$6.24 trillion in assets commit to divest

A report from US-based Arabella Advisors reveals that nearly 1,000 institutional investors, with $6.24tr in assets, have committed to divest from fossil fuels, a rise from $52bn only four years ago.

Interestingly the main drivers of this increase come from traditionally conservative assets holders, such as insurers, pension funds, and sovereign wealth funds, who are adding their weight to the charitable and health funds. The result of these divestments is that there is now a ‘negative material impact’ on the fossil fuel industry.

The insurance sector continues to divest more than any other sector, having committed to divest over $3tr in assets. Sovereign wealth funds and pension funds are also divesting: Ireland, which has a €8.9bn sovereign development fund, became the world’s first country to commit to divest its wealth fund from fossil fuels.

The report believes that reasons for the divestment may be varied, but the increased performance of alternative assets, the legal threats of failing fiduciary and reputational risk may all be factors, along with the clear environmental reasons. The report concludes that moral and financial cases for divestment have changed the context in which the fossil fuel industry operates and are now advancing the transition to clean energy.

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