impact.
Udik 7y ago
For a start, I can't even understand what is exactly the point of advocating any action against fossil fuel companies. After all, those companies only exist because we, directly or indirectly, buy their products. And we buy their products because they're cheaper than the alternatives, or even irreplaceable. It's as if everybody were asking the government to take action against the supermarket where we all do our grocery shopping. We could ask the government to impose a heavy tax on our shopping (which we'd have to pay dearly, of course) but no, we want some action to be taken against the company that owns it. What is the purpose? Another commenter links an article on the Guardian that claims that only 100 companies are responsible for 70% of the global greenhouse gasses emissions. It's as if those companies were producing and consuming the fuel themselves. No, those companies sell fossil fuels to us, we are buying and consuming it. Am I being extraordinarily naive? Or this thing just doesn't make sense?
- parasubvert 7y ago
  It’s largely driven by people that don’t want to work within the market, they want to break the market, by starving supply / making it illegal. This tends to just lead to higher prices, black markets, riots, and right wing populist governments, but what do I know.
  - Udik 7y ago
    The end result of any successful action to curb fossil fuel consumption will be (at least at the beginning) an increase in the price of products depending on them. So why don't people ask directly for more taxes on those products, to drive the demand towards better alternatives? It seems to me that the people don't want to take their share of responsibility and accept that the they'll have to bear the costs of the solution; and instead crave for some sort of empty vengeance on the companies whose products they keep buying.
    - parasubvert 7y ago
      Yep. In fairness the carbon tax approach might not work so well in practice as people can just vote in populists to repeal it. A regulatory framework of rising emissions standards ala California has the nanny state downside but is harder to undo (though Trump is giving it a college try). No where in the above does “let’s just put everyone we don’t like in jail” actually work unless you’re fond of terrorism and civil war..
rmrfrmrf 7y ago
Bill Gates also doesn't support the Green New Deal or government involvement (god forbid his taxes go up) in mitigating climate change. His public prayers for a technocratic solution to climate change are ridiculous and embarrassing for him considering he knows it will never happen.
- loeg 7y ago
  Bill Gates generally supports higher taxes on the very wealthy, like himself. Not sure why you decided otherwise.
colanderman 7y ago
Maybe I'm weird. I always thought the purpose of divestment was to stop profiting off of unethical companies, and to eliminate conflicts of interest for value-driven entities such as nonprofits. I'm surprised anyone would treat it as a tool to fight climate change.
- Diggsey 7y ago
  Whose voice carries more weight when campaigning to reduce fossil fuel usage: the person who profits off fossil fuels and will suffer as a direct result, or the person who has divested themselves completely? If you have a moral objection to receiving those funds, then just give them to a charity that might actually help. The way economics works, if you choose to divest yourself in this way, you are betting against the profitable use of fossil fuels, but you are not influencing it (it will either continue or cease on its own depending on whether it stays profitable). You are simply encouraging someone else (who maybe doesn't care so much about the environment) to "take that bet" and profit off your poor decision.
  - Nicholas_C 7y ago
    The problem is if you’re an activist investor you’re not going to buy a bunch of shares and then tell them to stop trashing the environment or else. You might not get support from other investors and your shares would drop.
  - dunstad 7y ago
    Choosing not to profit off of fossil fuels may be a 'poor decision' from a financial perspective, but it's a good moral decision. The fact that our financial systems incentivize poor moral behavior makes them poor systems.
    - Armisael16 7y ago
      Honest question: why is it inherently bad morals to profit from fossil fuels? If you act the same as you would if you weren’t profiting I don’t seem how it changes anything at all. It seems strange to me to cast everyone with an index fund as morally corrupt.
cwkoss 7y ago
Bill Gates rarely makes controversial statements like this. I wonder if his PR team specifically contrived this statement to distract from allegations re: Jeffrey Epstein.
- randogogogo 7y ago
  I have not gotten the impression anything Jeffrey Epstein related was "sticking" to Bill Gates.
  - cwkoss 7y ago
    https://twitter.com/search?q=bill%20gates%20epstein&src=typed_query&f=live https://twitter.com/search?q=bill%20gates%20epstein&src=type... ~400 tweets containing "bill gates" and "epstein" in the past day It seems the allegations are not very credible, but PR team may still want to spin story away from it.
ggm 7y ago
Value of shares is based both on revenues from holding the share and increase in value as growth. If the superannuation and sovereign wealth and trust funds worldwide (Trillion-dollar investment vehicles) stop investing in something it functionally loses 'gold plated' status and cannot be held to be less-speculative (in reality all shares are speculative but there are differences of degree and the holdings in the long term funds indicate "safer" bets in many cases) and so their inherent value becomes more open to question. I believe this would represent a real decline in value, as their risk changed. It would have to be declared on many people's books. It would remove some liquidity from markets, it would represent the kind of alienation of value which happens when a large thing is held for reasons disconnected from its actual profit. Enron. Has the value of owning tobacco shares not changed, as a result of divestiture? It is possible the dividend payment had to rise, to offset declines in base share value (for instance) Gates is making a reductionist statement, I think he has possibly forgotten what people do in the face of changes in perception of value. His friend "the sage of Omaha" very much prefers shares which pay dividends and this may be reflected in what he is saying, since he is not by nature a highly speculative investor.
- agar 7y ago
  Gates says divestment will not lower carbon emissions. This is very different from saying it will not lower valuation. Has the reduction in tobacco companies' stock prices materially affected smoking rates? I don't think so.
  - ggm 7y ago
    I'm less sure. Juul would say that redirecting nicotine addicts to vaping over smoking has probably altered rates of uptake of smoking, and the market backs Juul and vaping which has led big tobacco to diversify and invest. Oil and Coal ventures who own the underground asset have the choice of converting from gasoline production to feedstock for plastics and pharma and fertilizer, or just leaving it in the ground for future valuation. If they don't get capital raising its more expensive for them to develop new fields. I guess in some sense the de-carbonisation probably doesn't sheet home solely to investment decisions in coal and oil but I doubt its un-connected.
lgessler 7y ago
This analysis ignores the social significance of divestment (i.e., which might somehow contribute to other actions which are more impactful), though it might still be that even after accounting for this divestment isn't what environmentally-conscious people and organizations should prioritize.
WhatIsDukkha 7y ago
So where does the dollar to invest in climate innovation come from if you don't take the dollar out of the fossil fuel stock? What he said was nonsensical and innumerate. Perhaps its because he has effectively infinite money? His comment don't really hold up even under basic charity. The dollar in fossil fuels is a dollar not in another industry with a better story for the environment. The rest of us have a limited pile of dollars to decide with.
- joe_the_user 7y ago
  So where does the dollar to invest in climate innovation come from if you don't take the dollar out of the fossil fuel stock? "Climate innovation" is also going have limited impact on global warming, if by "climate innovation" you mean lower cost power sources like solar or wind. The problem is that lower-cost clean fuel is not drive hydrocarbons away since pumping already-found oil out of the ground pretty much can't be beaten in price. The only that can stop CO2 pollution is states using their regulatory power to stop it. One factor to consider is that pension funds and other funds with social impact would do well to divest if such a regulatory crack-down is to take place. -- "CO2 pollution" is good way to phrase it too, since other pollution problems aren't handled with the kind of worthless half-measures that CO2/greenhouse-gas problem has been mishandled with.
- comicjk 7y ago
