Students march with banner calling on Oxford University to divest, May 2014 Credit: Hugh Warwick 350.org/flickr CC BY-NC-SA 2.0

We Must Ask: Does Fossil Fuel Divestment Work?

As it hits its 10th year, the divestment movement claims many moral victories, yet fossil fuel companies keep booming and carbon keeps rising. Divestment fails to turn off the taps.

“After a decade of action, we are making a difference in the fight against climate change,” proclaims DivestInvest, the global divestment network. Dozens of leading climate organizations from 350.org to the World Council of Churches have enlisted as core partners or endorsers of DivestInvest.

According to DivestInvest’s website, 1,585 institutions have publicly committed to “at least some form” of fossil fuel divestment, representing an enormous $39.2 trillion of assets under management.

“That’s as if the two biggest economies in the world, the United States and China, combined, chose to divest from fossil fuels,” the site goes on.

DivestInvest’s 2021 glossy prospectus intimates that, thanks to divestment, the fossil fuel industry has begun to collapse. At the very least, oil and gas moguls should be trembling with fear that divestment activists will soon force them to close their spigots and relinquish their financial and political power.

If only this were true.

The balance sheets of the fossil fuel companies say otherwise. Instead of the industry tailspin portrayed in DivestInvest’s report, the fossil fuel giants are awash in record profits. In 2021, The Hill reports, “the four largest oil and gas companies made over $75 billion in profits, returned billions to their shareholders through record dividends and share buybacks, and handed out millions in compensation to their chief executive officers.”

Number two U.S. oil company Chevron’s stock hit an all-time high of $186.13 on January 26, 2023. After 10 years of divestment activism targeting the fossil fuel industry, loyal Chevron investors saw the dollar value of their nest eggs double. In April 2022 Chevron posted its highest quarterly profit in 10 years.

Worldwide fossil fuel production keeps rising. The U.S. government’s Energy Information Administration expects U.S. fossil fuel production to reach new highs in 2023.

Chart of Chevron stock price over the last 30 years. Source: macrotrends.net

Chart of Chevron stock price over the last 30 years. Source: macrotrends.net

Clearly, whatever the value of the divestment movement, it is not hitting the fossil fuel industry where it hurts.

How can this be?

Divestment and Its Discontents

The divestment movement began in earnest when Bill McKibben pennedGlobal Warming’s Terrifying New Math” for the August 2012 issue of Rolling Stone magazine. McKibben’s article did not actually make the case that divestment would lead to financial pain for the fossil fuel industry, but rather that it would bloody the industry’s reputation and identify it as “Public Enemy Number One.”

McKibben’s eloquent prose kicked off a campaign to pressure institutional investors to dump stock in fossil fuel companies. A group founded by McKibben and some university friends — 350.org — launched its Go Fossil Free: Divest from Fossil Fuels! campaign with the stated goal to “revoke the social license of the fossil fuel industry.”

McKibben went on a barnstorming tour across the country urging those concerned about climate to “Do the Math,” explaining the rationale behind divestment in strategic terms:

“The one thing we know the fossil fuel industry cares about is money. Universities, pension funds, and churches invest a lot of it. If we start with these local institutions and hit the industry where it hurts — their bottom line — we can get their attention and force them to change.”

The campaign spread rapidly from campus to campus. Many students got their first taste of collective action around climate. They learned basic skills of movement-building: organizing rallies, circulating petitions, knocking on doors, making speeches, devising slogans, pitching one-on-one in conversation, and creating posters, leaflets, and signs. Divestment provided clearcut targets and clearcut demands while leaving room for a variety of creative tactics.

Despite the obvious upsides, not everyone in the climate movement embraced McKibben’s call to place divestment at the center of climate action. Responding to McKibben, Christian Parenti, author of Tropic of Chaos and currently a professor of economics at the City University of New York, criticized 350.org’s focus on divestment in a 2012 op-ed that appeared at Common Dreams:

“[T]he spectacle of targeting the enemy — giving them a name and an address — is great but it needs to be linked to other forms of leverage. Namely, we need to also focus on state power and what we can do with it. The movement should be demanding that government at every level move to contain and control Big Carbon and to directly support alternative energy. Regulation is the only thing that will actually check the industries — oil, gas, coal — that are destroying the planet.

“I am all for dumping carbon stocks, if for no other reason than a sense of decency and honor. But how is dumping oil stock supposed to hurt the enemy? The boards of oil companies will be embarrassed? The spectacle of the discussion around divestment might provoke actions on other fronts — like legislation? I am not at all clear on how this is supposed to work. And I am not sure McKibben or 350 are either.”

