SEATTLE – Sometimes the best measure of a movement’s momentum is the reaction of its critics. When, in early October, the Australian National University (ANU) announced that it would sell its shares in seven fossil-fuel and mining companies, it triggered a chorus of criticism from the country’s conservative politicians.
These nominal champions of the free market were quick to tell the university what it should do with its money. The Treasurer of Australia, Joe Hockey, disparaged the ANU’s decision as being “removed from reality.” Others chimed in, calling it “a disgrace,” “very strange,” and “narrow-minded and irresponsible.” Never mind that the sums involved were relatively small – making up less than 2% of the university’s estimated $1 billion portfolio.
As the drive to divest from fossil fuels picks up speed, such panicky responses are becoming increasingly common. The outrage of Australia’s conservatives reminds me of the reaction I received when I testified before the US Congress in 2013 that we should “keep our coal in the ground where it belongs.” David McKinley, a Republican congressman from West Virginia, in the heart of America’s coal country, replied that my words “sent a shiver up [his] spine,” then changed the subject to the crime rate in Seattle, where I was Mayor.
Even ExxonMobil appears shaken. The company recently published a long, defensive blog post responding to what it described as a “full-throated endorsement” of fossil-fuel divestment by Mary Robinson, United Nations Secretary-General Ban Ki-moon’s special envoy for climate change. The fossil-fuel industry clearly sees the divestment movement as the political threat that it is. When enough people say no to investing in fossil-fuel production, the next step has to be keeping coal, oil, and gas in the ground.
That is a necessary step if we are to head off the most dangerous consequences of climate change. To prevent world temperatures from rising above the 2º Celsius threshold that climate scientists believe represents a tipping point beyond which the worst effects could no longer be mitigated, we will need to leave approximately 80% of known fossil-fuel reserves untapped.
Oil and coal companies and their political allies warn us of fiscal catastrophe if we do that – as if heat waves, droughts, storms, and rising seas did not bring their own fiscal and social catastrophes. As Mayor of Seattle, I supported the creation of energy-efficient buildings, the development of solar, wind, and hydroelectric power, and a shift toward walking, biking, and public transit as alternatives to driving – strategies that can help to build a more resilient economy and provide viable alternatives to fossil fuels. But they cannot prevent the worst of global warming, particularly if they result in coal and oil simply being sold elsewhere.
As imperfect as our governance systems are, at some point the public and its leaders may demand that we confront the truth about global warming. At that point, they will put in place the regulatory or legal controls needed to reduce fossil-fuel use dramatically.
If you are a prudent and cautious investor, contemplate that possibility for a moment. Stock values in the fossil-fuel industry – which are based on the assumption that companies will be able to extract and burn all known reserves – will plummet. Investing in these companies, it turns out, is extraordinarily risky. As anyone who receives investment statements knows, “past performance is no guarantee of future performance.”
That reality implies another compelling case for divestment. To be sure, some will claim that the world will never change and that we will continue to depend on fossil fuels forever. But one has only to look to Seattle, where gay couples marry in City Hall and marijuana is sold in licensed retail outlets, to see the human capacity to reexamine deeply held assumptions. The prudent investor, and the wise business leader, will look where the economy is headed, not where it has been.
The ANU’s decision looks like a sage one to anyone not in thrall to oil and gas companies, and it will only look wiser with the passing of time. Good on them. When I put Seattle on the path to divestment in 2013, my decision was well received by the young people who will have to live with the consequences of global warming, as well as the general public. As the political pressure mounts, the university’s administrators need only listen to the students.
We need more courage like that shown by the ANU. Its leaders bucked the power of coal and oil interests, which wield enormous power in Australia. If they can do it to popular acclaim, others can, too.
Mike McGinn is a former mayor of Seattle, the first city to commit to divestment from fossil fuels.
Copyright: Project Syndicate, 2014.