Low-Hanging Fruit

Some have argued that divesting from the publicly-traded fossil fuel corporations is pointless, as they only own a fraction of all proven fossil fuel reserves, with the rest being managed under the auspices of their state-owned equivalents. Indeed, publicly-traded fossil fuel corporations own about 25% of all proven reserves. However, their carbon content is approximately 745 billion tons, which alone exceed the established global carbon budget of 469 billion tons of carbon, beyond which will result in runaway climate change.

Whereas publicly-traded corporations are owned by shareholders, state-owned fossil fuel companies are ‘collectively owned’ by governments, which means that their management depends on policy, and thus investors have no influence. Changing their management would mandate government policies or an international agreement in 2015 to reduce carbon emissions, for which the divestment campaign is trying to build momentum. Consequently, targeting the publicly-traded companies, which also provide expertise to the state-owned companies, is essential, representing ‘low-hanging fruit.’

The fact that these firms are state-owned also underscores the financial argument for divestment with regards to stranded assets (See: Stranded Assets). For the international climate change agreement in 2015, negotiators will have to agree to allot the carbon budget between countries, but also between countries and corporations; who will be the likely losers of this arrangement? The countries that have most resisted coming up with a climate change agreement are those with the largest reserves, such as the United States, Canada, Russia, Australia, China, India, and OPEC countries, which means that publicly-traded corporations will likely be in trouble when they come up with a climate agreement. This will likely be the case as countries prioritize the cheapest and most easily extractable reserves for the carbon budget and not the expensive unconventional sources in which the publicly-traded companies specialize. Consequently, targeting the publicly-traded companies is also warranted given the likelihood that they will be the losers of future climate talks.