Parenti got slammed by some for questioning a tactic that would enable us to “take back our money and our souls.” Parenti provided a nuanced defense of his position in an interview that appeared in The Nation. Over time, a few other skeptics appeared.

After the heirs of oil tycoon John D. Rockefeller announced in 2014 that their charity would be divesting from fossil fuels, Journalist Matthew Iglesias wrote a short piece for Vox entitled “Does Fossil Fuel Divestment Work?” Iglesias explained that divestment neither deprives fossil fuel companies of capital nor drives down their stock prices, though it does inflict reputational damage on the fossil fuel industry.

Writing for The New Yorker in 2015, the philosopher William MacAskill addressed the question “Does Divestment Work?” and concluded, like Iglesias, that divestment campaigns might accomplish something, but not necessarily the kind of financial damage to the fossil fuel industry that activists unversed in industry economics often imagine:

“Divestment campaigns have the potential to do good, but only with caveats. To avoid the risk of misleading people, those running campaigns should be clear that the aim of divestment is to signal disapproval of certain industries, not to directly affect share price [emphasis added]. They should be clear that they aim to stigmatize the organizations (like fossil-fuel companies) that are being invested in, not those that do the investing (like universities, pension funds, or foundations). They should aim to maximize their media exposure. And, where possible, they should bundle the campaigns with actions that have larger direct effects, such as fossil-fuel energy boycotts, or with calls for specific policy changes.”

In April of 2018, the distinguished economist Robert Pollin and his coauthor Tyler Hansen of the Political Economy Research Institute, University of Massachusetts Amherst, published “How Well Does Fossil Fuel Divestment Combat Climate Change?” Their report was the first major scholarly study to evaluate the effectiveness of the divestment movement. Their conclusion:

“Divestment campaigns, considered on their own, have not been especially effective as a means of significantly reducing CO2 emissions, and they are not likely to become more effective over time.”

Ben Norton of the Real News Network presented Pollin’s conclusions and offered divestment advocates in the environmental movement an opportunity to respond. The divestment supporters more or less conceded that the value of their campaigns lay in removing validation, withdrawing social approval, and stigmatizing the fossil fuel industry — not in inflicting economic damage on fossil capital.

Let’s Stop Pretending

After 10 years of divestment activities having consumed large amounts of activist energy and funding, it is fair to ask whether these moral appeals have run their course. Aren’t we already fairly well sorted out into people who admire well-run, energy-efficient public transportation, electric cars, and bikes . . . and those who are more comfortable riding around in F-250 trucks and giant SUVs? Who is left to proselytize?

A nonprofit-industrial complex thrives on this campaign, but it’s time to go back and review what Parenti presciently explained years ago in his response to McKibben. By focusing on pressure campaigns against private actors with no direct effect on the fossil fuel industry, well-intentioned people inadvertently delay the necessary struggle to win and engage state power to phase out the extraction and production of fossil fuels.

Indeed, doing so buys into the neoliberal logic that government can do nothing when, in fact, only government can shut down the fossil fuel industry. There is no evidence that the divestment strategy of persuading a quorum of capitalist financiers to abandon the most powerful and profitable industry on earth will achieve success before the planet blazes past 7.2 degrees Fahrenheit (4 degrees Celsius) of global warming.

As fossil fuel industry consultant Cyril Widdershoven observed last October, “The impact of these gestures is limited in an environment where demand is only increasing and returns are very impressive for those who do invest.” Thus divestment may even have the paradoxical effect of increasing future returns per share as the fossil fuel industry reaps record profits and uses them to buy back shares from divesting institutions.

So, What to Do?

There is plenty to do that might actually have the desired effect of ending the fossil industries. It should be clear by now to everyone that the only effective way to cut fossil fuel production at the necessary pace and scale is by direct regulation of the fossil fuel industry.

NGOs, activists, and especially policymakers need to stop pretending that our climate movement can succeed by pressuring capitalists to be more responsible through market mechanisms like changing who owns the shares of companies that pollute. Remember that every divested share of a fossil fuel company winds up in a different investor’s hands. How does that stop the industry that is hell-bent on baking the planet?

This is not to say that all strategies focused on blocking investment are a misallocation of movement energies. We should fight tooth and nail against every specific attempt to finance the expansion of fossil fuel infrastructure.

Where we can block the funding of particular projects by making them appear risky to investors or by campaigning against identified backers, our carefully targeted efforts to stop the money pipeline can be effective. When activists discovered that the Bank of Montreal was actively involved in attempting to raise $250 million to fund construction of a coal export terminal in Oakland, California, they launched a reputational campaign against the Bank of Montreal, which then vanished from the scene, leaving the coal project floundering.

