Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
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Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
#2Eliminating or reducing government subsidies for oil and coal companies probably would have a climate impact.
Even if divestment has “zero impact” as Gates suggests (which I doubt, but ok), it would have a symbolic importance and possibly spur others on to change their approach.
Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
#3By divesting, the cost of capital for these firms increases which makes the marginal projects no longer economically feasible. By then putting money into cleantech, like Gates suggests, we reduce the cost of capital for these firms which is obviously a good thing.
His actual quote is that it has probably had zero impact to date which may be true but is largely irrelevant to the proposition that we should divest and increase the cost of capital for these firms.
Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
#4Divestment of fossil fuels will probably end up being good financial advice. German utilities lost value fast when renewables were implemented.
I would put my retirement money in an S&P 500 index fund that excluded fossil fuels.
Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
#5By divesting, the cost of capital for these firms increases which makes the marginal projects no longer economically feasible. By then putting money into cleantech, like Gates suggests, we reduce the cost of capital for these firms which is obviously a good thing. His actual quote is that it has probably had zero impact to date which may be true but is largely irrelevant to the proposition that we should divest and i…
Or it reduces the stock price of those firms giving better returns to those who are not so morally-driven in their investing decisions.
Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
#6You can't fix a tragedy of the commons with individual action.
Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
#7By divesting, the cost of capital for these firms increases which makes the marginal projects no longer economically feasible. By then putting money into cleantech, like Gates suggests, we reduce the cost of capital for these firms which is obviously a good thing. His actual quote is that it has probably had zero impact to date which may be true but is largely irrelevant to the proposition that we should divest and i…
Or it reduces the stock price of those firms giving better returns to those who are not so morally-driven in their investing decisions.
Not sure I understand. If large-scale divestment of fossil fuel investments lowers their stock prices, how will that give the non-morally-driven investors higher returns?
(Assuming we both agree that "morally-driven" investors will tend to invest in renewables.)
Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
#8Really divestment is something which seems intuitively to be threshold based for its impact. If there is a robust investment pool any leaving will just be auto-filled by those seeking opportunities. However if it gets below a critical mass from enough divestitures they will find new investments hampered and those who are "late to the exit" will find it hard to get value out of it.
Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
#9Earlier quoted context omitted.
Or it reduces the stock price of those firms giving better returns to those who are not so morally-driven in their investing decisions.
Not sure I understand. If large-scale divestment of fossil fuel investments lowers their stock prices, how will that give the non-morally-driven investors higher returns? (Assuming we both agree that "morally-driven" investors will tend to invest in renewables.)
this explains it pretty well.
https://www.aqr.com/Insights/Perspectives/Virtue-is-its-Own-...
Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates
#10I'm pretty unclear on how anyone even thinks divestment works, actually.
When a company sells stock in an IPO, buying stock from them allows them to raise capital, so it seems clear to me that you shouldn't buy stock from a fossil fuel company.
But that's non-investment, not divestment. Divestment is about selling existing stock.
It's true that divestment drives down the stock price. This could mean that if a company has retained stock, it would limit their ability to sell that stock to raise capital in the future. However, if you drive down the stock price, it's just as likely that you'd be allowing the company to buy back its own stock at a bargain price, which could help the company by allowing them to retain greater control. It's not guaranteed that you're hurting the company by driving down the price of their stock--in fact, you may be helping them.
It might be possible to look at the needs of individual companies and divest from those companies to drive down the stock price if and only if you think they will be attempting to sell stock in order to raise capital in the future. But this strategy has risks, and I've also never heard anyone talk about this strategy when talking about divestment.