Editor’s note: This commentary is by Jack Hanson, a senior environmental studies major at the University of Vermont who lives in Burlington. He is president of the Renewable Energy Network at UVM, a club that helps connect students with Vermont renewable energy professionals, and is an intern with the Bernie Sanders campaign.
Divestment — the elimination of holdings of stocks from a company, industry, or sector for ethical reasons — is nothing new. It has been used in the past and has proven to be an important tactic in changing the public perception of an industry, and building pressure that creates meaningful change. The Vermont Pension Fund, which is now considering divesting from coal and ExxonMobil, has divested from companies operating in apartheid South Africa, as well as from major tobacco companies, as part of larger global efforts to stigmatize and take away power from these corporations.
Now that alternatives exist at a comparable price, it is foolish to argue for fossil fuels from a standpoint of ethics.
With fossil fuel companies, the moral argument is stark: these companies are actively pushing our global climate towards a future that will make much of our planet uninhabitable for human life within this century. We are already seeing the rising temperatures, increased extreme weather events, droughts, floods and storms associated with climate change. This will only continue and worsen. Aside from this, the extraction of fossil fuels — think mining, deep water drilling, mountaintop removal, fracking — is very damaging to the environment and to the residents of the areas in which they occur. Finally, these companies are deeply involved in contaminating our democratic process through misinformation campaigns, lobbying efforts, campaign contributions, and hiding and discrediting climate science. Now that alternatives exist at a comparable price, it is foolish to argue for fossil fuels from a standpoint of ethics.
So, as in past cases of divestment, we can agree that there is a moral imperative to untangle our money from these activities. What is new this time around is that there is actually a very compelling financial argument for divestment that accompanies the moral one. With coal companies, it is fairly simple — look at their value over the past several years, note the increasing regulations worldwide, and observe the low prices of all of coal’s competitors. Coal is clearly on its way out. In terms of the broader fossil fuel industry, there is an important flaw in their market valuation, something Bill McKibben has called the “carbon bubble.” The stock values of these companies are based on their total assets, which include any and all fossil fuel reserves they have laid claim to. However, to meet global targets of 1.5 or even 2 degrees celsius of warming, 80 percent of those reserves would have to remain untapped, rendering them useless. Not burning these reserves would plummet the value of these companies. Burning them would drastically alter our climate, creating conditions that would make Earth uninhabitable for most current lifeforms, including humans. The only safe bet, in every sense of the word safe, is to divest now.