BMJ 2015;350:h3196 doi: 10.1136/bmj.h3196 (Published 25 June 2015)
Page 1 of 2
Editorials
EDITORIALS Fossil fuel companies and climate change: the case for divestment Share holder action isn’t working and time is running out 1
2
3
Taavi Tillmann fellow , Jonny Currie GP trainee , Alistair Wardrope medical student , David McCoy 4 senior clinical lecturer Research Department of Epidemiology and Public Health, UCL, London, UK; 2Royal Liverpool University Hospital, Liverpool, UK; 3Medical School, University of Sheffield, UK; 4Department of Primary Care and Public Health, Queen Mary University London, UK 1
Climate change is likely to have a negative effect on human health through diverse pathways, including extreme weather events and heat waves, the spread of disease vectors to previously temperate climates, and disruption of the water cycle causing drought, famine, conflict, and mass migration.1 To prevent this we need to rapidly replace our dependence on fossil fuel energy with renewables. A debate has emerged within the health community about the best way to stimulate such change.
On one side, the British Medical Association, the Climate and Health Council, and Medact (together with a growing movement outside the health community) are calling for divestment from fossil fuel companies. Such withdrawal of investments should send a clear signal to policy makers and the public that fossil fuel companies are no longer legitimately supporting the general public interest and need to be better regulated.2 Others, however—including the Wellcome Trust and the Gates Foundation—argue that as active shareholders in fossil fuel companies they can change the companies’ practices through dialogue and constructive engagement.3
Although the two sides disagree on how best to change the behaviour of these companies, there should be common ground: to prevent catastrophic climate change from more than 2°C of global warming, the world needs to stop rising greenhouse gas concentrations within about 23 years.4 This is an extremely short timeframe, requiring an urgent international plan of action. It also means that most of the already known coal, oil, and gas reserves must stay in the ground.5 There should also be agreement that the primary and legally bound duty of fossil fuel companies to maximise profit for shareholders induces behaviours that conflict with ecological health and the public interest. This is exemplified by the fact that fossil fuel companies continue to invest more in discovering further fossil fuel reserves than they do in renewable energy.6 Governments and taxpayers across the world continue to subsidise fossil fuels to the tune of trillions of dollars every year.7
Companies continue to ignore and deny As proponents of divestment, we argue that shareholder engagement has achieved little with fossil fuel companies. According to the Interfaith Center on Corporate Responsibility, a coalition of organisations that view the management of their investments as a powerful catalyst for social change, 150 requests from various responsible shareholders asking fossil fuel companies to evaluate financial risk from climate change regulation over the past 23 years were ignored or met with a dismissive reply. One response from Exxon Mobil in 2014 said that it intended to discover further fossil fuels at least equal to its current reserves, while stating confidently that governments would not intervene with climate change regulation.8 Similarly, according to the chief executive of Shell, the company’s business model is set on ignoring global targets to reduce greenhouse gases and relies on continuing our fossil fuel dependence for decades to come.9 This provides further grounds for scepticism of the argument that dialogue with shareholders will stop fossil fuel companies promoting both the supply and demand of fossil fuels. Additionally, fossil fuel companies, which have worked hard to distort and undermine climate science in the past, continue to hinder action on climate change by exerting a powerful influence over policy and legislative processes.10 A more fundamental weakening of the power and influence of fossil companies is needed before we can expect them to change their behaviour on ethical and ecological grounds. Parallels with the tobacco industry are salient: shareholder action was much less effective at bringing legislation and regulation to curb the tobacco epidemic than divestment and the erosion of the social legitimacy of tobacco companies.11 There is little evidence that fossil fuel companies are seeking to transform or are capable of transforming themselves. No major fossil fuel company has noticeably shifted its investment into renewables. On the contrary, 83% of oil and gas companies have made no effort to develop renewable sources of energy.6
Correspondence to: T Tillmann [email protected] For personal use only: See rights and reprints http://www.bmj.com/permissions
Subscribe: http://www.bmj.com/subscribe
BMJ 2015;350:h3196 doi: 10.1136/bmj.h3196 (Published 25 June 2015)
Page 2 of 2
EDITORIALS
As one example, BP sold its wind power assets in 2013 to “become a more focused oil and gas company,” simultaneously dropping its rebranded name of “Beyond Petroleum.” Given this reality, our emphasis should not be on transforming these companies but on investing in renewable energy companies.
