Divesting from Fossil Fuels May Prove a Boon to Investors

As the desire for clean energy and divestment from fossil fuels grows, so does the prospect that fossil fuels may pose a hazard to the modern investor.

Divesting from fossil fuels is a focus for Clara Vondrich, the global director for Divest-Invest.

At Divest-Invest, Vondrich encourages investors to invest in the clean energy market while divesting from fossil fuels based on the belief that doing so is not only a financial benefit but, also a moral duty.

During a July 25 talk at the California Energy Commission, she discussed how the divestment movement is changing the investor’s view on fossil fuels.

She said fossil fuels present a hazard to the modern investor in the face of shifting energy markets.

“What was once a blue chip is now a high risk,” Vondrich said.

A primary obstacle in shifting current investment trends is overcoming a prevailing and deep skepticism that the world is not ready for fossil fuel divestment yet, she said.

Vondrich said that fossil fuels investments present certain risks from the impending energy market carbon bubble burst, and the risk of stranded assets for fossil fuel companies.

Current fossil fuel stock dividends are evidence of unsustainable borrowing practices, rather than increasing revenue, she said.

By contrast, the clean energy sector offers opportunities in the wake of global climate pacts such as the Paris Agreement and the increased demand for renewable energy and clean technologies.

“I think we’re standing at a very important point in history,” Vondrich said.

Investors that commit to Divest-Invest are expected to invest at least 5 percent of their portfolio in climate investments, while divesting from a minimum of the 200 largest fossil fuel companies, by reserves. Divestment commitments have spiked from 50 billion in 2014 to 6 trillion as of July 2018.

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California Energy Commission

The California Energy Commission is the state's primary energy policy and planning agency created by the Legislature in 1974.
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