With less than 11 years left for us to limit global warming to 1.5C, fossil fuels are still all pervasive in our societies. They’re polluting our atmosphere, acidifying our oceans, and forging the plastics that are piling up in landfills—and all of this activity is funded by our financial institutions

Because even though the UK has committed to net zero carbon emissions by 2050, funding fossil fuel companies is still the norm within the financial sector—and, whether it’s your bank quietly financing tar sand extraction or your pension provider actively investing in companies like BP and Shell, it’s likely that your money is tied up in it too.

This system can seem inescapable and inevitable. But if you want to withdraw your financial support from the companies that are driving us towards climate breakdown, there is one important action you can take: fossil fuel divestment.

What is fossil fuel divestment?

Fossil fuel divestment (sometimes called disinvestment) is, well, the opposite of investment: removing money from organisations or funds that support fossil fuel companies. It can be about removing your own money from these places, or about lobbying organisations you’re part of like universities, religious institutions, local governments and charities to do the same.

But divestment is about more than just pulling money from the financial sector: it’s about sending the message that funding fossil fuels when the world’s climate is almost at the point of no return—with millions of the world’s poorest predicted to suffer the most—is as morally reprehensible as their funding of the apartheid government was in the 80s.

Because of the urgency of the situation, the campaign for fossil fuel divestment is gathering steam, with more than 1000 institutions publicly committing to divest to a tune of $9.20 trillion— amongst them the Republic of Ireland, New York City, and the World Council of Churches.

Does fossil fuel divestment work?

As with any movement to shift power, the people at the top aren’t giving up without a fight. Fossil fuel companies have been working hard to cast doubt on the strategy of divestment: for example, the website divestmentfacts.com claims divestment will “cost top pensions trillions” and “carries direct costs for students.” Look in the top right corner and you’ll see that the site is “a project of The Independent Petroleum Association of America.” Funny, that.

Corporate propaganda aside, do any of the commonly advanced arguments against divestment hold up?

Argument #1: Divesting will lose you money

It’s undeniable that the fossil fuel industry is a profitable one—for now.

But no less reputable figures than the heads of the International Monetary Fund, World Bank and Bank of England have cautioned about the financial risks of fossil fuel investment—AKA the “carbon bubble.” Essentially, any fossil fuel investments will lose their value when the world begins to transition to low-carbon economies—as it must, to meet internationally agreed climate targets. The stock markets are just betting on inaction.

And several analyses have suggested that divestment doesn’t mean an automatic loss of profits. In fact, the MSCI Low Carbon Target Index has been outperforming its traditional counterpart since 2010.

Argument #2: Divestment will be the end of society as we know it

Because so many of the building blocks of our modern, convenient lifestyles are made from fossil fuels, some worry that large-scale divestment would unintentionally put paid to our comfortable lives.

But again—Theresa May has already committed to transition to a low-carbon economy by 2050. And the technology to replace fossil fuels isn’t only already available—it’s improving all the time. From solar and wind energy becoming less expensive than coal to rise of affordable electric cars, the innovations we need for a more sustainable future are already here.

Argument #3: Divesting is hypocritical virtue signalling

Another common argument is that it’s hypocritical to lobby for financial divestment from fossil fuels while continuing to depend on them in your day-to-day life. Other opponents of divestment insist that it’s an ineffective strategy—just moving your money can’t bankrupt the fossil behemoths, or remove the carbon that’s already been pumped into the atmosphere.

But this is based on a misapprehension of the movement: no one is asking anyone to cut themselves off from fossil fuels overnight and live in a cave. Leaders of the divestment movement, 350.org, are calling for investors to commit to selling off their fossil fuel investments over a period of five years, while at the same time moving money into renewable energy. Seen in this way, divestment is far from hypocritical—it’s a key part of driving the transition to a low-carbon world.

And it’s worked before. In the ‘80s, students pressured their universities to divest from companies that did business in South Africa. 155 campuses, 26 state governments, 22 countries and 90 cities listened to them—directly contributing to the fall of the apartheid government. On the day in 1986 that Barclays sold their South African unit, the chairman said:

“World opinion counts. It affects commerce. And world opinion has changed quite a lot this year.”

Argument #4: People should make change from the inside

In 2014, the Church of England filed shareholder restrictions requesting Shell and BP to take more action on climate change. The Church’s Head of Responsible Investment said: “Our approach is to get stuck in on ethical issues and try and have a positive influence.”