  Imagine a climate innovator that is selling stock worth $1 billion based on expected returns. That stock can be expected to sell for $1 billion, and no more, even if $0.5 billion of that comes from altruistic investors. The altruistic investors can't drive up the price - as long as money from amoral investors is needed, the amoral investors are the price setters, because they won't pay more than what they think the expected returns are worth. They will step aside as the altruistic investors move in. The altruistic investors would do better to just invest for maximum returns and donate money. Note, I don't act according to this advice: I'm invested in sustainable funds despite my own arguments. But I don't expect this to go very far, so I'm also donating to appropriate causes.
  - ClumsyPilot 7y ago
scottlocklin 7y ago
I love this sorts of moralistic windmill tiltings; they make for wonderful buys.
manfredo 7y ago
It artificially deflates the demand for equity in fossil fuel companies. Which theoretically would result in lower willingness to invest in fossil fuel ventures. But these companies already exist, and artificial deflation of their stock price won't keep people from fueling up their cars. I think a better strategy would be conditional investment tied to reduction in emissions. Have a mechanism to buy $X stock at a higher price in exchange for a power company to replace a coal plant with a gas one, or replace a gas plant with a solar farm.
bayareabronco 7y ago
Divest from fossil fuels and invest the funds in clean energy. What am I missing?
- loeg 7y ago
  The other investors will sell the now marginally overpriced clean energy funds and buy the now marginally underpriced fossil fuel funds. Stock prices and capital available remain the same.
ineedasername 7y ago
Sure, unless everyone divests, a few people selling will drive down the share price only until those not selling realize the asset is undervalued and buy the price back up. All that, without actually changing the production and consumption model.
3131s 7y ago
Isn't this article presenting a false dichotomy? How is divesting from fossil fuels mutually exclusive to putting your money behind "tech that helps cut emissions instead"? In the short term at least, you'll have more money to do exactly that after divesting. The only rationale I can see for having this mindset is that 1) it is imperative to make money in order to reinvest in better causes, and 2) investing in fossils fuels is the best way to maximize profit.
brownkonas 7y ago
I can't help but remember: past results do not indicate nor guarantee future returns. Unless someone can un-convince me of general macro-economics, not investing in fossil fuel companies will lead to depression of the fossil fuel market and incentivize more relatively lucrative opportunities. The companies of the past only had the means of production of the past, the companies of the future have access to non-fossil fuel dependent energy.
- H8crilA 7y ago
  I imagine there's enough capital to take over the divested amounts. Warren Buffett has no trouble investing in oil (e.g. the recent Occidental/Andarko merger, he got some juicy preferred shares out of that). And I'm sure he's not alone. Taxes/limits, we need that on carbon. The economic status quo on the subject is also the most obvious response: pay for the externality you're causing when burning carbon. EU's limits system (cap-n-trade) is already there and has been for many years, can be plugged into a global CO2 emissions market. This should eventually extend to cars, airplanes, ships, steel, concrete, home heating, whatever - even the farting cows. Either that or solar geoengineering.
habosa 7y ago
I agree with Bill that divestment is probably less impactful than many people think, and certainly not worth all of the effort people go through protesting trying to get Fund X to divest from Objectionable Investment Y. However I think there are two obvious ways it has > zero impact. Let's take an oil company as an example: 1) If fewer influential investors/funds are invested in oil, there will be fewer people angry if a third party proposes a law or regulation that will hurt oil profits. As said in the article, it makes change easier. 2) The money divested will not go under a mattress. It will be invested in something slightly better (or less worse). Over time this moves money in the right direction.
- edanm 7y ago
  I don't get your second point- money "divested" is replaced by different money invested - there's no overall change.
MandieD 7y ago
You divest from something you consider morally problematic so that your other actions are not influenced by a desire to see your morally-questionable investment be more profitable. I own about as much XOM as I pay for heating oil each year. Is that small enough that I’m not ever so slightly tempted to ask my representative to go easier on oil drilling restrictions? So far, it’s not tempted me. But if 10% of my net worth were in fossil fuel stocks? I might be hesitant to ask for tighter regulation of that industry. My owning or not owning XOM makes no difference in Exxon’s behavior, but it might in mine.
perfunctory 7y ago
> Those who want to change the world would do better to put their money and energy behind the disruptive technologies that slow carbon emissions and help people adapt to a warming world, Mr Gates told the Financial Times. You cannot put your money behind the disruptive technologies if your money is tied in fossil assets. You'll have to divest first before you can relocate it elsewhere. You can spend a dollar only once.
- viraptor 7y ago
  The point was that these are separate actions. You can sell the oil shares and do whatever you want with the money - that doesn't change anything. You can use that money to invest in green alternatives - that's what matters.
tomtomtom777 7y ago
It's an interesting perspective and one pursued by the initiative: https://follow-this.org/en/ https://follow-this.org/en/ They offer shares of Shell in an attempt to transition the company to green energy.
myspy 7y ago
"put their money and energy behind the disruptive technologies that slow carbon emissions and help people adapt to a warming world?" Example here is Beyond Meat. I hear the recommendation a lot to put a high price on CO2, i.e., what creates a lot of CO2 during production gets more expensive. The idea is demanded by the Friday for future movement, or better said by the experts they asked how to solve our climate change problem. I think it would be the right direction.
coldtea 7y ago
So, how about the concern that if we cut fossil fuel to 0% tomorrow (or even in a year or decade), we would have absolutely no way (for decades) to replace it. We don't have enough alternative (renewable or nuclear or whatever) energy power, we need to build billions of electric cars (if we are to replace the current fleet), thousands of wind/solar/etc installations, ways to regulate fluctuations and store the energy that don't involve fossil fuel grid, as well as tons of factories, machinery, etc currently operating on fossil fuel, including our entire airplane fleets, plus all the armies in the world... Oh, and find the money to do all that... So there's that... Some people seem to believe that if we turned a switch, we could turn to 100% renewables tomorrow...
- itsthewrongway 7y ago
  I agree. And I think what people are missing is that when Gates talks about beyond meat and impossible foods, he’s saying those companies are actually doing something now that have the ability to make a difference by helping people to consume less meat. And in reality we all have the power to flip the switch and stop eating meat today, which causes as much as if not more greenhouse gasses than all of the fossil fuel industry combined [link below]. And again, no new technology needed, and we can start today. But as I’ve noticed people tend to put on earmuffs when you mention that. https://science.sciencemag.org/content/360/6392/987.full https://science.sciencemag.org/content/360/6392/987.full
JulianMorrison 7y ago
Really the problem here is taking the rules of a free market economy as immutable and not seeking a political solution that could outright ban misbehaviour, rather than trying to defund it piecemeal. The correct solution to ecocide is a criminal charge and seizure of assets.
Beltiras 7y ago
Neccesary but not sufficient. Divestment in dinofuel should be closely followed by investment in clean energy tech, sequestration or other carbon-saving or net-negative industry.
emoticoji 7y ago
Bill doesn't want his share value to go down. He has billions of dollars on the line making sure the spice flows. Since Microsoft's big data is in bed with the fossil fuel industry to produce billions of dollars worth of additional fossil fuel production.
Likeable 7y ago
If fossil fuel companies stop getting new investments then they can't explore new sources of fossil fuels. And keeping the fossil fuels that are still in the ground there is one of the top priorities for fighting climate change. Every billion ton of coal we mine turns into three billion tons of CO₂ and that adds another 0.5 ppm of CO₂ to the atmosphere.
avmich 7y ago
https://johncarlosbaez.wordpress.com/2019/09/18/divesting/ https://johncarlosbaez.wordpress.com/2019/09/18/divesting/ Today it is large corporations which have the greatest power over daily life, and they are far more susceptible to pressure and change then the insulated bureaucracies of governments. Thankfully Bill and many others knew this years ago, and started a divestment campaign of breathtaking magnitude...
JohnClark1337 7y ago
I especially like how it turns into a hit piece in the last two paragraphs

