With the growing global movement to reduce reliance on fossil fuels, a number of organisations and public bodies are now divesting themselves from non-renewables due to concerns over both the environmental and financial sustainability of such investments.
Storebrand’s Sustainable Intentions
Norwegian giant Storebrand, the country’s largest private pension fund, is the latest high-profile organisation to publicly announce its intentions to move funds away from fossil fuels. Having launched a new fossil fuel free pension fund, Storebrand hopes it is setting a precedent. CEO Odd Arild Grefstad said, “We urge the Norwegian government also to show leadership by opening up for more sustainable investments, this means fewer investments in the fossil fuel industry and more in renewables.”
Waltham Forest Council’s Pledge
In the U.K. some councils have already committed to ending their investments in non-renewables. Last year Waltham Forest Council pledged to remove pension fund stakes in fossil fuels over the next five years. And, last week environmental group Worthing Climate Action Network led a campaign calling on West Sussex County Council to re-invest pension funds currently tied to fossil fuels into more ethical projects. A spokesman for the group said: “West Sussex County Council can help address climate change by divesting £100m of its pension funds out of fossil fuels,” adding that divesting these funds now is morally and ethically correct.
The Global Drive to Meet Energy Needs
It is not only environmental and climate change concerns that are encouraging this rise in divestment from fossil fuel energy sources. The drive globally to meet energy needs in a sustainable way using clean sources brings into question the long-term profitability of investing in the non-renewable sector. London’s Southwark Council announced in December it would be divesting its pension fund from fossil fuels.
With ethical and economic incentives for diverting investments from fossil fuels to renewables, it seems likely that this pattern is set to continue. As Paul Fisher, senior associate at the Cambridge Institute for Sustainability Leadership, puts it: “long-term investors are increasingly aware that fossil fuels are going to be in decline, to be replaced by cheaper and cleaner renewable energy sources.”