Billions could be saved by decarbonising investments

A new interactive tool allows users to determine the financial benefit of divesting from carbon-heavy companies. It also reveals which major international funds are decarbonising their investments.

The Clean Capitalist Decarbonizer was launched by 350.org, South Pole Group and Corporate Knights, which then used this tool to analyse the investments of 14 prominent funds totalling USD 1 trillion in assets. The analysis revealed that these funds had lost well over USD 22 billion over the past three years by not shifting at least 20 per cent of their investments from carbon-heavy oil and coal companies and coal-intensive utilities to environmental markets or new energy, according to a news release on Morningstar.

“While incomplete disclosure limits the precision of analysis, the conclusion is unequivocal: decarbonizing portfolio holdings produced a better financial outcome in every case but one,” said Corporate Knights chief executive, Toby Heaps.

In response to recent reports on the financial benefits of divesting in fossil fuels, a growing group of investors are “voting with their dollars for less pollution and more environmental solutions,” said Heaps. This includes the Dutch pension plan PFZW, which has pledged to cut its carbon footprint in half by 2020, and the French insurer AXA, which is selling off its stakes in mining companies and utilities that derive over 50 per cent of their turnover from coal.

The three partners hope that the Decarbonizer will provide a deeper level of transparency – and urgency – in the discourse around fossil fuel divestment.

“When the tool disclosed that the University of Toronto could have generated an excess return – big enough to have paid full tuition for the entire student body for all four years – if they had divested from fossil fuels when the campaign started, the conversation became grounded in the story of the institution itself. Divestment is the moral, prudent, and smart thing to do,” said Brett Fleishman, senior analyst at 350.org.

 

Photo credit: Tony Webster, flickr/Creative Commons

 

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