Why engagement with fossil fuel companies won’t work: the impetus for divestment

NI Managing Partner Michael Kramer sat down with Bill McKibben at the recent Finance for a Sustainable Future conference, and heard the case for divestment over engagement from the horse’s mouth, so to speak.  See Michael’s June column on GreenBiz.com for the full story; here’s a teaser:

During the last 40 years, the SRI industry has used three primary strategies to foster change in the corporate world: engagement as shareholders to influence company and industry policies and practices; advocacy with regulators and policymakers to rein in abuses to protect share value; and divestment (what the industry refers to as environmental, social and governance portfolio screening). The challenge SRI investors always face is determining which strategy is appropriate for which circumstance. Historically, the SRI industry has preferred engagement, because one can use ownership to encourage companies to, for example, adopt ecological practices, embrace fair labor standards and improve diversity.

However, the core purpose of certain sectors – alcohol, tobacco, weapons, gambling, even nuclear power – have been widely accepted exclusions by SRI investors for their inherent harm or potential harm they cause to humanity. . . .And this was precisely the point McKibben made to the SRI industry: In this particular case, at this perilous moment in the history of this planet, engagement simply doesn’t achieve the desired outcome (at least, not fast enough). Past efforts to move fossil fuel companies into renewable energy or get fossil fuel companies to report on the impact of climate change on profitability largely have failed.

You may also want to take a look at Michael’s May column on GreenBiz, which looked more generally at climate change as a business risk.

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Michael Kramer

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