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Why the divestment movement is missing the mark

Nature Climate Change volume 10, pages 1067–1068 (2020)Cite this article

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Despite a strong media presence and pledges from high-profile investors, the divestment movement has largely failed to mobilize financial markets in the war on carbon. Divestment 2.0 will require major tweaking to more effectively redirect the flow of capital and catalyse greater corporate climate action.

These commitments and a strong media presence notwithstanding3,4, the divestment movement has failed to turn financial markets into a full-blown battlefield in the war on carbon5 due to three critical, yet underappreciated, limitations. First, by drawing a binary divestment line between fossil and non-fossil stocks, the movement fails to properly differentiate among companies — on both sides of the divide — based on their relative contributions to global warming and climate change. Second, the movement’s focus on institutional investors ignores the market reality that retail investors control a major portion of equities. Third, the movement offers investors little, if any, guidance on how to reinvest funds freed up by divestment of fossil fuel stocks.

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  1. School of Law, College of Engineering, Texas A&M University, Fort Worth, TX, USA

    Felix Mormann

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  1. Felix Mormann
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Correspondence to Felix Mormann.

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Mormann, F. Why the divestment movement is missing the mark. Nat. Clim. Chang. 10, 1067–1068 (2020). https://doi.org/10.1038/s41558-020-00950-2

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