Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates • Hacker News Board

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#21

Post by sremani » Tue, Sep 17, 2019, 8:45 PM UTC

Synaesthesia wrote: post #2

Eliminating 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.

>> symbolic importance

Do the symbolic with your money, I have respect for that.

But a bunch of about to be retired people, who may need every penny of their return, will get reduced return because some fund manager wanted to feel good and have better PR all the while collecting the same big check for his services... No Bueno!

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#22

Post by bcoates » Tue, Sep 17, 2019, 8:46 PM UTC

kerkeslager wrote: post #10

I'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…

I think it assumes that large investors aren't really passive, but intervene on behalf of their investments. If you convince someone to divest from X, then they have the luxury of remaining neutral when you propose that X be destroyed.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#23

Post by munk-a » Tue, Sep 17, 2019, 8:48 PM UTC

shkkmo wrote: post #12

kelnos wrote: post #7

Earlier quoted context omitted.

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.)

Because investors will be able to own a piece of that company for less. The company hasn't changed, its ability to offer dividends hasn't changed, its longer term prospects haven't changed (due to divestment.) Really, the only impact this might have is a slight reduction in the ability to those companies to raise capital by selling stock (and I don't think that is incredibly common in the oil industry).

If the lack of investment from certain segments of the population was sustained then the stock will be of lower demand in the long term hurting it's price for investment, if this is really well sustained and consistently done then IPOs for such industries will raise less capital because there is less demand available when initial investors want to cash out.

However, that's really conditional, I think in actuality we're observing a short term fluctuation and eventually investment will resume - in that case you're essentially handing your money to the people you disagree with by taking a loss (or less or a gain) when selling your stock, allowing them to purchase it under value, and then letting them resell the stock once the market has recovered from it's temporary depression.

So divestment would work in theory with good coordination, but I don't think it'll work in practice because humans are terrible.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#24

Post by TheGallopedHigh » Tue, Sep 17, 2019, 9:01 PM UTC

emckay wrote: post #20

Divestment also results in less shareholder oversight of emission heavy companies because environmentally conscious investors are selling their shares to investors with less scruples. This isn't just theoretical. According to Fossil Free, asset managers with about 10 trillion under management have committed to divesting. If you assume 10% of that is tracking something like the S&P 500, then these investors have sold…

Could you talk a bit more about your company?

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#25

Post by gruez » Tue, Sep 17, 2019, 9:05 PM UTC

andrewtbham wrote: post #4

Divestment 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.

>Divestment of fossil fuels will probably end up being good financial advice. German utilities lost value fast when renewables were implemented.

How do you know whether that's already priced in?

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#26

Post by cortesoft » Tue, Sep 17, 2019, 9:07 PM UTC

kerkeslager wrote: post #10

I'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…

They use the example of South Africa, but that was a very different process. It wasn't just about not investing in South African companies... it was about not buying their goods, too.

Is part of this 'divestment' also about not investing in the purchasers of fossil fuels? Or reducing consumption in any way? It doesn't sound like it.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#27

Post by scohesc » Tue, Sep 17, 2019, 9:11 PM UTC

Wow, that's absolutely insane that I have to go through half an hour of 'opting out' from different ad networks in order to visit the actual website I was going to in the first place without being tracked.

Thank developers for ad-block technology.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#28

Post by gruez » Tue, Sep 17, 2019, 9:13 PM UTC

Nasrudith wrote: post #8

Really 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.

>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.

...only if the company actually needs more capital and can't raise it any other way (eg. bonds). If there's any sort of leak, then you're giving the holdouts outsized returns.

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#29

Post by gruez » Tue, Sep 17, 2019, 9:15 PM UTC

cortesoft wrote: post #26

kerkeslager wrote: post #10

I'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…

They use the example of South Africa, but that was a very different process. It wasn't just about not investing in South African companies... it was about not buying their goods, too. Is part of this 'divestment' also about not investing in the purchasers of fossil fuels? Or reducing consumption in any way? It doesn't sound like it.

>They use the example of South Africa, but that was a very different process. It wasn't just about not investing in South African companies... it was about not buying their goods, too.

So boycotting? Not sure what's the point of bundling something that's actually effective (boycotts) with something with questionable effectiveness (divestment).

Re: Fossil fuel divestment has ‘zero’ climate impact, says Bill Gates

#30

Post by olau » Tue, Sep 17, 2019, 9:17 PM UTC

graeme wrote: post #19

rocqua wrote: post #15

Earlier quoted context omitted.

Prices are set by supply and demand. Divestment reduces demand. Probably, the falling prices also increase demand, but fundamentally, if fewer people want something the price should drop.

Does this work in liquid markets though? Demand could obviously drive up price beyond fundamental value in a bubble, or below fundamental value in a panic. But in the ordinary course of things, we would expect the price of a security to match its value in the long run. If you are a rational, amoral investor, and you see a security worth $100, you would be prepared to pay up to $100 for it, and to buy it in as large a…

> Does this work in liquid markets though?

Well, I think the idea is to try to the make the market for these stocks less liquid.

And it might work, because the long run you're talking about isn't actually looking too bright due to the technological developments with renewables and electric vehicles. These stocks are not retirement stocks, unless you're retiring in a couple of years.