Engagement needs more time to prove itself

Julian Poulter

In the June issue of Alliance, Ellen Dorsey, Sian Ferguson and Clara Vondrich made the case for divestment of assets from fossil fuel companies on ethical, financial and fiduciary grounds. Mark O'Kelly disagreed, arguing that active engagement as shareholders is the best way to make the transition to a low-carbon economy. Julian Poulter continues the debate here.

The call from a range of foundations in the June issue of Alliance to divest from fossil fuels is excellent campaigning and critical to maintain pressure. It needs to continue. However, foundations should understand that the value of the divestment campaign is largely political and simply doesn’t stack up in the finance or corporate governance world.

'The value of the divestment campaign is largely political and simply doesn’t stack up in the finance or corporate governance world.'

First, carbon emissions occur in more sectors than just fossil fuels, and it is carbon we are trying to divest from, not companies. Indeed, as more utilities (and now even some fossil fuel companies) diversify their operations into clean investment, the very definition of a dirty high-carbon company blurs, and this will accelerate. In markets such as Australia, Germany and Denmark, the leading utilities are highly diversified companies – should we divest from them because they own coal even though they are the biggest investors in the clean energy transition?

 
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