Let’s no longer waste our limited energy, resources, and time on divestment campaigns that have no identifiable impact on specific fossil fuel projects. A winning climate movement must offer more than symbolic victories. Let’s focus on shared campaigns that build close working relationships and solidarity among the environmental, social, and worker justice movements.


Ted Franklin serves on the coordinating committee and editorial board of System Change Not Climate Change, is a founding member of the Labor Rise Climate Jobs Action Group and No Coal in Oakland, and is active with other groups struggling for climate justice and labor rights.

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4 comments
  • I was involved with a local student group trying to get the University of Montana to divest. On the one hand, it harnessed energy into direct action, a sit-in at administrative offices. But the administration stalled, formed committees, advisory groups, etc.. until that group of students graduated. This seems to be a pattern nationwide. The successful campaigns haven’t turned into mass movement building at the level needed. The question becomes; what other strategy was foreclosed because of energy spent on divestment? Could the students have gone straight to the fossil fuel giants and disrupted them?

  • On many campuses, students can focus on stopping the flow of fossil-energy funding of research into climate solutions at their universities. See, for example, https://stanforddaily.com/2022/05/18/from-the-community-open-letter-doerr-school-of-sustainability-should-cut-ties-with-the-fossil-fuel-industry/. Stopping this funding will have a direct impact on the attempts of the fossil fuel industry to define “acceptable solutions” to the climate crisis. Where there is no funding, many universities and colleges are located in or near communities where intense climate and environmental justice struggles are underway. Students participating in off campus campaigns are likely to learn skills and lessons that they will not learn on campus.

  • This is very well written and makes a very persuasive argument. I do, however, think there is some value to these “symbolic” campaigns, and you do also recognize there are circumstances where they may have value.
    One way in which they have value is that the PR they generate adds to the public consciousness about fossil fuels. They contribute to the values that influence how people perceive the FF industry and corporations that profit from it. They contribute to creating an alternative moral standard.
    This is especially true for youth, who are coming into social consciousness, in the same way that symbolic environmental messages contribute to a values system that shapes how people view the planet and its ecology. They also create an on-ramp for those who are just coming into consciousness and for whom symbolic actions may be all they are prepared to undertake. This may be especially true for students demanding their institutions break with their association with FF interests, in the same way anti-militarist activists demand a dissociation from arms industry interests.
    Symbolic campaigns also contribute to the pariah status of the FF industry, which makes the other kinds of environmental appeals more persuasive.
    But I also get your point about how activists invest limited time and resources and the need to go beyond symbolism to actions that can actually shift the power balance and policies that govern the use of FF.
    Thanks for raising the bar in the public discourse.

  • I’m in agreement with Ted’s position on divestment. With little time left to implement the gigantic mitigation efforts needed to enable human survival in this epoch of the rapidly worsening climate crisis, we really have no time to waste. We need to concentrate our efforts on building a powerful working-class based movement that is integrally united with social justice, environmental justice and indigenous groups. Capitalism forced its way into the world riding on the backs of enclosure and slavery. It has used economic and military force to bolster its tyranny and destruction of nature. Only FORCE will move the needle—but it must be the right kind of force. When our opponent has no morals, appealing to morality as divestiture does is all but completely useless. As ecosocialists we can ally ourselves with those involved in divestiture, but we cannot afford to waste any time. It will take FORCE to move the needle on the behavior of the billionaires and millionaires who use the FORCE of their economic power and the VIOLENCE of the state’s police agencies to maintain their catastrophic rule. Those elements clearly have no intention of effectively addressing the need to mobilize society to assure that life on Earth can survive the climate crisis. They have enough money to weather the storms (they think) and truly do not care about anyone or anything but their positions of power and privilege. That is their only “morality.” Our efforts need to be focused on building the working-class movement we need to FORCE change at the level of the political state and build our alliance for the complete abolition of the capitalist system. It is capitalism whose destruction of nature lies at the root of the problem. But to give the greatest chance of avoiding the rivers of blood the political right and the capitalist class in general can be counted on to utilize in their defense of capitalism, we need our movement for ecosocialism to work to unite the working class (including everyone except those who live by owning). This of course is no easy task. But if all our efforts keep that goal in sight, with assistance from nature itself in accelerating the possibilities for social collapse as ammunition in our ecosocialist “cannons,” we stand a far better chance of making progress than if we emblazon “divest now” on our banners.

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On Sept 19, 2023 ahead of the Climate Ambition Summit in New York City, climate activists gathered for a rally and civil disobedience outside Bank of America Tower in Midtown Manhattan as part of the March to End Fossil Fuels wave of actions resulting in multiple arrests. Activists demand Bank of America to “Defund Climate Chaos and Defend Human Rights” Photo: Erik McGregor (CC BY-NC 2.0 Deed)

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