As compelling as this sounds, some of those who have dedicated years to such engagement strategies have found them to be a waste of time. Leading environmentalist Jonathon Porritt, who worked extensively alongside both Shell and BP on various sustainability projects, has lamented:

“There was a time when I seriously persuaded myself that it was still just about possible for companies like Shell and BP to find some way of transitioning into fully-integrated energy companies, investing as much in renewables storage and efficiency as in hydrocarbons… It didn’t happen. Worse yet, the lengths they went to justify their continuing investments in new hydrocarbons have become more and more extreme”

It seems the Church of England had a similar revelation—they’ve since voted to divest from fossil fuels by 2023.

Argument #7: We need fossil fuels to end poverty

Perhaps the most pernicious misconception of all, some argue that because fossil fuels built our modern Western economies, they’re therefore essential to developing the third world and ending poverty. This couldn’t be further from the truth.

The IPCC has been at pains to point out that “people who are socially, economically, culturally, politically, institutionally or otherwise marginalised are especially vulnerable to climate change;” In The Uninhabitable Earth, David Wallace-Wells paints a bleak portrait, backed up by the latest research, of what awaits developing nations in a 1.5C+ warmer world:

• 150 million people at risk of protein deficiency due to “nutrient collapse”
• 250 million Africans facing water shortages
• Half of the world’s population subject to deadly heatwaves at least 20 days each year

To name just a few of the horrors that could be in store for the world’s poorest.

How does your bank fund fossil fuels?

The UK’s “Big Four” banks—Lloyds, Barclays, HSBC, and RBS/Natwest—have long been reliable supporters of fossil fuel companies: in fact, they’re four of the biggest investors in the industry in the UK. But just what kind of pollutants, exactly, is your bank financing?

Barclays

Banktrack’s Fossil Fuel Finance Report Card for 2019 reveals that Barclays is the top European banker of fracking and coal, pouring $85bn into fossil fuels and $24bn into expansion. It’s also provided finance to the companies behind the controversial Dakota Access Pipeline, which pumps oil through Native American land.

Barclays also continue to offer project finance for tar sands, which produces some of the most polluting oil in the world.

Actions you can take against Barclays include:

• Sign Greenpeace’s petition telling Barclays to stop funding tar sands
• Download People & Planet’s Divest Barclays action guide

HSBC

In March 2018, HSBC bowed to pressure from divestment campaigners and announced a partial ban on financing new coal plants. But there’s a loophole in the policy: it doesn’t apply in Bangladesh, Indonesia and Vietnam until 2023.

HSBC’s CEO contended that this was because “there’s a very significant number of people in those three countries who have no access to any electricity.” But as 350.org argues: “the European Union’s largest bank cannot fund clean tech in developed countries and then force the people of Bangladesh, Indonesia and Vietnam to breathe sulphur dioxide and smog.”

Actions you can take against HSBC include:

• Share 350.org’s video: “HSBC: Stop Funding Climate Breakdown”
• Sign 350.org’s petition: “HSBC: Stop Profiting From Destruction”

RBS Group (inc. Natwest)

RBS has invested over $4 billion into fossil fuels since the Paris Agreement was signed in 2015. However, in another victory for divestment campaigners, they recently announced that they’ll no longer provide “project-specific finance” to:

• New coal fired power stations
• New thermal coal mines
• Oil sands projects
• Arctic oil projects
• Unsustainable vegetation or peatland clearance projects

This is a good first step—but again, there’s a loophole. Only removing “project-specific finance” leaves the door open for RBS to financially support fossil fuels in other ways (for example, by providing general corporate finance, or underwriting and advisory services).

Lloyds

In 2017, Share Action ranked Lloyds as the major European bank least responsive to climate change. Last year, Lloyds announced that they would refuse any new clients whose revenues come mainly from coal power plants and mines; however, they’ll continue to work with existing clients in the industry—and they’re still funding oil and gas.

Divestment step #1: Switching banks

If you’re concerned with how your bank is using your money, the easiest method of divesting is by switching to a more ethical bank.

But before you go, it’s important to tell your bank exactly why you’re leaving. Draft an email or letter explaining your position, telling them which bank you’re moving to instead, and outlining your requests. Share your letter on social media, and, if/when you get a response from the bank, share that too. (If you’re not the letter-writing type, a simple social media post will do!)

Here’s a letter template to get you started:

“Dear (name of old bank/ CEO),

I’ve banked with (old bank) for (x) years. But as you continue to finance the fossil fuel industry which the UN says is driving the planet towards “severe, widespread and irreversible impacts,” I’ve been forced to switch my banking to (new bank)—who do not fund fossil fuels.