348 points by melling 7y ago

Eliminating or reducing government subsidies for oil and coal companies probably would have a climate impact. Even if divestment has “zero impact” as Gates suggests (which I doubt, but ok), it would have a symbolic importance and possibly spur others on to change their approach.

DennisP 7y ago
And to that point, it reduces the number of influential rich people with an incentive to lobby against climate action.
sremani 7y ago
>> symbolic importance Do the symbolic with your money, I have respect for that. But a bunch of about to be retired people, who may need every penny of their return, will get reduced return because some fund manager wanted to feel good and have better PR all the while collecting the same big check for his services... No Bueno!

voisin 7y ago

By divesting, the cost of capital for these firms increases which makes the marginal projects no longer economically feasible. By then putting money into cleantech, like Gates suggests, we reduce the cost of capital for these firms which is obviously a good thing. His actual quote is that it has probably had zero impact to date which may be true but is largely irrelevant to the proposition that we should divest and increase the cost of capital for these firms.

triceratops 7y ago
Or it reduces the stock price of those firms giving better returns to those who are not so morally-driven in their investing decisions.
- kelnos 7y ago
  Not sure I understand. If large-scale divestment of fossil fuel investments lowers their stock prices, how will that give the non-morally-driven investors higher returns? (Assuming we both agree that "morally-driven" investors will tend to invest in renewables.)
  - andylei 7y ago
    this explains it pretty well. https://www.aqr.com/Insights/Perspectives/Virtue-is-its-Own-Reward-Or-One-Mans-Ceiling-is-Another-Mans-Floor https://www.aqr.com/Insights/Perspectives/Virtue-is-its-Own-...
    - shkkmo 7y ago
      It's a bit wordy, but the relevant argument is here: > everything still gets owned by someone. So, clearly the group without such qualms, call them the sinners, have to own more than they otherwise would of the sin stocks. How does a market get anyone, perhaps particularly a sinner, to own more of something? Well it pays them! In this case through a higher expected return on the segment in question.
      - gowld 7y ago
        The article's loose language is confusing. The full analysis has 3 parties: virtuous boycottor investors, vicious (as in vice) investors, which the article incorrectly calls "sinner", and the evil corporation. The conclusion is that the virtuous boycottor investors' weapon is forcing the evil company to pay the vicious investors a premium return, until the corporation is bankrupt, and the vicious investors laugh all the way to the bank while the virtuous investors take pride that their financial sacrifice improved the world.
        shkkmo 7y ago
        The specific question being answered was: > how will that give the non-morally-driven investors higher returns? Which is why I only quoted the section that applied directly. The argument doesn't say that "sinful" companies will be forced into bankruptcy, it goes more like this: 1) virtuous boycotting of a company means the stock has to offer higher returns to "sinful" investors so they buy more shares. 2) Higher returns mean that the bar for the expected return of "sinful" capital expenditures by companies will be higher and thus there were be fewer choices by companies to expend capital in "sinful" ways. I think the second stage of this argument is... weak and conditional. For a company like BP that offers significant dividends, a lower stock price directly correlates to a higher return without costing the company anything. There is only a downside if that company is selling stock to raise capital. Since BP has been buying back stock for years, it seems like this is actually a benefit to BP as well.
graeme 7y ago
If prices are based roughly on economic value, then how would divestment by a portion of the market affect capital access? You'd need virtually all capital to have an impact. Otherwise amoral investors could swoop in and capture the profits. I could see divestment in early stage funding being more impactful when things are less liquid.
- rocqua 7y ago
  Prices are set by supply and demand. Divestment reduces demand. Probably, the falling prices also increase demand, but fundamentally, if fewer people want something the price should drop.
  - graeme 7y ago
    Does this work in liquid markets though? Demand could obviously drive up price beyond fundamental value in a bubble, or below fundamental value in a panic. But in the ordinary course of things, we would expect the price of a security to match its value in the long run. If you are a rational, amoral investor, and you see a security worth $100, you would be prepared to pay up to $100 for it, and to buy it in as large a quantity as you could if it was selling for less. Assuming there is more than one such investor in the market, we would expect them to bid roughly to the expected value of the stock. I suspect this was the reasoning underlying Mr. Gates' comments. As long as customers buy the oil then the security has value for investors.
    - olau 7y ago
      > Does this work in liquid markets though? Well, I think the idea is to try to the make the market for these stocks less liquid. And it might work, because the long run you're talking about isn't actually looking too bright due to the technological developments with renewables and electric vehicles. These stocks are not retirement stocks, unless you're retiring in a couple of years.
      - solveit 7y ago
nradov 7y ago
Divesting only (marginally) increases the cost of capital for firms which seek additional financing through secondary stock offerings. That doesn't apply to most oil companies.
Nicholas_C 7y ago
It’s a bit more complicated though as oil prices will rise if firms don’t take on projects. This in turn would cause those marginal projects to look a lot better down the road and oil prices for consumers will be a lot higher (which might be a good thing if it lowers fuel usage). I think this might be happening right now. There isn’t a lot of reserve replacement going on as everyone is focused on cash flow and the capital markets for energy remain closed due to ESG concerns from investors. If so, the prices will rise eventually and new projects will start.

andrewtbham 7y ago

Divestment of fossil fuels will probably end up being good financial advice. German utilities lost value fast when renewables were implemented. I would put my retirement money in an S&P 500 index fund that excluded fossil fuels.

