Frequently Asked Questions
What is divestment?
When you invest your money, you might buy stocks, bonds, or other investments that generate income for you. Faith and religious institutions, as well as universities, unions, retirement funds, municipalities, and other institutions put billions in these same kinds of investments to generate income to help run their institutions.
Divestment is the opposite of an investment — it simply means getting rid of stocks, bonds, or investment funds that are unethical or morally ambiguous. Fossil Fuel investments are a risk for investors and the planet -– that’s why we’re calling on institutions to divest from these companies.
Faith institutions have been involved in a number of successful divestment campaigns in recent history, including Darfur, Tobacco, and others, but the largest and most impactful one came to a head around the issue of South African Apartheid. By the mid-1980s, there were heated conversations about apartheid in faith communities across Canada, and a handful of faith institutions had divested from companies doing business in South Africa. The South African divestment campaign helped break the back of the Apartheid government and usher in an era of democracy and equality.
Time is running out to promote the deep structural changes needed to mitigate the climate crisis. Actions to lower individual environmental footprints are crucial, but, by themselves, not enough to move us towards a clean energy future for our children. We need to embrace the courage and hope our faith provides us, and be unafraid to confront and change our dependency on a fossil fuel based economy.
Who is Fossil Free Faith?
Fossil Free Faith is a multi-faith consortium made up of passionate volunteers from around Canada supporting and engaging one another and our faith institutions about climate justice, fossil fuel divestment / reinvestment, and the role of bold faith in strengthening our shared future.
Fossil Free Faith aims to be a source of support and resources for Canadian faith communities and their members who are committed to or considering climate action, especially around fossil fuel divestment and clean energy reinvestment. We will do this by hosting a dedicated web resource page, Facebook Page, Twitter, and Google Group to share ideas, resources, challenges, and inspiration around climate action.
Our hope is that this initiative will act as an important bridge between Canada’s faith communities and the larger fossil fuel divestment movement. By encouraging faith communities to step up and engage on this issue, we have the opportunity to help position faith communities as leaders. Strengthening faith-based collaborations around climate action will inject needed energy, creativity, and moral authority into this vital movement for change.
What are the specifics of the call to divest from fossil fuels?
The fossil fuel divestment movement is calling for institutional leaders to immediately freeze any new investment in fossil fuel companies, and divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within 5 years.
200 publicly-traded companies hold the vast majority of listed coal, oil, and gas reserves. Those are the companies we’re asking our institutions to divest from. Our demands to these companies are simple, because they reflect the stark truth of climate science:
They need to stop exploring for new hydrocarbons immediately.
They need to stop lobbying our local, provincial, territorial and federal governments to preserve their special breaks.
Most importantly, they need to pledge to keep 80% of their current reserves underground forever.
Shouldn’t we just focus on making more sustainable choices in our own lives and within our faith communities?
Changing our own lifestyles and the consumer choices of our faith communities is important. And local initiatives like recycling and compost programs, community gardens, and buying local can be useful ways of starting to get people talking about climate change and climate justice.
These activities are good places to start, but the urgency of the climate crisis demands collective action on a larger scale. It’s time to go right to the root of the problem – the fossil fuel companies themselves – and make sure they hear us in terms they might understand, like their share price.
Shouldn’t we just focus on stopping fossil fuel projects like pipelines and coal plants?
Stopping fossil fuel infrastructure projects are important, especially because they represent millions of dollars of public funds spend locking us into a risky and unsustainable future. Coal plants cause asthma and dump mercury into the air and water; fracking fluid can leak into groundwater and make people sick; pipelines can leak, and so on. We can and should stand with people on the front lines of these fights to stop projects like Energy-East, the Northern Gateway and Kinder Morgan pipelines, and more, that would destroy communities and the planet, and contribute to climate change.