In light of the growing evidence that the market may not fully reflect the risks involved in the ownership of fossil fuel stocks (raising the possibility that these stocks may become stranded assets12), divestment may be financially prudent as well as effective action on climate change. But if such arguments fail to convince, we ask proponents of shareholder engagement to take at least two additional steps. Firstly, they should do more to publicly explain their positions and actions on social and ethical investment. For example, the Wellcome Trust’s decision not to invest in coal and tar sands should be known more widely to strengthen its shareholder action. Secondly, their demands as shareholders should be clearer and more time limited. For example, the Wellcome Trust could demand that fossil fuel companies commit to ending the exploration of unconventional reserves (especially of tar sands and arctic oil) by a certain date. At this stage, transparent public engagement is more effective than quiet engagement behind the scenes. This would help the world move towards a low carbon future within our 23 year deadline and prevent runaway climate change and unprecedented harm to global health. Competing interests: We have read and understood BMJ policy on declaration of interests and declare the following interests: TT is a member, and DM the director, of Medact, a public health charity that
For personal use only: See rights and reprints http://www.bmj.com/permissions
works on climate change and supports the Fossil Free Health campaign. AW is coordinator of Healthy Planet, a student body that works on climate change and supports the Fossil Free Health campaign. TT is supported by a fellowship grant from the Wellcome Trust. Provenance and peer review: Not commissioned, peer reviewed 1 2 3 4 5 6 7 8 9 10 11 12
McCoy D, Montgomery H, Arulkumaran S, Godlee F. Climate change and human survival. BMJ 2014:348:g2531. Fabian N. Economics: support low-carbon investment. Nature 2015;519:27-9. Farrar J. Fossil-fuel divestment is not the way to reduce carbon emissions. Guardian 2015 Mar 25. www.theguardian.com/commentisfree/2015/mar/25/wellcome-trust-fossil-fueldivestment-not-way-reduce-carbon-emissions. Le Quéré C, Moriarty R, Andrew RM, et al. Global carbon budget 2014. Earth Syst Sci Data Discuss 2014;7:521-610. McGlade C, Ekins P. The geographical distribution of fossil fuels unused when limiting global warming to 2°C. Nature 2015;517:187-90. Ceres and Sustainalytics. Gaining ground: corporate progress on the Ceres roadmap for sustainability (oil & gas producers). Ceres, 2014. www.ceres.org/roadmap-assessment/ sector-analyses/oil-gas-producers. Coady D, Parry I, Sears L, Shang B. How large are global energy subsidies? IMF Working Paper WP/15/105. International Monetary Fund, 2015. Alpern S. Talking to the hand: why engagement with fossil fuel companies offers so little promise. Weblog 2015 Jan 6. http://cleanyield.com/talking-hand-engagement-fossil-fuelcompanies-offers-little-promise/. Levitt T. Nick Stern: Shell is asking us to bet against the world on climate change. Guardian 2015 May 27. www.theguardian.com/sustainable-business/2015/may/27/stern-shell-isasking-us-to-bet-against-the-world-on-climate-change. Oreskes N, Conway EM. Merchants of doubt. Bloomsbury, 2010. Wander N, Malone RE. Fiscal versus social responsibility: how Philip Morris shaped the public funds divestment debate. Tob Contr 2006;15:231-41. Leaton J, Ranger N, Ward B, Sussams L, Brown M. Unburnable carbon 2013: wasted capital and stranded assets. 2013. www.carbontracker.org/report/wasted-capital-andstranded-assets/.