gruez 7y ago
>Divestment of fossil fuels will probably end up being good financial advice. German utilities lost value fast when renewables were implemented. How do you know whether that's already priced in?
golemiprague 7y ago
If German utilities lost value it means that moving to renewables didn't work, isn't it? Not that the fossil fuel companies lost value. Which I think indeed what happened there, they had to go back and use coal because the whole renewable thing didn't work so well for them and just made everything more expensive without really providing enough energy.
clomond 7y ago
Well, although this is not financial advice - there does exist an index fund that does just that (SPYX). It holds the S&P 500 less any company which "holds fossil fuel reserves". Still some "fossil fuel" companies in there, but for retail investors with the context of an index fund its probably as close as you're gonna get at least today.

triceratops 7y ago

You can't fix a tragedy of the commons with individual action.

zackmorris 7y ago
Also I would argue that the smug truisms that people spout such as "divestment won't solve climate change" have a very damaging effect on causes that require concerted action by the public. For example the "Penn & Teller Bull$#!@: Recycling" episode left many viewers under the impression that recycling is a waste of time because it's not mature yet and is sometimes mismanaged. That probably lowered global recycling by some small percentage over several years. A tremendous negative impact in the scheme of things, for a couple guys trying to be funny. It's generally bad form to undermine causes via pedantry, for example: * Nobody should listen to Al Gore about global warming because he flies a private jet! * We can't raise taxes on cigarettes because people will just buy them anyway no matter how much they cost! * Why bother preventing deforestation when nature does what it wants with forest fires anyway! Yet we hear these sorts of arguments right here on HN on practically every submission. Better to at least try to be part of the solution than use criticism as an excuse to do nothing, IMHO.
- triceratops 7y ago
  I'm not saying "do nothing". I think legislation is a better tool to fix this problem and everyone's time would be best spent on working on that. > Nobody should listen to Al Gore about global warming because he flies a private jet! Well, I think we should still listen to him. He could also fly first-class and set a better example. But average Joe passenger won't fly less just because "it's good for the planet". He will fly less if it starts to cost more because of a carbon tax. > We can't raise taxes on cigarettes because people will just buy them anyway no matter how much they cost! That's not true in the slightest; cigarette consumption is inversely correlated to taxes. A cigarette tax is the opposite of individual action. I'm strongly in support of a carbon tax. > Why bother preventing deforestation when nature does what it wants with forest fires anyway! That's...a super-weird statement to make in the context of what I said. Preventing deforestation can't be accomplished with individual action e.g. by boycotting Amazon-grown soy or something. You need laws and tariffs. FWIW I also recycle and try to keep up with the latest and greatest on plastic sorting. But I also know it doesn't do anything in the big picture. Add a $10 fine for badly sorted recycling and the problem will fix itself.

Nasrudith 7y ago

Really divestment is something which seems intuitively to be threshold based for its impact. If there is a robust investment pool any leaving will just be auto-filled by those seeking opportunities. However if it gets below a critical mass from enough divestitures they will find new investments hampered and those who are "late to the exit" will find it hard to get value out of it.

imtringued 7y ago
The company still earns the same amount of income from selling fossil fuel products.
gruez 7y ago
>However if it gets below a critical mass from enough divestitures they will find new investments hampered and those who are "late to the exit" will find it hard to get value out of it. ...only if the company actually needs more capital and can't raise it any other way (eg. bonds). If there's any sort of leak, then you're giving the holdouts outsized returns.
- ClumsyPilot 7y ago
  What do you mean by the leak? What mechanism would drive outside returns?
  - gruez 7y ago
    >What do you mean by the leak? non-divesters who are willing to invest or extend credit to the company. >What mechanism would drive outside returns? It's been explained by other comments in this thread. Basically divesting worked, it would suppress demand, allowing non-divestors to purchase the company (and thus the future earnings) at a cheaper price.

kerkeslager 7y ago

I'm pretty unclear on how anyone even thinks divestment works, actually. When a company sells stock in an IPO, buying stock from them allows them to raise capital, so it seems clear to me that you shouldn't buy stock from a fossil fuel company. But that's non-investment, not divestment. Divestment is about selling existing stock. It's true that divestment drives down the stock price. This could mean that if a company has retained stock, it would limit their ability to sell that stock to raise capital in the future. However, if you drive down the stock price, it's just as likely that you'd be allowing the company to buy back its own stock at a bargain price, which could help the company by allowing them to retain greater control. It's not guaranteed that you're hurting the company by driving down the price of their stock--in fact, you may be helping them. It might be possible to look at the needs of individual companies and divest from those companies to drive down the stock price if and only if you think they will be attempting to sell stock in order to raise capital in the future. But this strategy has risks, and I've also never heard anyone talk about this strategy when talking about divestment.

bcoates 7y ago
I think it assumes that large investors aren't really passive, but intervene on behalf of their investments. If you convince someone to divest from X, then they have the luxury of remaining neutral when you propose that X be destroyed.
- gbrown 7y ago
  Exactly, carbon regulation will be a lot easier to pass if the direct impact to peoples' finances is lessened.
  - facorreia 7y ago
    But some other investor bought the stock, didn't they?
    - gbrown 7y ago
      Perhaps, though most people don't buy stock. If you can get institutional investors to divest, that limits most people's direct exposure. Do I expect it to necessarily make a big difference (especially in the short term, without becoming a broader movement)? No. I do believe, however, that it's not nothing, and that we need to pursue everything. There's also a personal aspect - I want nothing to do fossil fuel stocks. I try to limit my emissions in my personal life, so why not exercise that preference in whatever small way I can in my financial life?

beatpanda 7y ago

Divestment also means asking banks and institutions to commit to not investing in new fossil fuel infrastructure, not just selling stock in existing oil and gas companies. Making it more difficult for new fossil fuel infrastructure projects to access capital absolutely has an impact.

nabla9 7y ago

Fossil fuel divestment is basically subsidy for those who don't care. Divestment causes stock price drop and it increases ROI for those who invest into the company.

