why divest

Why Divest from Fossil Fuel? Pros & Cons and Examples

Since the clean-energy movement gains momentum, people become more aware of what their money is up to. And this is why divest is such a common term all of a sudden. Nowadays profit-line is no longer the only thing investors care about. Ideology and ‘Environmental Effect’ influence investors decision-making more than ever before. ‘Fossil Fuel Divestment’ or ‘Fossil Fuel Free’ is one of the outcomes of this phenomenon. In this article, I will try to conclude why divest of fossil fuel is good or bad. In this article you’ll find:

What Is Fossil Fuel?

Fossil Fuels are coal, natural gas, and oil. These fuels are actually masses of ancient flora and tiny animals (fossils) trapped underground or under the sea. High pressure and Low oxygen level underground chemically converted these fossils into what we know as ‘Fossil Fuels’ For more about fossil-fuel chemistry click here

What’s So Bad About Fossil Fuel?

Responsible for global warming

To use the energy trapped inside fossil fuels we most burn it. The process of burning fossil fuels releases CO2 gases into the atmosphere, which is the main reason we have global warming.

What Is Divestment?

Divestment is the action of withdrawing money from a certain investment. People divest for different reasons:
  • Ideology
  • Environmental
  • Politics
For more Info about divestment Read my article: What Is Fossil Fuel Divestment? (All You Need To Know)

Why Divest from Fossil Fuel?

Most people divest from fossil fuel out of pure environmental ideology, they no longer want to give their money to contaminating fossil fuel companies. Others divest because of financial reasons: they believe the era of fossil fuel is over, and soon we will only be using renewable energy sources. Either way, The fossil free trend is growing, as new financial ‘Fossil Free’ products join the market all the time to meet demand.

Fossil Fuel Divest Cons

  • Fossil Fuel Is Not Going Anywhere – Even If everybody will drive electric cars – Fossil Fuels will still be needed to make all this electricity.
  • Fossil Fuel Lobby –  These corporations are among the strongest in the world, They are not going to give up easily on their product.
  • Energy Companies feel Where The Wind Blows – Oil companies are also investing in and developing green energy technology.
  • Fossil Free funds are new – You can’t analyze their history so It’s hard to predict how will they behave in the future.
  • Profit Line – Divesting from fossil fuel might hurt your portfolio profit line.
  • Why Divest Only From Fossil Fuels? Other industries create environmental damage as well, you can’t divest from them all.

Fossil Fuel Divest Pros

  • Environmental –  Divesting from the Fossil Fuel industry might be the single most helpful act one can do to stop climate change.
  • Sending A Message – Show contaminating corporations that it’s time to stop ignoring the environment.
  • Renewable Energy Gets Bigger – Prices of renewable energy (wind & solar) drop every month, pulling the price of oil barrels down with them.
  • Politics – Countries begin to fight climate change with new laws which might hurt the value of fossil fuel companies.
  • Insurance – Some insurance companies see the ‘fossil free’ trend as a reason to stop insuring oil companies.
  • Big Organisations –  Big important organizations are withdrawing their money away from fossil fuels, they might know something.
Why divest

Many Big Companies already divested

Examples Of Big Organisations That Divested

  • New York City
  • Leonardo DiCaprio Foundation
  • Rockefeller Brothers Fund
  • Guardian Media Group
  • World Council of Churches
For the full list click here

Examples of Fossil Fuel Free Mutual Finds

My Conclusion

There’s big uncertainty about pulling your money out of fossil fuel investments. It might be a smart financial move and it might not be. At the end of the day, I think that putting your money where your mouth is, means more than just words. And if you care about the environment – divesting is the right thing to do, even if you end up losing some money. I do what’s In my power to stop climate change and this is why to divest is right for me. I hope this was helpful, Omri

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