When French insurance group Axa announced it was selling its coal assets in 2015, the question emerged whether rivals including Allianz, Aviva, Zurich and others would divest too. Some did, and some did not. A broader question also surfaced: would public and private investors now look to sell down all their investments related to fossil fuels – oil, gas and coal? Axa, ING and the World Bank replied that they would. Norway, a country with significant oil reserves and revenue dependency, has already banned its sovereign wealth fund from investing in coal and is considering whether to drop oil as well. In the US, New York mayor Bill de Blasio wants the city’s $189bn fund – one of the country’s largest – to divest from fossil fuels. “It’s clear by now [that] Big Oil isn’t going to change its stripes; it’s time to stop pretending and start divesting,” he said in January this year. Perhaps unsurprisingly, fossil fuel companies are resisting these moves. The surprise, however, is that many institutional investors are also resisting divestment. They have opted instead for a strategy of engagement, choosing to talk to companies about their climate actions. BlackRock, Vanguard and New York State’s pension fund are among those that have opted for continued investment and discussions with fossil fuel companies. They argue that shareholder engagement is a superior tactic for pushing fossil fuel companies to move beyond business models based on burning every last barrel of oil. Yet expecting engagement to change the fossil fuel industry ignores decades of evidence to the contrary.
FT 8th March 2018 read more »