dannypgh 7y ago
It's really "threat that more people will want to divest or remain divested when they would have otherwise invested" that can cause change. The board answers to the shareholders, and shareholders generally want to be able to sell their shares at a profit. If shareholders start to believe that the market for the shares is going to continuously decline because of some activity the company engages in, that creates an incentive to pressure the company to change behavior.
- shkkmo 7y ago
  Rising stock prices is not the only way or even the primary way that companies generate returns for their investors. Many oil companies pay dividends to their stockholders and these can outweigh the gain from increasing stock prices. BP, for example, uses a significant amount of their cashflow to pay dividends and buy back stock. Their current dividend return is ~6% and has varied between ~2% and ~8% over the last 10 years meanwhile their stock price has fluctuated (by a significant amount) in the 30s and hasn't produced any meaningful gains in value for the average "Buy and hold" investor. Long term holders of BP stock make their money from dividends, not from increases in value in the BP stock. Making that stock cheaper just means that the dividend rate of return goes UP.
  - dannypgh 7y ago
    It is true that stocks are assigned some value based on expected future dividends, but this only one component of the value of a share, and for any company undergoing a divestment campaign, this will shift. A publicly traded Ponzi scheme can maintain a 10% yield for 10 years with only an IPO.
    - shkkmo 7y ago

emckay 7y ago

Divestment also results in less shareholder oversight of emission heavy companies because environmentally conscious investors are selling their shares to investors with less scruples. This isn't just theoretical. According to Fossil Free, asset managers with about 10 trillion under management have committed to divesting. If you assume 10% of that is tracking something like the S&P 500, then these investors have sold about 80 million shares of Chevron. In 2018, shareholders introduced a proposal asking Chevron to limit its methane emissions. That proposal failed with 46% of the vote. 80 million shares would have been enough to swing the vote to 54% in favor. I quit my job a couple of months ago to fix this problem. You can learn more at greengovernance.org or by emailing me at (hn username)@greengovernance.org (typed this from my phone on a plane but I will add citations later when I get to my computer)

TheGallopedHigh 7y ago
Could you talk a bit more about your company?
- emckay 7y ago
  We're creating an S&P 500 index fund that aggressively uses shareholder engagement to get companies to reduce emissions through their supply chains.
  - veezbo 7y ago
    This seems like a great idea in theory- potentially better than the so-called luxury ETFs that only invest in what the fund manager deems as socially-responsible companies. If your expense ratios are low, and you allow me to have a meaningful say in how I or the fund as a whole votes for better climate outcomes, I would be personally interested. I'd love see how you guys do it, and will be following your progress.
    - emckay 7y ago
      Exactly! Thanks for the kind words.

jsingleton 7y ago

This is the report mentioned in the article: https://www.gatesfoundation.org/goalkeepers/report/2019-report/ https://www.gatesfoundation.org/goalkeepers/report/2019-repo...

scohesc 7y ago

Wow, that's absolutely insane that I have to go through half an hour of 'opting out' from different ad networks in order to visit the actual website I was going to in the first place without being tracked. Thank developers for ad-block technology.

bcaa7f3a8bbc 7y ago
BTW, these opt-out options work by adding unique cookie identifiers to your browser (opt-out tracking is implemented by tracking you?). If you block 3rd-party cookies or ads, it won't work, and you'll need to redo everything if you clear cookies or change browser. I'd say these "opt-out" options are not gonna work in practice.

mushufasa 7y ago

If you agree that the real solution is for investors to engage with your portfolio -- to own what you own -- we've built www.yourstake.org to help you do so. If you take action (or decide not to), I'd love to hear your feedback : (patrick) @ yourstake.org.

omegaworks 7y ago

Fossil fuel divestment has zero climate impact, says a billionaire with capital invested in the fossil fuel economy. >Those who want to change the world would do better to put their money and energy behind the disruptive technologies that slow carbon emissions and help people adapt to a warming world, Mr Gates told the Financial Times. Divesting from the fossil fuel industry doesn't prevent people from investing in alternative, disruptive technologies. In fact, it frees up more money to be invested in those technologies!

Angostura 7y ago

So divest from fossil fuels and reinvest in disruptive technologies that slow carbon emissions. Got it.

nullc 7y ago

For a while I've wondered if the math might work out such that the most cost effective way to fight greenhouse gas emissions is simply to buy up and horde oil on the open market. The oil has carbon already trapped in an efficiently storable form, it's absurdly dense, it's quite inexpensive... and buying it up would have a secondary effect of driving up the price, which would incentivize efficiencies and alternatives. Bonus, as a government program it would be more appealing to climate change deniers than alternatives because at the end of the day you'd have oil, which could later be used if we figure out some better solution (or that the problem didn't exist in the first place).

omegaworks 7y ago
Artificially propping up the price of oil won't have the intended effect: It would incentivize the extraction of oil, which at present requires infrastructure that damages the surrounding environment. A lot of the oil is in the ground now because it doesn't make financial sense to extract it; the cost of extraction is less than the revenue generated from its sale on the market. There's plenty of oil hoarded in the ground now in private wells. People sitting on land rights waiting for the right time to sell that oil on the open market. A massive government program that artificially props the price of oil up is the perfect setup for a massive wealth transfer to people that do nothing but hold title. That extracted oil would need to be transported or piped away from the extraction site and stored in perpetuity, all of which the land was already doing for free! Techniques for extraction like fracking destroy the quality of adjacent groundwater and externalizes that cost onto the surrounding community. We don't want a government program that incentivizes poisoning groundwater on a hotter planet with diminishing glacial melt surface water. Planet Money did an excellent series on the crude economy: https://www.npr.org/sections/money/2016/08/26/491342091/planet-money-buys-oil https://www.npr.org/sections/money/2016/08/26/491342091/plan...

biehl 7y ago

Divestment is a practical prerequisite for effective regulation of fossil fuel companies. Right now tough regulations will directly hurt pensioners with pensions invested in fossil fuel companies. After divestment will not hurt those people in the same direct way. So: Step 1) - Divest Step 2) - Regulate to fully compensate for externalities caused by fossil fuel companies without worry of collateral damage

anonuser123456 7y ago
Right and here's the problem. Pension funds are notoriously underfunded and filled with people that don't give one iota of a rip about where it's invested. Pension managers will not leave those yields on the table or they'll fave a revolt.

noneckbeard 7y ago

Investors divesting from fossil fuels sounds a lot like sanctions in that they “don’t work until they work.”[1] It would take an overwhelming number of investors to make divestment really hurt, which is unlikely. And I definitely agree that focusing on supporting climate change impact is better than starving the polluters. But it seems intellectually dishonest to say that divestors are “wasting their time.” And there’s no reason you can’t do both. 1. https://qz.com/1072581/sanctions-dont-work-until-they-do-the-art-of-pressuring-north-korea/ https://qz.com/1072581/sanctions-dont-work-until-they-do-the...

paulsutter 7y ago
Wouldn’t it be better to reduce demand? Even just now where supply was literally taken out with missles (or were they drones?) that doesn’t affect how much fossil fuel is used. Why would divestment work any better? To reduce demand you should either create cheaper ways to store alternative energy or make carbon based fuels more expensive with a carbon tax.
- noneckbeard 7y ago
  Can’t it be both? Those aren’t mutually exclusive, and in fact are hardly even related in terms of implementation. And taking out supply to drive up cost of fossil fuel will absolutely have an impact. At least a few people will opt for the fuel economy version of their new car in the next few days after seeing the new sticker price of a gallon of gas.
la_barba 7y ago
>Investors divesting from fossil fuels sounds a lot like sanctions in that they “don’t work until they work.”[1] Sure, but you can say that about any cause. Sounding like something is vague, and thats the larger point from the article. People need to quantify the actual impact of their actions w.r.t. divestment. Whereas, its easier to quantify the impact of other more positive/creative actions (e.g. transitioning from petroleum to clean energy). >And there’s no reason you can’t do both. Oh, there are more than two ideas that activists have. There is "no reason" you can't do a third, fourth, fifth, sixth, seventh and more and more. You only have limited resources to expend here - your free time, energy and motivation.