I trusted you with my money. But by continuing—despite the warnings of the IMF, World Bank, Bank of England and others—to invest in companies who aren’t just endangering the future of life on earth, but whose resources are also set to become “stranded assets” within a matter of years, you’ve shown that you lack the foresight to be trusted with my funds.

I urge you to reconsider your position and commit to withdrawing support from fossil fuels of all kinds as soon as possible—as you must, to comply with the Paris Agreement. I look forward to a response detailing exactly when you’ll end support (financial and advisory) for coal, oil, gas, and other dirty fuels like tar sands.

Although I’m just one customer out of millions, the fossil fuel divestment movement that I’m part of is growing all the time—and until you listen to its demands and act with moral and financial responsibility, you’ll continue to lose customers to (new bank).

Yours sincerely,

(Your name)”

Once you’ve drawn some attention to the issue, it’s time to start considering your alternative options.

Triodos

Triodos practise “sustainable banking”—their mission is “to help create a society that protects and promotes quality of life and human dignity for all.” As well as financing cultural and social projects, they also focus on lending to projects that will provide environmental benefits, like organic farming and renewable energy.

They won’t lend to “any organisation that puts profit before people and planet”—which includes the fossil fuel industry, as well as weapons and environmentally hazardous substances. You can browse the organisations they fund here.

Accounts

• Triodos offer current accounts for a fee of £3/month (which come with an eco-friendly debit card!)
• They also offer a range of savings accounts; with the “Everyday Savings” you can save from £1, and the “Regular Savings” takes monthly deposits from £25

Charity Bank

Charity Bank is owned by—and use customers’ money to make loans to—charities, social enterprises and social purpose organisations. In 2015, the Good Shopping Guide named Charity Bank as one of the World’s Top 10 Most Ethical Companies.

Their primary focus is social causes, with the majority of their loans since 2002 going towards social housing. However, they do also lend to environmental projects, with £10.5M given away to that end to date.

Accounts

• Charity Bank do not offer current accounts, as their primary focus is lending
• But they do have savings accounts that support the work of charitable organisations across the UK: their “33-Day Notice Account” comes with up to 0.55% Gross/AER, and their “93-Day Notice Account” up to 0.65%
• If you’ve got at least £5000 saved, you can use their “1-Year Fixed Rate Account” or “3-Year Fixed Rate Account” for 1.30% or 2.00% Gross/AER respectively

The Co-operative Bank

The Co-Op was the first UK-high street bank to introduce a customer-led Ethical Policy—which states that the Co-Op won’t provide banking services to any organisation whose core activity contributes to:

• Climate change via the extraction or production of fossil fuels (i.e. oil, coal, gas, shale gas, tar sands and certain biofuels)
• The manufacture of chemicals that linger in the environment (or are linked to health concerns)
• The unsustainable harvest of natural resources (e.g. timber, fish)

That said, the Co-Op has had its fair share of scandals in the past, with Move Your Money calling them out for “drug-addled executives, culling branches, vulture fund owners and (…) the poorly handled and frankly egregious attempt to dump social justice campaign groups from its customer base.”

Further, the Co-Operative Group no longer has any shareholding in the bank—it’s primarily owned by hedge funds. Nevertheless, if you need a bank with a high-street presence, the Co-Op could be the best bet for you.

Accounts

• Their standard current account has no monthly fees, and an option to opt-in to rewards that will be given to you, or a charity on your behalf, every month. They also offer a “Cashminder” current account which is a good option for those in financial need, or young people opening a bank account for the first time
• They have a range of savings accounts, including the “Smart Saver” at 0.46% gross/AER and the “Online Saver” at 0.75%

Mutuals: Building societies and credit unions

If none of the above sound appealing, consider moving your money to a mutual fund like a building society or a credit union—that is, a financial institution owned and controlled by its members, with the goal of serving members rather than maximising profits.

(The distinguishing factor between the two models is that membership of a credit union is typically based on a “common bond”, like living or working in the same area as the other members, or belonging to the same church or trade union.)

There are many different building societies and credit unions in the UK offering a variety of different services—many don’t lend commercially, so it wouldn’t be possible for them to use your money to fund fossil fuels (although you should thoroughly research both their services and environmental policies before switching).

You can find your nearest credit union here, and find out more about building societies here.

The Ecology Building Society merits a special mention for being dedicated to building a greener society—in everything from lending solely to sustainable building projects, to creating edible gardens around their own eco-build offices. They don’t support current accounts, but they do offer a range of savings accounts.

