Taking the finance out of fossil fuels
Getting the finance out of fossil fuels is an important element in tackling climate change. We are still on a trajectory to overheat the planet and fossil fuel emissions are the primary cause.
I was speaking at a meeting tonight organised by Friends of the Earth Scotland on this issue in Edinburgh. The irony is that we are funding our own destruction through our banks and pension funds. There are several reasons why these institutions should stop supporting fossil fuel companies including:
•Climate change. The carbon emissions of coal are higher than for any other fuel in the world. Recent estimates show that the vast majority of the world’s coal reserves will have to be left in the ground in order to avoid devastating climate change.
•Destroying lives in the global south. Coal mining is responsible for devastating local pollution in the global south as well as the displacement of thousands of people from their homes.
•Carbon bubble. Banks and other financial players have created a carbon bubble in the global economy. Only a small fraction of fossil fuel resources can be burned without breaking international commitments to tackle climate change. This means most fossil fuel assets are worthless. A sudden correction of the current overvaluation of fossil fuel companies could cause a new global financial crisis.
Divestment has been used effectively throughout history to place social and economic pressure on an industry or government that is causing harm. By publicly withdrawing financial support, fossil fuel divestment addresses the root of the problem – the unchecked expansion of fossil fuel companies on an endless quest for profit.
The meeting heard about campaigns at universities, including Edinburgh. Another example comes from the USA where students on more than 300 US campuses have launched divestment campaigns.
The campaign has not been helped by last week’s budget. The nuclear and renewable energy industries have made a last-ditch attempt to stop George Osborne from freezing a tax on fossil fuels, warning the move could jeopardise investment in low-carbon energy schemes. It will also make it harder for Britain to attract the £100bn plus that is needed by 2020 in low-carbon energy.
As a pensions negotiator I focused on the challenges a disinvestment campaign faces.
In Scotland’s biggest pension scheme (Local Government) we have very weak governance and the result can be seen in Rob Edwards (who chaired the meeting) recent investigation for the Sunday Herald. Public bodies who have a statutory duty to cut emissions are investing £millions in polluting companies. We have a very weak culture of shareholder activism in the UK, compared with Europe or the USA. There is also a shortage of information and training for Trustees. I outlined some of measures UNISON is taking to address this issue.
With more than 5% of our pension funds being invested in companies that damage the environment it is clear that we still have much to do. However, there is a clear determination from a variety of groups to work together on this issue.