Students have kept pressure on universities to divest their non-ESG assets, with significant success © Mike Kemp/In Pictures via Getty Images

When environmentalist Bill McKibben hit the road in 2012 to preach the gospel of sustainable investing, few would have guessed that his bio-fuel-powered bus tour of US universities would spark a worldwide divestment movement.

But eight years later, the work of Mr McKibben and others has led more than 1,250 institutional investors with $14.5tn in assets to commit to cut fossil fuels from their portfolios, and inspired a new generation of activists to take the fight to companies profiting from climate change.

Their message caught on quickly with students. If the world was going to keep global warming in check, energy companies would need to leave the vast majority of their fossil fuel assets in the ground. Therefore, university endowments that held fossil fuel stocks, as Mr McKibben argued in Rolling Stone magazine, are investing in a way “that guarantees [their students] won’t have much of a planet on which to make use of their degree”.

At first, many school administrators and endowment managers were not so easily persuaded. The early adopters were the type of institutions one would expect — the first to take the fossil-free pledge was Unity College, a liberal arts school in Maine that calls itself America’s Environmental College.

But while the campaign found quick success with these types of schools, as well as religious institutions and charitable foundations, most large universities were reluctant to join — citing both political and financial reasons.

Bill McKibben (centre) has long preached the gospel of sustainable investing © Julia Schmalz/Bloomberg

Students have kept up the pressure and things are changing. By January 2020, more than half of the public universities in the UK had committed to divest, and both Cambridge and Oxford joined the group later in the year.

In the US, Brown University became the first Ivy League school to sign up in March 2020. Cornell University followed suit in May.

Yet the efficacy of the campaign is still an open question. Before the pandemic struck, the world had not meaningfully cut its emissions and critics are quick to point out there is little evidence to show that investor pledges to eschew fossil fuel companies have hurt the energy sector.

As Bill Gates, the billionaire founder of Microsoft, told the Financial Times last year: “Divestment, to date, probably has reduced about zero tonnes of emissions. It’s not like you’ve capital-starved [the] people making steel and gasoline.”

Mr McKibben is insistent that the detractors have missed the point: the campaign was not designed to cut off fossil fuel companies’ access to capital, but rather to replicate the successful anti-apartheid divestment campaign of the 1980s.

“The divestment work was very specifically designed to start stigmatising this industry — to take away its social licence to operate,” he says.

By focusing on universities, divestment campaigners were also looking to inspire more young people to join the broader fight against climate change, which was floundering after the failed Copenhagen climate summit of 2009.

“In terms of recruiting new people into the movement, divestment was one of the greatest tools in the history of the struggle,” says Yossi Cadan, global campaign manager of, the climate activist organisation co-founded by Mr McKibben.

Yossi Cadan © Noga Cadan

The next phase for the movement will be to squeeze the financing of the fossil fuel industry, says Mr Cadan. This could mean that divestment advocates collaborate more with shareholder engagement groups, which argue that divesting erodes their power to influence company behaviour.

Divestment backers are adamant that engaging with fossil fuel companies is a fool’s errand.

“The only meaningful change [for fossil fuel companies] is burning less fossil fuels,” says Connor Chung, a Harvard student and press co-ordinator of the Fossil Fuel Divest Harvard movement. “That’s not a question of business practice. It’s a question of business model, and there’s just no clear evidence that shareholder engagement is good at changing the latter.”

But Mr Chung does believe engagement actions can work when they target issues that are tangential to a company’s core business model. This means that even when an investor has ditched fossil fuels, it can still influence the industry by calling on companies in other sectors to curb their use of “dirty” energy.

This model is being implemented by Oxford university — which may provide a blueprint for other large institutions signing on to divest.

In addition to cutting its direct fossil fuel exposure, Oxford is demanding that every business in its portfolio have a credible net-zero carbon strategy, says Kaya Axelsson, a former member of the Oxford Student Union, who helped develop the school’s sustainability strategy.

“We didn’t even have that much energy exposure in our portfolio,” she says. “We needed to make it wider than that. So now our fund managers are required to engage with any company in which Oxford has an investment . . . so that’s where we’re driving climate action across all businesses, not just in the energy sector.”

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