Fossil Fuel Divestment
With the environmental concern including over reliance on hydrocarbons and global warming, fossil fuel divestment was one of the most effective solution to climate change and air pollution. However, due to the controversies such as lack of viable alternative to fossil fuels, and cost implication, it is only arguable that divestment be conducted in an incremental manner till other viable and reliable alternatives are found. In this paper therefore proposes that irrespective of the controversies, divestment is still the most effect options to solving the global warming
Proposed divestment strategies
Schafer, (2005, pp. 429–437) argued that in order to divest from the fossil fuel, companies should change their development paths by focusing on the non energy intensive economy to the low carbon economy. For example, while the climate change mitigation still tend to pose a major challenge to a number of countries especially the emerging economic such as Chain and south Africa, less carbon intensive paths to economic development should be explored. Energy efficiency can provide these countries with high potential for climate change mitigation. This way, energy saving can also be maximized. Witt the current fuel mix composed of 75% coal and petrol; these countries still face medium and long term challenges . How then can these countries change their development paths from the carbon intensive economies? Can fossil fuels be completely eliminated? In the short and medium term, this will not be possible, and in the long run, efforts will provide measurable results, but eliminating fossil fuels is next to impossible. The best way this can be managed is through the proper legislation and regulations. Only regulation and legislation can bring a paradigm shift nine the carbon intensive economy. The production sectors will not be sensitive to energy prices changes (Pattani and Laura Krantz, 2015).
Incorporating Carbon risk in investment analysis
There should also be specific policy instrumented geared at meeting these divestment goals. For example, the fact that carbon risk has never been incorporated in investment analysis has made carbon risk, a less important factor in investment analysis. Therefore, by divesting in fossil fuels and making it mandatory to incorporate carbon risk investment analysis, many investors would find most of the investments less attractive. While regulation can be a risk, it is important to consider both the pros and cons of regulation in the current global climate. There should be a global consensus on when and how to regulate grebes house gas emission, how to allocate the proposed carbon budgets and investment in carbon intensive budgets. In the light of the above argument, it is important to analyze the extent of carbon risk in current ad well as future investments. It is also important to engage as many stakeholders as possible in discourses geared at mitigating and disclosing the carbon risk. Finally, it is important to diversify all the investment by focusing on less carbon intensive economy or divest in fossil flues intensive assets so as to eliminate carbon related risks (Clark, 2015)
Environmental activism can be a good change driver when it comes to divestment in carbon. Environmental activism include such as worldwide go slows, demonstration, or mass actions can influence divestments in fossil fuels. Additionally, direct and indirect carbon regulation can help realize divestment goals. Any investment whose sum of a proportional amount of each portfolio company’s emissions (portfolio carbon footprint) is Uighur than the amount of stock held in the portfolio should be stopped and divested.
Both companies and institutions of learning should commit to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis. Any investment in carbon intensive assets should be divested and replaced with either renewable low carbon assets. irrespective of the job security or financial implications, Fossil fuels divestment goals can not be realized when sympathy or irrational excuses are given. it is important to focus on the long term benefits of the fossil fuels divestment.
Schafer, A., (2005). Viewpoint: structural change in energy. Energy Policy, 33. 429–437.
Clark,, P. (2015). Prince Charles shuns fossil fuel investments – FT.com. [online] Financial Times. Available at: http://www.ft.com/cms/s/0/d6fa0eae-ea73-11e4-a701-00144feab7de.html#axzz3YVSB8IHx [Accessed 27 Apr. 2015].
Howard, E. (2015). Soas becomes first London university to divest from fossil fuels. [online] the Guardian. Available at: http://www.theguardian.com/environment/2015/apr/24/soas-becomes-first-london-university-to-divest-from-fossil-fuels [Accessed 27 Apr. 2015].
Pattani, A. and Laura Krantz, L. (2015). Tufts University students continue sit-in to urge fossil fuel divestment – The Boston Globe. [online] BostonGlobe.com. Available at: https://www.bostonglobe.com/metro/2015/04/24/tufts-university-students-continue-sit-urge-fossil-fuel-divestment/YPR12j
Robins, Nick, Kirtan Mehta, and Paul Spedding. Oil & Carbon Revisited: Value at Risk from Unburnable Reserves. HSBC, January 25, 2013.