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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-
by 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 agoThe 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 agoWhat 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.