Is fossil fuel divestment at a financial tipping point for energy investors?

January 27, 2017

Promising clean energy investments are prompting fossil fuel divestmentAs the cost of renewable energy becomes more competitive with fossil fuel cost, it may be the perfect time for fossil fuel divestment (aka divestiture). An article in The Guardian argues that energy investors could be at a tipping point when it comes to investment in renewables.

Historically, the case for corporate sustainability has focused on improving public perception rather than on profitable investment returns. But the focus is shifting.

From the article:

[P]rofitable sustainability is coming of age, at least as far as renewable energy is concerned. With the value of fossil fuel holdings plummeting and the profitability of renewables growing, investors and companies are increasingly looking to sustainable investments for good long-term bets.

About a year ago, the United Nations Investor Summit on Climate Risk convened with over 500 global investors representing an estimated $22 trillion in assets.

Also from the article:

[M]ost of the presenters shunted aside the standard public relations and millennial hire arguments in favor of an old-fashioned look at profits and losses. And, as they made clear, companies and investors that shun sustainable, low-carbon assets stand to lose a lot of money.

Investing in solar energy and other renewables is becoming increasingly viable, a trend the article says could be a potential game-changer for investors. The importance of divestment strategy has traditionally centered on the morality of investments. Now the economic value of divestment is becoming hard to ignore.


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