Investing in the Climate, Fossil Fuel the New Slavery?

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Investing in the Climate, Fossil Fuel the New Slavery?

The planet is getting hotter and sooner or later, world governments are going to be forced to take action. Again at the Warsaw summit this fall, scientists and civil society leaders underscored the urgency to slow the burning of fossil fuels and the critical need to move our economy to one more reliant on renewable energy. Government regulation may not be happening fast enough to stop the irreversible damage predicted from a 2-degree (Celsius) rise in global temperature. Still, action will happen eventually, it's pretty clear, and yet, alarm-bells notwithstanding, energy companies and other investors continue to invest in carbon as if there's no tomorrow. In the short run, it's still profitable.

“The reality is that climate change and finance are still viewed as separate worlds... Mainstream investors still dismiss it as "not our issue," John Fullerton, President and Founder of The Capital Institute tells GRITtv in this return appearance on the program.

Continued investment in fossil fuels is creating what is called a "carbon bubble" Fullerton explains. A bigger, more malignant financial dilemma than its predecessor, the housing bubble; in order for the world to reduce emissions, climate scientists estimate that two-thirds of today's fossil fuel reserves need to stay in the ground, making much of today's assets tomorrow's chimera.

It's time, the UN Climate Chief Christiana Figueres told energy executives last month to “honestly assess the financial risks of business as usual.” Setting aside, or "stranding" assets enough fossil fuel to head off climate catastrophe will be costly for the countries with publicly-held reserves as well as for the energy companies and the people whose pension funds are currently invested in them. Energy companies, Fullerton estimates, would need to take a $20 trillion write-off, way more than the estimated $2 trillion lost in the subprime mortgage meltdown.

College students are championing a new economic order. Campaigns across college campuses are demanding that universities divest from fossil fuels, as they once campaigned for divestment from apartheid South Africa. So far the results have not been encouraging. Says Fullerton of Brown and Harvard's decision not to divest:

“The president of [Brown] issued a long and thoughtful statement on their decision on why they should not divest, and to be honest, I fully sympathize with all of the economic arguments...but I do think if we look back at that letter, maybe even only five years from now, and substitute the word fossil fuel perhaps with the word slavery we will be aghast at how we thought about this issue. Our leading public institutions are letting us down”

The pressure on college boards is rising—in the US and in Europe—thanks to campaigns like 350.0rg's "Fossil Free." For Laura's commentary on this issue, check out the F Word: Climate Catastrophe or Crash?

[orginally published on GritTV]