Cite this as: BMJ 2015;350:h3196 © BMJ Publishing Group Ltd 2015
Subscribe: http://www.bmj.com/subscribe
Page 1 of 2
Editorials
EDITORIALS Fossil fuel companies and climate change: the case for divestment Share holder action isn’t working and time is running out 1
2
3
Taavi Tillmann fellow , Jonny Currie GP trainee , Alistair Wardrope medical student , David McCoy 4 senior clinical lecturer Research Department of Epidemiology and Public Health, UCL, London, UK; 2Royal Liverpool University Hospital, Liverpool, UK; 3Medical School, University of Sheffield, UK; 4Department of Primary Care and Public Health, Queen Mary University London, UK 1
Climate change is likely to have a negative effect on human health through diverse pathways, including extreme weather events and heat waves, the spread of disease vectors to previously temperate climates, and disruption of the water cycle causing drought, famine, conflict, and mass migration.1 To prevent this we need to rapidly replace our dependence on fossil fuel energy with renewables. A debate has emerged within the health community about the best way to stimulate such change.
On one side, the British Medical Association, the Climate and Health Council, and Medact (together with a growing movement outside the health community) are calling for divestment from fossil fuel companies. Such withdrawal of investments should send a clear signal to policy makers and the public that fossil fuel companies are no longer legitimately supporting the general public interest and need to be better regulated.2 Others, however—including the Wellcome Trust and the Gates Foundation—argue that as active shareholders in fossil fuel companies they can change the companies’ practices through dialogue and constructive engagement.3
Although the two sides disagree on how best to change the behaviour of these companies, there should be common ground: to prevent catastrophic climate change from more than 2°C of global warming, the world needs to stop rising greenhouse gas concentrations within about 23 years.4 This is an extremely short timeframe, requiring an urgent international plan of action. It also means that most of the already known coal, oil, and gas reserves must stay in the ground.5 There should also be agreement that the primary and legally bound duty of fossil fuel companies to maximise profit for shareholders induces behaviours that conflict with ecological health and the public interest. This is exemplified by the fact that fossil fuel companies continue to invest more in discovering further fossil fuel reserves than they do in renewable energy.6 Governments and taxpayers across the world continue to subsidise fossil fuels to the tune of trillions of dollars every year.7
Companies continue to ignore and deny As proponents of divestment, we argue that shareholder engagement has achieved little with fossil fuel companies. According to the Interfaith Center on Corporate Responsibility, a coalition of organisations that view the management of their investments as a powerful catalyst for social change, 150 requests from various responsible shareholders asking fossil fuel companies to evaluate financial risk from climate change regulation over the past 23 years were ignored or met with a dismissive reply. One response from Exxon Mobil in 2014 said that it intended to discover further fossil fuels at least equal to its current reserves, while stating confidently that governments would not intervene with climate change regulation.8 Similarly, according to the chief executive of Shell, the company’s business model is set on ignoring global targets to reduce greenhouse gases and relies on continuing our fossil fuel dependence for decades to come.9 This provides further grounds for scepticism of the argument that dialogue with shareholders will stop fossil fuel companies promoting both the supply and demand of fossil fuels. Additionally, fossil fuel companies, which have worked hard to distort and undermine climate science in the past, continue to hinder action on climate change by exerting a powerful influence over policy and legislative processes.10 A more fundamental weakening of the power and influence of fossil companies is needed before we can expect them to change their behaviour on ethical and ecological grounds. Parallels with the tobacco industry are salient: shareholder action was much less effective at bringing legislation and regulation to curb the tobacco epidemic than divestment and the erosion of the social legitimacy of tobacco companies.11 There is little evidence that fossil fuel companies are seeking to transform or are capable of transforming themselves. No major fossil fuel company has noticeably shifted its investment into renewables. On the contrary, 83% of oil and gas companies have made no effort to develop renewable sources of energy.6
Correspondence to: T Tillmann [email protected] For personal use only: See rights and reprints http://www.bmj.com/permissions
Subscribe: http://www.bmj.com/subscribe
BMJ 2015;350:h3196 doi: 10.1136/bmj.h3196 (Published 25 June 2015)
Page 2 of 2
EDITORIALS
As one example, BP sold its wind power assets in 2013 to “become a more focused oil and gas company,” simultaneously dropping its rebranded name of “Beyond Petroleum.” Given this reality, our emphasis should not be on transforming these companies but on investing in renewable energy companies.