antibland 7y ago

Climate change is solved with neither divestment nor technology, but with hard-stop policy reforms. Considering just 100 corporations are responsible for 71% of global emissions [0], we know who's doing the damage and how they're doing it. [0] https://www.theguardian.com/sustainable-business/2017/jul/10/100-fossil-fuel-companies-investors-responsible-71-global-emissions-cdp-study-climate-change https://www.theguardian.com/sustainable-business/2017/jul/10...

scrooched_moose 7y ago

> However, Mr Gates questioned the divestment movement’s “theory of change”, arguing that investors who want to use their money to promote progress will have better results by funding innovative businesses such as Beyond Meat and Impossible Foods, two alternative protein companies he has backed. I must be missing something, but isn't that exactly what "divestment" is? You sell off shares in fossil fuels and reinvest the money in other industries which are more climate conscious? It sounds like he's saying people are getting their money back from fossil fuels and hiding it under the mattress.

cptskippy 7y ago
You can both keep existing investments in fossil fuels and invest new funds innovative companies. It isn't any either or proposition.
- pavon 7y ago
  Moreso, if the fossil fuel investments are profitable, you can use the returns to fund more progressive companies than you would have been able to otherwise.
angstrom 7y ago
This has always been my interpretation. I was unaware the idea was to sell C02 heavy companies.
Kye 7y ago
The article does seem to operate on the premise that they aren't doing this. Until now, I assumed the point was to divest from fossil fuels and reinvest in growth industries: renewables and sustainable production. But maybe they aren't. The article might have a flawed premise, or maybe it's a call to action for organizations that are divesting to invest in the future. I only skimmed the article, so I don't know if they explored this. At a glance, I see no mention of where the money went after they pulled it out of fossil fuels.

jchw 7y ago

> The idea is not to starve companies of capital but to remove their “social licence to operate” Per this description, the basic idea behind divesting seems similar to the concept of creating social stigmas and perhaps even “cancel” culture. I’d argue that this isn’t even very effective as a vehicle for positive change amongst individuals, and seems extremely unlikely to be effective amongst corporations. Honestly, it doesn’t seem like the idea of corporate social responsibility has held up well in the modern era, period.

mxcrossb 7y ago
Basically, think of divesting as an advertisement. Every time a major player does it, the public hears a pro environment message, and leaves thinking climate change is something to act on now, and that green energy is the future. And public perception does have an impact on the future. Let me emphasize the cynicism of this point. As you said, no individual corporation is going to change here (other than running more advertisements to boost their image), because it’s not like they can stop being a fossil fuel company. There’s no carrot to match the stick.

Havoc 7y ago

I think he underestimates the wrath of a market that has judged a market sector unpopular

anonuser123456 7y ago
One markets unpopularity is anothers arbitrage. The underlying value is what drives the asset in the long run. Oil companies play the long game.
- Havoc 7y ago
  > Oil companies play the long game. Except in the long run these companies are dead unless they pivot.

jes5199 7y ago

Even if this is true, there’s a moral dimension to what you invest in - do you really feel okay about making money off of fossil fuels?

colanderman 7y ago
Indeed I thought this was the entire point of divestment. Not to profit off of unethical activities. I'm surprised anyone would think this would impact climate change.

sarah180 7y ago

He's probably right that there are much more effective ways to focus resources & energy, but you'd have to believe that markets and elasticity don't exist to believe the impact is zero. If you reduce the pool of investors, the cost of access capital goes up. This means companies that would start a new fossil fuel project will have to give up more money to get investment or loans. Most projects will be unaffected, but this will be the difference between some marginal projects happening and not happening. This is pretty basic economics, though perhaps Gates has a reason in mind not to believe this will apply.

crankylinuxuser 7y ago

This, I would believe is a false hit piece that is trying to protect coal, oil, and gas. https://www.newyorker.com/news/daily-comment/money-is-the-oxygen-on-which-the-fire-of-global-warming-burns https://www.newyorker.com/news/daily-comment/money-is-the-ox... "It has become the largest such campaign in history: funds worth more than eleven trillion dollars have divested some or all of their fossil-fuel holdings. And it has been effective: when Peabody Energy, the largest American coal company, filed for bankruptcy, in 2016, it cited divestment as one of the pressures weighing on its business, and, this year, Shell called divestment a “material adverse effect” on its performance."

bartimus 7y ago

Why is nobody concerned about the next 100.000 years lasting ice age which is already overdue by roughly 4000 years?

quickthrower2 7y ago
Because we can biohack that hypothetical problem by burning fossil fuels.
input_sh 7y ago
Maybe because we see 0 evidence of an ice age happening any time soon, while we see the opposite catastrophe happening in a timespan from yesterday to within a few decades, depending on where you live?

ahupp 7y ago

There's an efficient markets reason to believe this. Say you have some estimate of the value of all future earnings of some business, and then a group of people divests and pushes down the share price. The future earnings haven't changed, so this pushes down the P/E ratio and makes the stock that much more attractive to buyers who aren't divesting. It's just not possible for it to have that much price impact.

Udik 7y ago

For a start, I can't even understand what is exactly the point of advocating any action against fossil fuel companies. After all, those companies only exist because we, directly or indirectly, buy their products. And we buy their products because they're cheaper than the alternatives, or even irreplaceable. It's as if everybody were asking the government to take action against the supermarket where we all do our grocery shopping. We could ask the government to impose a heavy tax on our shopping (which we'd have to pay dearly, of course) but no, we want some action to be taken against the company that owns it. What is the purpose? Another commenter links an article on the Guardian that claims that only 100 companies are responsible for 70% of the global greenhouse gasses emissions. It's as if those companies were producing and consuming the fuel themselves. No, those companies sell fossil fuels to us, we are buying and consuming it. Am I being extraordinarily naive? Or this thing just doesn't make sense?

parasubvert 7y ago
It’s largely driven by people that don’t want to work within the market, they want to break the market, by starving supply / making it illegal. This tends to just lead to higher prices, black markets, riots, and right wing populist governments, but what do I know.
- Udik 7y ago
  The end result of any successful action to curb fossil fuel consumption will be (at least at the beginning) an increase in the price of products depending on them. So why don't people ask directly for more taxes on those products, to drive the demand towards better alternatives? It seems to me that the people don't want to take their share of responsibility and accept that the they'll have to bear the costs of the solution; and instead crave for some sort of empty vengeance on the companies whose products they keep buying.
  - parasubvert 7y ago
    Yep. In fairness the carbon tax approach might not work so well in practice as people can just vote in populists to repeal it. A regulatory framework of rising emissions standards ala California has the nanny state downside but is harder to undo (though Trump is giving it a college try). No where in the above does “let’s just put everyone we don’t like in jail” actually work unless you’re fond of terrorism and civil war..

rmrfrmrf 7y ago

Bill Gates also doesn't support the Green New Deal or government involvement (god forbid his taxes go up) in mitigating climate change. His public prayers for a technocratic solution to climate change are ridiculous and embarrassing for him considering he knows it will never happen.

loeg 7y ago
Bill Gates generally supports higher taxes on the very wealthy, like himself. Not sure why you decided otherwise.

colanderman 7y ago

Maybe I'm weird. I always thought the purpose of divestment was to stop profiting off of unethical companies, and to eliminate conflicts of interest for value-driven entities such as nonprofits. I'm surprised anyone would treat it as a tool to fight climate change.

