In early 2015, my wife, Margot, and I were asked to contribute to a collection of essays on fossil fuel divestment by Operation Noah. We decided to use essentially secular ethical approaches to investigate the issue, and the result was published on the JRI Blog HERE. We concluded that more or less whatever ethical approach was used, continued investment in fossil fuels could not be justified. Here, I want to concentrate on just one of those ethical approaches, what is sometimes called a moneycentric ethic. This ethic is a branch of anthropocentric ethics, but it is a very selfish one where we only consider the bottom line, and where profit is the only motive. So if we are moneycentric we have little or no concern for poor people (or any other people) or the environment. Writing in July 2018, I want to look at what a moneycentric investor should do with their fossil fuel investments?
Firstly, has anything changed between early 2015 and now? The biggest change can be summed up in one word, and that is “Paris”. I remember spending the run-up to COP21, the Paris Climate Change meeting in December 2015, analysing the meeting from every angle I could find. On paper, the agreement was not that strong, but that neglected the businesses, the mayors, the NGOs, and all those outside the main conference hall. And inside that hall, there were also many totally committed people who were going home to make the agreement work. In my briefing, released the day after the meeting concluded, I commented, “Could it be that the spirit of the agreement was more important than what was written in it?” I think that statement has proven to be correct. Despite one or two bumps along the way, the election of Donald Trump being the biggest, we have seen huge progress in the adoption of renewable technologies in just two and a half years. At the same time, the fossil fuel industry looks weaker than it ever has.
The deployment of renewable energy technologies in the last two and a half years has seen a huge expansion. Here are a few examples: China; India; the United States; and Spain. There is no sign that this increase in renewables is likely to slow globally. Recently the European Union decided to approve a target of 32% of energy to be provided by renewables by 2030.
As a result of the Paris Agreement and the rapid moves to decarbonise energy production, there are now increasing numbers of warnings about the so-called “carbon bubble”. A recent report suggested that before 2035 we could see a sudden drop in demand for fossil fuels. Bill McKibben, the well-known American environmentalist, might be expected to be biased in his assessment of the current state of the fossil fuel industry, but the sources he cites in his recent article, such as the Institute for Energy Economics and Financial Analysis (IEEFA) are not. The fossil fuel sector faces major problems.
So to conclude, if we took a totally moneycentric approach, what should we do? In the past, there would have been absolutely no doubts, and we would have invested very heavily in fossil fuels. We would have made a lot of money. But now things are changing, and changing quite quickly. Even if we totally disregard the impacts on poor people and the environment, investing in fossil fuels is looking increasingly dicey. So a wise moneycentric investor might now see the way the wind is blowing and get out before the bubble bursts. I am completely sure that Christian institutions like the Church of England do not take their investment decisions entirely on moneycentric ethics, but even if they did………
Dr Martin J. Hodson
JRI Operations Director
Photo: Wind turbines along the harbour wall. Bilbao, Spain by Martin Hodson
The topic of divestment from fossil fuels is a controversial one. The opinions in this article are those of the author and are not necessarily those of JRI