In light of the growing evidence that the market may not fully reflect the risks involved in the ownership of fossil fuel stocks (raising the possibility that these stocks may become stranded assets12), divestment may be financially prudent as well as effective action on climate change. But if such arguments fail to convince, we ask proponents of shareholder engagement to take at least two additional steps. Firstly, they should do more to publicly explain their positions and actions on social and ethical investment. For example, the Wellcome Trust’s decision not to invest in coal and tar sands should be known more widely to strengthen its shareholder action. Secondly, their demands as shareholders should be clearer and more time limited. For example, the Wellcome Trust could demand that fossil fuel companies commit to ending the exploration of unconventional reserves (especially of tar sands and arctic oil) by a certain date. At this stage, transparent public engagement is more effective than quiet engagement behind the scenes. This would help the world move towards a low carbon future within our 23 year deadline and prevent runaway climate change and unprecedented harm to global health. Competing interests: We have read and understood BMJ policy on declaration of interests and declare the following interests: TT is a member, and DM the director, of Medact, a public health charity that
For personal use only: See rights and reprints http://www.bmj.com/permissions
works on climate change and supports the Fossil Free Health campaign. AW is coordinator of Healthy Planet, a student body that works on climate change and supports the Fossil Free Health campaign. TT is supported by a fellowship grant from the Wellcome Trust. Provenance and peer review: Not commissioned, peer reviewed 1 2 3 4 5 6 7 8 9 10 11 12
McCoy D, Montgomery H, Arulkumaran S, Godlee F. Climate change and human survival. BMJ 2014:348:g2531. Fabian N. Economics: support low-carbon investment. Nature 2015;519:27-9. Farrar J. Fossil-fuel divestment is not the way to reduce carbon emissions. Guardian 2015 Mar 25. www.theguardian.com/commentisfree/2015/mar/25/wellcome-trust-fossil-fueldivestment-not-way-reduce-carbon-emissions. Le Quéré C, Moriarty R, Andrew RM, et al. Global carbon budget 2014. Earth Syst Sci Data Discuss 2014;7:521-610. McGlade C, Ekins P. The geographical distribution of fossil fuels unused when limiting global warming to 2°C. Nature 2015;517:187-90. Ceres and Sustainalytics. Gaining ground: corporate progress on the Ceres roadmap for sustainability (oil & gas producers). Ceres, 2014. www.ceres.org/roadmap-assessment/ sector-analyses/oil-gas-producers. Coady D, Parry I, Sears L, Shang B. How large are global energy subsidies? IMF Working Paper WP/15/105. International Monetary Fund, 2015. Alpern S. Talking to the hand: why engagement with fossil fuel companies offers so little promise. Weblog 2015 Jan 6. http://cleanyield.com/talking-hand-engagement-fossil-fuelcompanies-offers-little-promise/. Levitt T. Nick Stern: Shell is asking us to bet against the world on climate change. Guardian 2015 May 27. www.theguardian.com/sustainable-business/2015/may/27/stern-shell-isasking-us-to-bet-against-the-world-on-climate-change. Oreskes N, Conway EM. Merchants of doubt. Bloomsbury, 2010. Wander N, Malone RE. Fiscal versus social responsibility: how Philip Morris shaped the public funds divestment debate. Tob Contr 2006;15:231-41. Leaton J, Ranger N, Ward B, Sussams L, Brown M. Unburnable carbon 2013: wasted capital and stranded assets. 2013. www.carbontracker.org/report/wasted-capital-andstranded-assets/.
Cite this as: BMJ 2015;350:h3196 © BMJ Publishing Group Ltd 2015
Subscribe: http://www.bmj.com/subscribe