Diggsey 7y ago
Whose voice carries more weight when campaigning to reduce fossil fuel usage: the person who profits off fossil fuels and will suffer as a direct result, or the person who has divested themselves completely? If you have a moral objection to receiving those funds, then just give them to a charity that might actually help. The way economics works, if you choose to divest yourself in this way, you are betting against the profitable use of fossil fuels, but you are not influencing it (it will either continue or cease on its own depending on whether it stays profitable). You are simply encouraging someone else (who maybe doesn't care so much about the environment) to "take that bet" and profit off your poor decision.
- Nicholas_C 7y ago
  The problem is if you’re an activist investor you’re not going to buy a bunch of shares and then tell them to stop trashing the environment or else. You might not get support from other investors and your shares would drop.
- dunstad 7y ago
  Choosing not to profit off of fossil fuels may be a 'poor decision' from a financial perspective, but it's a good moral decision. The fact that our financial systems incentivize poor moral behavior makes them poor systems.
  - Armisael16 7y ago
    Honest question: why is it inherently bad morals to profit from fossil fuels? If you act the same as you would if you weren’t profiting I don’t seem how it changes anything at all. It seems strange to me to cast everyone with an index fund as morally corrupt.

cwkoss 7y ago

Bill Gates rarely makes controversial statements like this. I wonder if his PR team specifically contrived this statement to distract from allegations re: Jeffrey Epstein.

randogogogo 7y ago
I have not gotten the impression anything Jeffrey Epstein related was "sticking" to Bill Gates.
- cwkoss 7y ago
  https://twitter.com/search?q=bill%20gates%20epstein&src=typed_query&f=live https://twitter.com/search?q=bill%20gates%20epstein&src=type... ~400 tweets containing "bill gates" and "epstein" in the past day It seems the allegations are not very credible, but PR team may still want to spin story away from it.

ggm 7y ago

Value of shares is based both on revenues from holding the share and increase in value as growth. If the superannuation and sovereign wealth and trust funds worldwide (Trillion-dollar investment vehicles) stop investing in something it functionally loses 'gold plated' status and cannot be held to be less-speculative (in reality all shares are speculative but there are differences of degree and the holdings in the long term funds indicate "safer" bets in many cases) and so their inherent value becomes more open to question. I believe this would represent a real decline in value, as their risk changed. It would have to be declared on many people's books. It would remove some liquidity from markets, it would represent the kind of alienation of value which happens when a large thing is held for reasons disconnected from its actual profit. Enron. Has the value of owning tobacco shares not changed, as a result of divestiture? It is possible the dividend payment had to rise, to offset declines in base share value (for instance) Gates is making a reductionist statement, I think he has possibly forgotten what people do in the face of changes in perception of value. His friend "the sage of Omaha" very much prefers shares which pay dividends and this may be reflected in what he is saying, since he is not by nature a highly speculative investor.

agar 7y ago
Gates says divestment will not lower carbon emissions. This is very different from saying it will not lower valuation. Has the reduction in tobacco companies' stock prices materially affected smoking rates? I don't think so.
- ggm 7y ago
  I'm less sure. Juul would say that redirecting nicotine addicts to vaping over smoking has probably altered rates of uptake of smoking, and the market backs Juul and vaping which has led big tobacco to diversify and invest. Oil and Coal ventures who own the underground asset have the choice of converting from gasoline production to feedstock for plastics and pharma and fertilizer, or just leaving it in the ground for future valuation. If they don't get capital raising its more expensive for them to develop new fields. I guess in some sense the de-carbonisation probably doesn't sheet home solely to investment decisions in coal and oil but I doubt its un-connected.

lgessler 7y ago

This analysis ignores the social significance of divestment (i.e., which might somehow contribute to other actions which are more impactful), though it might still be that even after accounting for this divestment isn't what environmentally-conscious people and organizations should prioritize.

WhatIsDukkha 7y ago

So where does the dollar to invest in climate innovation come from if you don't take the dollar out of the fossil fuel stock? What he said was nonsensical and innumerate. Perhaps its because he has effectively infinite money? His comment don't really hold up even under basic charity. The dollar in fossil fuels is a dollar not in another industry with a better story for the environment. The rest of us have a limited pile of dollars to decide with.

joe_the_user 7y ago
So where does the dollar to invest in climate innovation come from if you don't take the dollar out of the fossil fuel stock? "Climate innovation" is also going have limited impact on global warming, if by "climate innovation" you mean lower cost power sources like solar or wind. The problem is that lower-cost clean fuel is not drive hydrocarbons away since pumping already-found oil out of the ground pretty much can't be beaten in price. The only that can stop CO2 pollution is states using their regulatory power to stop it. One factor to consider is that pension funds and other funds with social impact would do well to divest if such a regulatory crack-down is to take place. -- "CO2 pollution" is good way to phrase it too, since other pollution problems aren't handled with the kind of worthless half-measures that CO2/greenhouse-gas problem has been mishandled with.
comicjk 7y ago
Imagine a climate innovator that is selling stock worth $1 billion based on expected returns. That stock can be expected to sell for $1 billion, and no more, even if $0.5 billion of that comes from altruistic investors. The altruistic investors can't drive up the price - as long as money from amoral investors is needed, the amoral investors are the price setters, because they won't pay more than what they think the expected returns are worth. They will step aside as the altruistic investors move in. The altruistic investors would do better to just invest for maximum returns and donate money. Note, I don't act according to this advice: I'm invested in sustainable funds despite my own arguments. But I don't expect this to go very far, so I'm also donating to appropriate causes.
- ClumsyPilot 7y ago

scottlocklin 7y ago

I love this sorts of moralistic windmill tiltings; they make for wonderful buys.

manfredo 7y ago

It artificially deflates the demand for equity in fossil fuel companies. Which theoretically would result in lower willingness to invest in fossil fuel ventures. But these companies already exist, and artificial deflation of their stock price won't keep people from fueling up their cars. I think a better strategy would be conditional investment tied to reduction in emissions. Have a mechanism to buy $X stock at a higher price in exchange for a power company to replace a coal plant with a gas one, or replace a gas plant with a solar farm.

bayareabronco 7y ago

Divest from fossil fuels and invest the funds in clean energy. What am I missing?

loeg 7y ago
The other investors will sell the now marginally overpriced clean energy funds and buy the now marginally underpriced fossil fuel funds. Stock prices and capital available remain the same.

ineedasername 7y ago

Sure, unless everyone divests, a few people selling will drive down the share price only until those not selling realize the asset is undervalued and buy the price back up. All that, without actually changing the production and consumption model.

