Universities Threaten Banks over Fossil Fuels
Could we be seeing a new more impactful phase of the climate divestment movement? Cambridge and 21 UK Universities have issued a 'warning' to their banks, declaring their intent to shift billions of pounds to greener institutions unless their banks accelerate net zero plans and stop financing fossil fuels. A recent assessment found that the majority of EU banks’ investment portfolios didn’t align with their climate pledges.
Interestingly, Cambridge was one of the institutions which argued against the divestment movement’s first phase. However, as the pressure mounts and financially promising alternatives like solar continue to grow, the logic of combining the moral imperative with financial self-interest – or at least less financial risk - may see such a second phase beginning.
The example fits in well with the 4 pillars of my paper 'Climate Contagion'. Now that clean technology is here, solar and wind are producing power at record low levels while being deployed at record speeds. Matched by the rise in electric vehicles, raising serious doubts about the fossil fuel industries medium term viability.
We are also beginning to see the impacts of climate change increase with record global temperatures and a litany of climate extremes. With landmark legislation like the IRA in the US triggering global economic competition, the banks moving away from fossil fuels may represent the final pillar.
Given this context, moving away from fossil fuels to satisfy stakeholder demands may just as much be the start of a shift to protect themselves from stranded assets, while reaping the benefits of the growing renewables sector.
Tipping points approach. Tick Tock.
Published by Financial Times | 15 February 2024