But, we can’t stop global warming one pipeline, coal plant, or fracking well at a time – the numbers just don’t add up. At the same time that we’re working hard to stop these destructive projects, we need to loosen the grip that coal, oil, and gas companies have on our government and financial markets, so that we have a chance of living on a planet that looks something like the one we live on now. The entrenched influence of the fossil fuel industry needs to be challenged, otherwise we will find ourselves fighting one infrastructure project after another until it is game-over.
How can divesting funds from a few faith institutions make an impact?
Divestment isn’t primarily an economic strategy, but a moral and political one. Just like in the struggle for Civil Rights in the U.S. or the fight to end Apartheid in South Africa, the more we can make climate change a deeply moral issue, the more we will push society towards action. This is one of the most important roles that Canadian faith institutions can play.
We need to make it clear that if it’s wrong to wreck the planet, then it’s also wrong to profit from that wreckage. At the same time, divestment builds political power by forcing prominent institutions and individuals (many of whom are members of faith institutions) to choose which side of the issue they’re on. Divestment sparks a big discussion and – as we’re already seeing in this campaign – gets prominent media attention, moving the case for action forward.
At the same time, there are certain economic impacts. Canada’s largest faith institutions hold significant endowments – get all of that money out of coal, oil, and gas, and we’re well on our way to making ExxonMobil, Shell, and others sweat.
While sale of stock might not have an immediate impact on a fossil fuel company, especially one as gigantic as Exxon, what it does do is start to sow uncertainty about the viability of the fossil fuel industry’s business model. Here’s why: in order to keep warming below 2°C, a target that nearly every country on Earth has agreed to, the International Energy Agency calculates that the fossil fuel industry will need to leave approximately 80% of their reserves of coal, oil, and gas unburned. Those reserves may be below ground physically, but they’re already above ground economically and factored into the share price of every fossil fuel company. Globally, the value of those reserves is around $20 trillion, money that will have to be written off when governments finally decide to regulate carbon dioxide as a pollutant. By divesting from fossil fuels, individuals and institutions not only build the case for government action, they also start this important discussion about the fossil fuel industry’s “stranded assets.”
On the flip side of that coin, divestment also starts to build momentum for moving money into clean energy, community development, and other more sustainable investments. Reinvestments in solar bonds, revolving loan funds, and advanced energy industries won’t be enough to fuel a clean energy revolution – that’s why we’re still pushing for government action – but they build the case for investment in important ways.
Which companies are the worst offenders?
We’re all complicit in fossil fuel consumption, and we should do all that we can to reduce our own use, but the real culprits — the ones who are rigging the system — are the fossil fuel companies. The largest 200 coal, oil, and gas companies own reserves that represent a significant percentage of the entire global market (1). These companies, incidentally, are also the largest political contributors around the world — they’re the ones writing laws and getting billions in government handouts each year (2).
There are many more companies that contribute indirectly to climate change — the multinationals that build drilling equipment, lay oil pipelines, transport coal, and utilities that buy and trade electricity. But right now, we’re focused on these 200 companies. For a full list of the companies and their reserves, check out this list.
Top 5 Coal companies
- Coal India
- Shenhua Group
- Adani Enterprises
- Shanxi Coking Company
- BHP Billiton
Top 5 Oil and Gas companies
Can we still make a reasonable return without investing in fossil fuel companies?
While it’s true that fossil fuel companies are extremely profitable (In 2011, the top five oil companies made $137 billion in profit — that’s $375 million per day), they’re also very risky investments (1). Coal, oil, and gas companies’ business models rest on emitting five times more carbon into the atmosphere than civilization can handle, which makes their share price five times higher than it should be in reality. In addition, disasters like Exxon Valdez, the BP oil spill, along with massive fluctuations in supply and demand of coal, oil, and gas, make energy markets particularly volatile, and therefore risky.
Report after report has shown that investing in clean energy, efficiency, and other sustainable technologies can be even more profitable than fossil fuels (2). It’s a growing market, with over $260 billion invested globally in 2011, and a safe place for your institution to invest (3).
