Under the banner STOP FOSSIL FUELS. BUILD 100% RENEWABLES, the group 350.org last month announced “a new fossil free milestone: $11 trillion has been committed to divest from fossil fuels.”

“These numbers are strong indicators that people power is winning,” the Bill McKibben-cofounded group boasted. “We would not have smashed our divestment targets without the thousands of local groups who have pressured their representatives to pull out of fossil fuels.”

But the mainstream media hardly reported it—for cause. The $11 trillion is the total assets of the funds announcing divestment, not the actual amount of fossil-fuel assets physically sold with a promise not to reinvest.

Previous milestones of $2.6 billion (2015) and $5.2 billion (2016) were exposed as gross exaggerations (even by Mother Jones) with the word “representing” hiding the trick.

What is the actual, verifiable, executed amount of oil, gas, and coal investments divested? The divestment reports prepared by Arabella Advisors for 350.org do not provide that figure. But one recent announcement contrasts the two figures. Last month, the University of California’s $13.4 billion endowment announced $150 million in sales in order to become “fossil free.” In this case, “representing” (per 350.org) would overstate divestment by a factor of 90.

And what if such decisions are soft? After all, what is “clean” and “green” and “sustainable” is subjective, not objective. Could a fund divest from a coal stock and then later invest, say, in a midstream natural gas stock? In fact, coal divestment accounts for much of the total.

Seller Meets Buyer

Assume whatever actual divestment figure you would like—say $500 billion. A humorous rejoinder (calling the Onion or Babylon Bee) would be:

The American Gas Association, American Petroleum Institute, and National Coal Association reported full placement of divested fossil-fuel stocks, with $500 billion repositioned from politically motivated funds to the wider market.

“Sure enough, for every seller there was a buyer,” the joint press release stated: “With fossil fuels representing a market share of 80 percent for the US and 85 percent globally, expect immediate placement of sold oil-, gas-, coal-related stocks for the foreseeable future.”

Two simple facts govern the energy investment market. Demand will meet supply. And that demand is valuing investments based on financial fundamentals and diversification metrics.

“The [stock] market price stays the same; the company loses no money and notices no difference,” stated William MacAskill, the president of the Centre for Effective Altruism. “Divestment, to date, probably has reduced about zero tonnes of emissions,” added Bill Gates. “It’s not like you’ve capital-starved [the] people making steel and gasoline,” he said. “I don’t know the mechanism of action where divestment [keeps] emissions [from] going up every year. I’m just too damn numeric.”

And according to IEA analyst Michael Waldron, “For oil and gas, we see less evidence of divestment actually having a material effect on what the industry is doing. We haven’t seen any huge increase in funding costs for oil and gas companies.”

The Wide Fossil-Fuel Market

Private equity firms are quietly financing profitable projects in the natural/mineral industries at a record pace. Non-public companies and state-owned energy sectors, too, are beyond the reach of the divestment movement.

Of the world’s top ten oil producers, the biggest are state-owned. The world’s largest oil and gas entities are Saudi Arabian Oil Company (Saudi Aramco), Russia’s Rosneft, and National Iranian Oil Company. Other giants are China National Petroleum Corporation, Sinopec Group (China), Kuwait Petroleum Corporation, Petroleos de Venezuela (PDVSA), and Nigerian National Petroleum Corporation, according to Investopedia. Add Mexico’s Pemex and Malaysia’s Petronas, among others, to the list too.

The divestment movement has targeted banks and insurance companies to curtail business with oil, gas, and coal projects (“33 major global banks poured $1.9 trillion to fossil fuel companies since the Paris [Climate] Agreement was adopted,” complained one study.) But China alone is funding a coal boom at home and abroad, while giving lip service to the Paris accord.

Even targeting the outside funders of fossil fuel companies leaves retained earnings and equity issuance. Platt’s reported:

In terms of capital structure, [IEA analyst Michael] Waldron notes oil majors are much less dependent on debt to finance spending so “it’s not a case of divestment drying up bank funding which is hurting these companies.” The world’s top 25 listed oil companies by production relied on equity to finance 75% of their spending last year, with 25% coming from bonds and other debts, the IEA estimates.

Political Investing is Risky

Fossil-fuel divestment is being joined by a “reinvestment” movement to buy into “industries that will build a just and sustainable future for all.” The pitch by 350.org reads as follows:

Investors should commit at least 5% of their portfolios to climate solutions that help rapidly scale to 100% renewable energy and universal energy access. For those investors who persist in engaging with the fossil fuel industry despite mounting evidence of its failure to achieve anything, we ask them to change track and divest now – as both science and justice demand in this moment.

