Why divest?

The Australian National University was the first prominent organization in Australia to announce its intention of selling its holdings in companies engaged in production or use of fossil fuels. Why divest? Primarily because science has long established that fossil fuels are the major contributor to global warming and warned that unless most recoverable fossil fuels remain in the ground, unused, dangerous climate change will ensue.

Those findings raise ethical questions about profiting from action so dangerous to the environment. Development of technology making it unnecessary to mine or use fossil fuels and public sector regulation supporting reduction of fossil fuel use also affect the value of fossil fuels and major advances are being made in both these areas.

Morality

Is it moral to earn income from shares in companies using thousands of lowly paid, poorly treated children who produce cheaper goods for a wider market, earning higher profits for shareholders and higher executive salaries?

Clearly, the answer is no. Wide publicity about such activity would prompt government action to abolish such exploitation. Importing countries would be persuaded to block imports from the offending producer, consumers would be encouraged to boycott them and the international market would express outrage at such employment practices.

Is it any more moral to earn income from shares in companies which mine and produce fossil fuels, knowing that combustion of those fuels will emit greenhouse gasses which will increase global warming, produce dangerous climate change and reduce crop yields, ultimately resulting in starvation and the death of millions?

One can always salve ones conscience with any number of convenient beliefs, without looking too closely at their validity and bank the money received from mining and production or use of fossil fuels. Thousands of shareholders do, so why not you?

The argument used by Directors and Management of companies involved in mining fossil fuels is … 'If we don't do it, our competitors will', or … 'we are only meeting market demand – end users pollute the atmosphere with greenhouse gases, not us'.

This is akin denying that production and sale of tobacco increases the incidence of fatal health problems and should be curbed, even if this reduces the value of tobacco companies. It puts into question the morality of owning shares in companies profiting from tobacco use.

The significant difference is that use of tobacco only affects tobacco users, while use of fossil fuels affects everyone and if continued without restriction, will have adverse, potentially fatal effects.

Value

Fossil fuel miners know that their value and profitability is based on the price they can obtain for their products and the value of recoverable fossil fuels they own which remain in the ground. Investors look at both the value of a mining company and the share yield. If the value indicates a long and profitable future and if the yield is competitive with that of other companies, the prospective investor provides funding or buys shares, hopes that their value will increase and waits to be repaid or receive a regular dividend.