Description: Students, retirees, faith-based organizations, and others are acting to stop or withdraw investment in the fossil fuel industry. Activists around the country are calling for similar actions by pension funds, governments, and foundations. These actions, known collectively as “divestment,” send powerful signals to financial markets and board rooms. Since the early 2010s, activists calling for divestment have helped grow a movement to steer investment funds away from those industries most responsible for the climate crisis.

The act of fossil fuel divestment is often attributed to Swarthmore College after, in 2010, a group of students traveled to West Virginia on their spring and fall breaks to learn about mountaintop removal coal mining and its effects on the communities of Appalachia. In 2011 Hampshire College in Massachusetts became the first university in the United States to commit to fossil fuel divestment, followed in 2012 by Unity College in Maine.

In 2022 several environmental organizations jointly published a detailed analysis of global investments in the fossil fuel industry. The report noted that since the 2015 Paris Agreement investments by major banks have continued to increase and, even in an era of net-zero commitments by many governments, the financial sector continued to profiteer from climate chaos.

The fossil fuel industry is one of the wealthiest industries to ever exist; however, much of that wealth is still underground in proven reserves. According to Bill McKibben, Schumann Distinguished Scholar at Middlebury College and founder of 350.org and Third Act, “Yes, this coal and gas and oil is still technically in the soil. But it’s already economically aboveground – it’s figured into share prices, companies are borrowing money against it, nations are basing their budgets on the presumed returns from their patrimony.”

The divestment movement helps clarify that responsibility for climate change rests with the fossil fuel industry and its shareholders, the banks and institutions that lend money to extract, refine or process the fuel, and the governments that make it possible.

The common approaches to divestment are as follows:

Individuals and smaller investors such as local governments or organizations can stop banking with major financial institutions such as JP Morgan Chase, Citibank, Bank of America, and Wells Fargo, who together have provided one quarter of all fossil fuel industry financing since 2015. Instead, individuals and smaller investors can select credit unions or banks that do not invest in the fossil fuel industry and often prioritize clean energy or socially responsible investments.

Finding alternatives to major financial institutions has been facilitated by a number of online resources that allow easy screening of available account features, relevant certifications or designations, location, and links to credit union or bank websites. Examples of online resources include Bank for Good, Green America, Mighty, and Bank.Green; links to these sites are included below.

Larger organizations and institutional or employer-based investment assets (such as pensions or retirement funds, endowments, foundation assets, etc.) can be managed to halt new investment and withdraw existing investments in the fossil fuel industry. According to Stand.Earth’s, divestment database, divestment commitments by faith-based organizations, educational institutions, and philanthropic foundations make up nearly two-thirds of global commitments to stop or phase out investment in the fossil fuel industry.

The ability of large organizations or institutions to divest is often subject to bylaws, legislation, or other institutional parameters established to prioritize investment return. For this reason, activist coalitions have brought public attention to the financial support extended to the fossil fuel industry by such institutions and have called for eliminating such investments and the underlying investment practices and guidelines that allow funds to support the industry most responsible for the climate crisis.

The following examples illustrate how activists have organized to call for divestment.

Divest Oregon is a coalition that calls on the state’s Public Employees Retirement System (PERS) to divest. The group supports the adoption of Oregon HB 2601, which would immediately stop new investments in the fossil fuel industry, make portfolio holdings in every asset class transparent, and phase out all current fossil fuel investments. Divest Oregon is a statewide grassroots coalition of individuals and organizations representing unions with PERS members, racial and climate justice groups, youth leaders, and faith communities with the goal of calling the Oregon State Treasury to account for its funding of climate devastation rather than prudent investing in a sustainable future.

Colorado’s Fossil Free Public Employee Retirement Association (PERA) is similar to Oregon’s PERS coalition. Fossil Free PERA cites specific examples of how the state’s retirement fund has direct ties to funding fossil fuels and actions detrimental to the environment and public health. For example, PERA has funded fracking projects in close proximity to a local elementary school and has invested funds in a Denver petroleum refinery facing a multi-million dollar settlement for air pollutant violations. Fossil Free PERA also urges Coloradans to sign its petition to the PERA and send a letter to PERA leadership to stop fossil fuel investments.

The Minnesota Divestment Coalition (MDC) leads Minnesota’s fossil free divestment movement. Like Divest Oregon and Colorado’s Fossil Free PERA, MDC is calling upon Minnesota’s Board of Investments to stop fossil fuel investments. Minnesota Divestment Coalition’s fact sheet on divestment notes that Minnesota is facing the fastest pace of climate change in the United States. MDC’s recommendations to individual activists include petitioning the state Board of Investments to stop fossil fuel investments, attending state and local candidate forums to discuss fossil fuel divestment, and urging existing state and local representatives to pass legislation that prevents investment of public employee funds in the fossil fuel industry.

While coalitions in Oregon, Colorado and Minnesota are asking for legislation requiring fossil fuel divestment, Maine, in June of 2021, became the first state to pass legislation to require the state’s Public Employee Retirement System to divest from fossil fuels. Maine’s Act LD 99 required $1.3 billion of the $17 billion from the pension fund to be divested, which was groundbreaking in the realm of financial climate action. In 2020, the State of New York’s comptroller, who manages the state’s retirement fund, initiated a comprehensive review of every fossil fuel investment and announced a commitment to decarbonize the pension fund portfolio by 2040. New York’s divestment plan, initiated without legislation but responding to pressure from the Divest NY coalition, included a phased divestment approach and required annual progress reports.

Colleges and Universities have responded to calls for full transparency regarding endowment and institutional investments, often leading to commitments by the institution to divest. Not only have major American universities, such as Princeton, Harvard, Cornell, Loyola, and Columbia responded to activists calling for divestment, but international universities have also committed to divestment, including Stockholm University (Sweden), University of Capetown (South Africa), Oxford University (United Kingdom), and many others. In almost all cases, the call for divestment originated with students and faculty who recognized that profiteering from the very industry responsible for climate change was ethically inconsistent with the higher values and responsibilities of the institution.

The divestment movement continues to grow. Whether contacting legislators, being involved via educational institutions, or making an impact as an individual, these actions are reducing the funding available to fossil fuel industries. These actions also help educate others about who is responsible for and profiteering from the climate crisis.

Goal: 

• Stop new investment in the fossil fuel industry
• Withdraw current investments in the fossil fuel industry