Greens call for divestment from fossil fuels

Greens call for divestment from fossil fuels

Greens are using Global Divestment Day to sound a warning over the so called ‘carbon bubble’. They are calling on companies to immediately divest from fossil fuels and urging the EU to introduce decisive policies on climate targets and energy to help businesses do so.

The overvaluation of oil, gas and coal mining companies poses a growing risk to economies, say the Greens. They argue that limiting global warming to below 2°C means the amount of fossil fuels that can actually be burnt is limited, making the majority of reserves stranded assets. With around a quarter of fossil fuel reserves owned by private companies, the over valuation of these companies creates a ‘carbon bubble’ and affects their ability to repay their debts.

Economist and Green South West MEP, Molly Scott Cato, said:

“Public and private financial institutions continue to pour millions into fossil fuel companies, inflating their share prices, as if their fossil reserves will always sell on the market. This is a deluded assumption. If we are serious about limiting global warming to 2 degrees these reserves must be kept firmly in the ground, which would turn them into stranded financial assets.”

Greens in Europe have produced a detailed study into the money trail behind the carbon bubble and have analysed the resilience of the financial system against a possible carbon shock. [2] The study finds that a number of sizeable pension funds in the UK are at risk. The study calls for ambitious climate and energy policies and a quick and decisive transition to a low-carbon economy as the way to mitigate the ‘carbon bubble’. Dr Scott Cato continued:

“This ground-breaking study concludes that a slow and uncertain transition to a low carbon economy, as currently being pursued by the European Commission, risks larger losses. What is needed is EU policy that provides long-term certainty to financial institutions and discourages investments in high-carbon businesses while boosting investments in cleaner technology and energy saving.”

Greens will join thousands of Global Divestment Day campaigners on five continents this Saturday, demonstrating against continued investment in fossil fuels.

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