Science? What about non-alarmist science? Justice? Enter the Green New Deal’s nebulous aims going far beyond the climate crusade. The great majority of investors are not interested in subjective, contradictory, controversial notions of virtue.

Buyer beware applies to socially responsible investing. Remember Enron, considered a “green” and “socially responsible” energy company until its demise in 2001. “Beyond Petroleum” BP was another favorite, pre-Deepwater Horizon. Solyndra and Evergreen Solar are other cautionary tales.

And how about now-bankrupt PG&E, serving northern California? “PG&E shows that we are no longer talking about tree-hugging climate warriors that just want to do good,” stated Wolfgang Kuhn of ShareAction, an activist pension fund. “This is about money.”

Greenwashing has and will fool “socially responsible” investors. Worse, politically correct businesses dependent on special government privilege add risk to risk. Think wind power, on-grid solar power, and electric vehicles in particular.

Fighting Back

Publically traded asset funds are a big target for the anti-fossil-fuel movement. The world’s largest, BlackRock, managing $6.3 trillion globally, is not going along. CEO Larry Fink has wisely kept all his options on the table, drawing ire from divestment advocates.

“BlackRock is perhaps the biggest name you’ve never heard of that is driving the climate crisis,” said Gaurav Madan, a campaigner with Friends of the Earth US. Its sin? Investing in Chevron, ExxonMobil, Royal Dutch Shell, and other integrated majors that offer strong dividends.

Pension groups are fighting back too.

Leading up to the legislative hearing, the Suffolk County Association of Municipal Employees released an analysis that divestment from fossil fuel stocks to green energy companies would “substantially underperform fossil fuels and result in state pension shortfalls” requiring a $33.4 billion cash infusion over 30 years. The Subway Surface Supervisors Association, the New York State Supreme Court Officers Association and the New York State Troopers Police Benevolent Association oppose divestment.

This echoes earlier objections over divestment from leading educational institutions.

  • “I [Drew Gilpin, president] also find a troubling inconsistency in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and as a community, we are extensively relying on those companies’ products and services for so much of what we do every day.” (Harvard University)
  • “It seems unlikely to us that divestment from fossil fuel would ‘revoke a social license’ when we continue to use fossil fuels day after day in every aspect of our lives.” (Columbia University)
  • “In our judgment, the deliberate public act of divestment would entangle MIT in a movement whose core tactic is large-scale public shaming.” (MIT)
  • “Taking an institutional stand on political issues of many kinds threatens the primary educational mission of the university, which is to be avowedly open to arguments of every kind and to avoid giving priority to partisan or other political viewpoints.” (Princeton)
  • “… the symbolic statement of divestiture would not elucidate the complex scientific and policy issues surrounding coal and climate change and, for this reason, it would run counter to Brown’s mission of communicating knowledge.” (Brown)
  • “Fossil fuels enable us to operate the university, to conduct research and to provide patient care.… We made a commitment to our donors to use income generated from the endowment to support our mission for today and for future generations –academic and research programs, student support, and life-saving patient care.” (University of Michigan)

Is divestment materially affecting the equity price of oil majors? Of several hundred analyst reports of ExxonMobil, none changed a rating (up or down) based on divestment or climate issues.

Government Divestment and Reform: A Free-Market Program

Rather than focusing on the voluntary investment market, and companies that consumers freely make profitable, the divestment movement should target government ownership and influence that concentrate wealth and privilege with political elites.

First, state energy companies, many listed above, should be privatized. A partial privatization of Saudi Aramco, announced in 2016, remains in limbo, but even an IPO for a small fraction of the company sets a precedent for more private ownership with this company and others to come.

Second, special subsidies to oil, gas, and coal should be terminated, as should preferences to competing energy technologies. In the US, this amounts to approximately $500 million for fossil fuels, and $7 billion for renewables and nuclear power. Globally, fossil-fuel consumption subsidies of $260 billion (2016) for petroleum (40 percent), natural gas (19 percent), and electricity (41 percent) should also be removed.


The divestment movement must contend with growing demand for oil, gas, and coal from 7.7 billion people—and investor appetite for returns and diversification. Global energy demand rose 2.3 percent last year with fossil fuels providing more than two-thirds of the increase. The outlook is almost 50 percent energy growth by 2050, according to the U.S. Energy Information Administration, with fossil fuels accounting for 70 percent.

It’s still a consumer-first, profit-driven fossil-fuel world. The upstream, midstream, and downstream industries, at home and abroad, offer a wide range of viable investments. Americans and the world should continue to invest, not divest, in dense mineral energies.

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