A new paper written by Centre on Innovation and Energy (CIED) researcher Dr Noam Bergman reviews the direct and indirect impacts of the fossil fuel divestment movement and concludes that the movement has changed public discourse in the UK and elsewhere.
Conversations about climate change mitigation now consider the role of the fossil fuel industry and finance actors that fund it, which was not the case a few years ago.
The study points out that even though the direct financial impact of the movement has so far been small, discussions about climate change in the finance world have changed. Some investors and shareholders have begun asking questions about investments in fossil fuels, whether out of environmental interest, or out of concern such investments might no longer be safe. Companies which oppose the divestment strategy are now routinely asked what they are doing instead to address climate change and investment risks.
The divestment movement has also catalysed political impact, for example contributing to the changing the notion of ‘fiduciary duty’. Traditionally, fiduciary duty was narrowly interpreted to mean that as long as fossil fuels offer the best returns on investment, fund managers could not legally divest from them. However, this has recently been challenged from within the finance world with some arguing that ethical considerations and prudence should be taken into account, or even that it should be redefined in the context of climate change. This challenge culminated in changing UK legislation for the likes of pension funds.
Finally, the study makes a theoretical contribution in combining different frameworks of social movement impacts, and showing how different categories of impact – cultural, financial and political – affect each other.
The research consisted of a literature review and analysis as well as UK-based interviews with activists and financial sector actors with an interest in environmental issues.
Read the full article.
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