Divestment step #2: Lobbying your pension

It can be easy to forget about your pension once it disappears from your paycheck: but, if you work in local government or the private sector, your pension is probably invested in fossil fuels. As your pension is arranged through your employer, divesting it isn’t as easy as switching personal bank accounts—you’ll have to make some noise about it.

The recommended way to approach the issue is:

1. Build a team: There’s power in numbers, so don’t try to go it alone—recruit a team of colleagues who are also passionate about the issue
2. Locate your pension: Ask your employer for the contact details of your pension scheme’s trustee, or, if there isn’t one, another point of contact
3. Email your contact: Ask how much of your money is invested in fossil fuels, and if there’s a fossil fuel divestment option available. The Guardian have a good template letter here. Don’t forget to share the letter and your contact’s response on social media, and with your other colleagues!
4. Act: Ask for your money to be transferred to the fossil-free fund, or, if there isn’t one, request a face-to-face meeting with your contact to discuss how one can be set up—the charity ShareAction can provide free advice to help you prepare you for this discussion. See their Pension Power guide for a primer.

It’s a lot of work to draw attention to something that should be standard, but don’t be disheartened—pension scheme members really can make a difference. Nest, for example, doesn’t offer a divestment option at the moment, but says it would consider it “if there was a strong member desire to see such an option.”

Divestment step #3: Moving your investments

It goes without saying that investing is an incredibly complex business—so if you’re considering divesting your investment portfolio, it’s highly advisable to seek professional help.

But many have been met with reluctance from advisors to divest small sums (by which we mean <$500,000), or just plain bafflement at the concept of divestment in general. So here are a few tips on who to turn to:

• The Ethical Investment Association is a group of 50+ independent financial advisors who “are keen to offer green and ethical investment advice to their clients”: particularly recommended by Ethical Consumer are Castlefield Advisory Partners, The Ethical Investment Cooperative, The Ethical Investors Group and Investing Ethically
• Other advisors who adhere to a fiduciary standard (i.e. will put your interests above their own, and disclose any fees) can be found through: CFP, NAPFA, and the Garrett Planning Network
• Finally, you can also contact advocacy groups like Fossil Free and Share Action more for general assistance

Divestment step #4: Responsible reinvestment

So you’ve switched your bank (publicising it on social media!), lobbied your pension scheme, radicalised your colleagues, and managed to untangle your investment portfolio from fossil fuels—not bad work. But there’s still a crucial final step: responsible reinvestment.

Because just pulling money from fossil fuels in protest against climate change isn’t enough: the small task of building a sustainable, post-carbon global system to replace fossil fuels remains. So consider putting your money back into sustainable projects and funds—not just environmentally sustainable, like renewable energies, but socially sustainable, too.

350.org outlines 7 principles of responsible reinvestment:

1. Increase community empowerment and prosperity by investing in smaller, community controlled places
2. Shift economic control by investing in places that prioritise workers’ rights
3. Democratise the workplace by investing in places that increase worker ownership
4. Drive social equity by investing in places that address social inequities
5. Promote ecological wellbeing and resilience by investing in places that move the economy away from extractive industry
6. Shift trends in production and consumption by investing in renewable energy
7. Strengthen the public by investing in public sector infrastructure

You should of course seek professional help here. You can also look into Ethex, a not-for-profit that provides information on ethical investment opportunities.

Fossil fuel divestment: Moving forward

Divesting your personal finances from fossil fuels—and telling your family, friends, colleagues and social networks about the movement—is a small but important step you can take in the fight to limit global warming. But make no mistake: collective, organised action is still necessary if we want the financial sector to heed our demands.

Other ways you can contribute to the movement include:

• Lobby any organisations you’re part of—universities, councils, faith groups, trade unions—to divest too: see Fossil Free’s guide to lobbying your local council here
• Organise in your local area: join one of Fossil Free’s local events, start your own, or run a campaign
• Sign petitions like the ones mentioned above, or Banktrack’s call on all banks to stop financing fossil fuels
• And finally, take to the streets—join the global climate strikes on the 20th of September, or look for your nearest Extinction Rebellion group here

Fossil fuel divestment resources

Organisations

350.org’s Fossil Free UK: Campaign building a movement to take back power from the fossil fuel industry

Banktrack: An international tracking organisation which aims to stop banks financing harmful activities

Carbon Tracker Initiative: Carbon Tracker is an independent financial think tank that analyses that maps the risks and opportunities on the road to a low-carbon future

Share Action: Charity building the movement for responsible investment

Reports

Banktrack: Banking on Climate Change: Fossil Fuel Finance Report Card 2019

Featured image by Ouch.pics