Divestment is when investors sell their shares in companies or industries, to show their disapproval.
Unfriending Fossil Fuels
Divestment is like unfriending someone on social media, after you’ve tried everything else to convince them they should act better. It’s a last resort – you’re giving up on them. If enough other people also do it, the person you’ve unfollowed may get the message.
Divestment happens when investors who disapprove of a company’s behavior (or a whole industry’s) sell all their shares in that company (or industry), and ask other investors to do the same.
If enough investors sell, the company’s stock price might drop, making its executives look bad and making it harder for the company to raise money for future growth.
Experts disagree on how well divestment works, because it requires lots of investors, especially big investment funds, to divest at around the same time. This is hard to make happen. And even if many big investment funds dump a company’s shares, other less-principled investor funds may buy those shares because they sense an opportunity to make money.
Fortunately, effective divestment campaigns generate lots of publicity, which hurts the targeted companies even if their stock price doesn’t drop.
The biggest divestment movement right now, and possibly ever, is the global movement to divest investments in fossil fuel companies.
Around the world, large investment funds – including pension funds, university endowments, and even government funds – are selling stocks in oil and gas companies, coal companies, and other companies driving carbon emissions and climate change.
So much money is getting divested from fossil fuels that both the stock prices and reputations of these companies seem to be suffering. Though this may partly also be because the business prospects for these companies are declining (they’re threatened by renewable energy).
So if you don’t like fossil fuel companies, just find someone who owns their stock and convince them to ‘unfriend’ them.