Thomas Piketty & Tim Jackson call on investors to divest from fossil fuels and national governments to end subsidies
Leading economists Thomas Piketty and Tim Jackson released a letter today in the French newspaper Le Monde and The Guardian, calling on investors to divest from fossil fuels and on national governments to end fossil fuel subsidies at the G20.
“Science, ethics, and economics are intersecting to form a clear market signal: in the lead up to the COP21 climate talks, responsible investors should divest from fossil fuels,” the letter reads.
The call from two leading economists is another sign of momentum for the growing fossil fuel divestment movement ahead of the Paris climate talks. As of September 2015, over 400 institutions, representing more than $2.6 trillion in assets under management have made some form of divestment commitment.
The letter highlights not only the moral imperative of divesting from companies that are responsible for the climate crisis, but also the increasing financial risk of holding onto fossil fuel stocks as the economy moves in a new direction.
Piketty and Jackson warn the investor community that “from a fiduciary perspective, there are a number of indicators that fossil fuel investments contain significant levels of risk.”
“At a time when the fossil fuel industry should be shifting their businesses to focus on renewable energy they are doing the opposite, doubling down on coal, oil and gas. Capital continues to flow into the exploration and future extraction of dirty energy. Long-term investment decisions must take into account the externalities of a business model at odds with physical realities,” they add.
Concerns regarding climate risk have become increasingly mainstream over the last year, with major institutions like the Bank of England warning about the potential of fossil fuel reserves to become stranded assets.
While an increasing number of institutions move away from fossil fuels, many governments are continuing to subsidise the industry, even as they make pledges for COP21 to reduce emissions. A new report released on Thursday by the US based research and advocacy group Oil Change International and the UK-based Overseas Overseas Development Institute found that G20 countries still provide $452 billion a year in subsidies to the fossil fuel industry–nearly four times the entire amount of global subsidies for renewable energy (and four times the currently unfulfilled pledge to generate $100 billion a year in climate finance by 2020).
According to Piketty and Jackson, “divestment also models the kind of commitments we are expecting to be taken from governments. We, the undersigned, call on national governments to take effective commitments to end all form of subsidies to fossil fuels at the G20”.
This weekend, 350.org is joining with Oil Change International and other allies to organise actions around the world calling on G20 countries to fulfil their commitment to end fossil fuel subsidies and stop other sources of dirty finance. Activists are rallying in Istanbul’s Taksim Square, bringing “carbon bubbles” to the Tokyo stock exchange, protesting Japanese coal finance in Indonesia and the Philippines, and demonstrating at ExxonMobil stations in Washington, D.C.
“The first step to addressing the climate crisis is to stop funding the problem,” said 350.org Executive Director, May Boeve. “Ending fossil fuel subsidies and other dirty finance is the clearest way that G20 countries can help build momentum for the climate talks in Paris. As leading economists and hundreds of institutions continue to join the fossil fuel divestment movement it’s time for governments to follow suit and stop funding climate destruction.”
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