3131s 7y ago

Isn't this article presenting a false dichotomy? How is divesting from fossil fuels mutually exclusive to putting your money behind "tech that helps cut emissions instead"? In the short term at least, you'll have more money to do exactly that after divesting. The only rationale I can see for having this mindset is that 1) it is imperative to make money in order to reinvest in better causes, and 2) investing in fossils fuels is the best way to maximize profit.

brownkonas 7y ago

I can't help but remember: past results do not indicate nor guarantee future returns. Unless someone can un-convince me of general macro-economics, not investing in fossil fuel companies will lead to depression of the fossil fuel market and incentivize more relatively lucrative opportunities. The companies of the past only had the means of production of the past, the companies of the future have access to non-fossil fuel dependent energy.

H8crilA 7y ago
I imagine there's enough capital to take over the divested amounts. Warren Buffett has no trouble investing in oil (e.g. the recent Occidental/Andarko merger, he got some juicy preferred shares out of that). And I'm sure he's not alone. Taxes/limits, we need that on carbon. The economic status quo on the subject is also the most obvious response: pay for the externality you're causing when burning carbon. EU's limits system (cap-n-trade) is already there and has been for many years, can be plugged into a global CO2 emissions market. This should eventually extend to cars, airplanes, ships, steel, concrete, home heating, whatever - even the farting cows. Either that or solar geoengineering.

habosa 7y ago

I agree with Bill that divestment is probably less impactful than many people think, and certainly not worth all of the effort people go through protesting trying to get Fund X to divest from Objectionable Investment Y. However I think there are two obvious ways it has > zero impact. Let's take an oil company as an example: 1) If fewer influential investors/funds are invested in oil, there will be fewer people angry if a third party proposes a law or regulation that will hurt oil profits. As said in the article, it makes change easier. 2) The money divested will not go under a mattress. It will be invested in something slightly better (or less worse). Over time this moves money in the right direction.

edanm 7y ago
I don't get your second point- money "divested" is replaced by different money invested - there's no overall change.

MandieD 7y ago

You divest from something you consider morally problematic so that your other actions are not influenced by a desire to see your morally-questionable investment be more profitable. I own about as much XOM as I pay for heating oil each year. Is that small enough that I’m not ever so slightly tempted to ask my representative to go easier on oil drilling restrictions? So far, it’s not tempted me. But if 10% of my net worth were in fossil fuel stocks? I might be hesitant to ask for tighter regulation of that industry. My owning or not owning XOM makes no difference in Exxon’s behavior, but it might in mine.

perfunctory 7y ago

> Those who want to change the world would do better to put their money and energy behind the disruptive technologies that slow carbon emissions and help people adapt to a warming world, Mr Gates told the Financial Times. You cannot put your money behind the disruptive technologies if your money is tied in fossil assets. You'll have to divest first before you can relocate it elsewhere. You can spend a dollar only once.

viraptor 7y ago
The point was that these are separate actions. You can sell the oil shares and do whatever you want with the money - that doesn't change anything. You can use that money to invest in green alternatives - that's what matters.

tomtomtom777 7y ago

It's an interesting perspective and one pursued by the initiative: https://follow-this.org/en/ https://follow-this.org/en/ They offer shares of Shell in an attempt to transition the company to green energy.

myspy 7y ago

"put their money and energy behind the disruptive technologies that slow carbon emissions and help people adapt to a warming world?" Example here is Beyond Meat. I hear the recommendation a lot to put a high price on CO2, i.e., what creates a lot of CO2 during production gets more expensive. The idea is demanded by the Friday for future movement, or better said by the experts they asked how to solve our climate change problem. I think it would be the right direction.

coldtea 7y ago

So, how about the concern that if we cut fossil fuel to 0% tomorrow (or even in a year or decade), we would have absolutely no way (for decades) to replace it. We don't have enough alternative (renewable or nuclear or whatever) energy power, we need to build billions of electric cars (if we are to replace the current fleet), thousands of wind/solar/etc installations, ways to regulate fluctuations and store the energy that don't involve fossil fuel grid, as well as tons of factories, machinery, etc currently operating on fossil fuel, including our entire airplane fleets, plus all the armies in the world... Oh, and find the money to do all that... So there's that... Some people seem to believe that if we turned a switch, we could turn to 100% renewables tomorrow...

itsthewrongway 7y ago
I agree. And I think what people are missing is that when Gates talks about beyond meat and impossible foods, he’s saying those companies are actually doing something now that have the ability to make a difference by helping people to consume less meat. And in reality we all have the power to flip the switch and stop eating meat today, which causes as much as if not more greenhouse gasses than all of the fossil fuel industry combined [link below]. And again, no new technology needed, and we can start today. But as I’ve noticed people tend to put on earmuffs when you mention that. https://science.sciencemag.org/content/360/6392/987.full https://science.sciencemag.org/content/360/6392/987.full

JulianMorrison 7y ago

Really the problem here is taking the rules of a free market economy as immutable and not seeking a political solution that could outright ban misbehaviour, rather than trying to defund it piecemeal. The correct solution to ecocide is a criminal charge and seizure of assets.

Beltiras 7y ago

Neccesary but not sufficient. Divestment in dinofuel should be closely followed by investment in clean energy tech, sequestration or other carbon-saving or net-negative industry.

emoticoji 7y ago

Bill doesn't want his share value to go down. He has billions of dollars on the line making sure the spice flows. Since Microsoft's big data is in bed with the fossil fuel industry to produce billions of dollars worth of additional fossil fuel production.

Likeable 7y ago

If fossil fuel companies stop getting new investments then they can't explore new sources of fossil fuels. And keeping the fossil fuels that are still in the ground there is one of the top priorities for fighting climate change. Every billion ton of coal we mine turns into three billion tons of CO₂ and that adds another 0.5 ppm of CO₂ to the atmosphere.

avmich 7y ago

https://johncarlosbaez.wordpress.com/2019/09/18/divesting/ https://johncarlosbaez.wordpress.com/2019/09/18/divesting/ Today it is large corporations which have the greatest power over daily life, and they are far more susceptible to pressure and change then the insulated bureaucracies of governments. Thankfully Bill and many others knew this years ago, and started a divestment campaign of breathtaking magnitude...

JohnClark1337 7y ago

I especially like how it turns into a hit piece in the last two paragraphs