There are also a number of ways to re-invest locally that help build your community and stimulate good jobs. Projects like energy efficiency and rooftop solar have high up-front and labor costs, but save institutions money in the long run because electricity, heating, and other costs are reduced significantly.
Can shareholders pressure fossil fuel companies without divesting?
Shareholder action can be an effective tool to make small reforms at a company, such as pressuring Apple to institute better labor practices at the factories it works with in China. Over the last decade, there has been an attempt to use shareholder action to change the behavior of the fossil fuel industry, as well. While there have been some limited successes — instituting sustainability practices inside the company, for instance — there haven’t been any resolutions that have been able to address the core problem with the industry: the massive amounts of carbon they insist on dumping into the atmosphere for free. Voting for climate friendly resolutions is a good thing to do, but it’s not going to solve the problem. Scientists say that in order to keep warming below 2°C, we need to leave about 80% of the fossil fuel industry’s current reserves underground. This is an achievable goal, but it’s the type of move that no group of shareholders would ever vote for willingly. Make no mistake, Exxon could still make a profit as an energy company if it transitioned its massive wealth and expertise over to renewables, but they’ll do it because of government regulation, not because they willingly decide to make the move.
That’s why it’s time for divestiture. We need to make the moral stakes of our current situation clear: the fossil fuel industry is wrecking the planet, and it’s immoral to profit off that wreckage. Divestment is a clear and powerful action that helps build the case for government action, along with making the economic point that we should be moving our money into the solution as supposed to the problem. If we’d started this campaign 30 years ago, then shareholder action would make more sense, but with the rapidly closing window for action, we need to act swiftly and boldly. Divestment can be an uncomfortable step to take, but it’s the right thing to do — and it will make a far greater impact than any shareholder resolution we could ever pass.
I'd like to divest my own money from fossil fuel companies as well. How can I do that?
As grassroots divestment campaigns take hold of institutions across the country, many individuals are taking matters into their own hands and choosing to divest their personal finances from fossil fuels. And that’s great!
Fossil fuel companies are currently overvalued, and as the international community moves toward regulating carbon emissions, divestment may be a good long-term investment strategy as well as the right thing to do. In Canada, in response to demand from individuals like yourself, a few fossil-free financial options have been created in the past few months. Vancity Credit Union now has a fossil free mutual fund option. Genus Capital also has a fossil free option. In Ontario there are various organizations/coops offering community bonds as a re-investment option. And it is likely that the options will grow. (For a US-oriented road map to divesting and reinvesting, visit: http://gofossilfree.org/usa/your-roadmap-to-personal-divestment/.)
The not-so-fine print: Fossil Free Faith is not making investment recommendations, but merely providing information about possible alternatives to fossil fuel related investments. Individuals should evaluate any investment alternative for personal appropriateness.
How do I get involved?
Kicking off a divestment campaign in your faith community will require building support, and we are here to help. The first thing to do is join the Fossil Free Faith google group, for useful resources and updates. And then start a conversation within your community/congregation. Depending on where the community is at on climate, this might begin with a sermon or a meal and discussion or a screening of 350.org’s excellent “Do the Math” film. You can also contact a local campus divestment campaign, or Fossil Free Faith, to find someone local to speak about divestment.
It is also important to speak with your group’s investment manager or investment committee early on, and make sure that they are included in the discussion. You can also send an email to the google group, or to christine (at) fossilfreefaith (dot) ca, to see what other efforts are being made within your larger faith institution, and how to connect with them. Various faith institutions have conversations percolating across the country.
The work we need to do won’t all be exciting—it involves meetings and petitions, rallies, and all the work of being an organizer in a church or a temple or a city or a society or a planet. Some of it will be uncomfortable—it will involve asking good people and institutions to change their ways. But this is the fight of our lives, and we’ll be right behind you every step of the way. Stay in touch. We’re in this together.
* Questions and answers borrowed and adapted from: http://gofossilfree.org/faq – a great additional resource for fossil fuel divestment support.