Fossil fuel divestment is an effort to reduce climate change by applying pressure through social, political, and economic actions to remove investments in companies that extract fossil fuels. These investments include stocks, bonds, and other financial items.

Fossil fuel divestment campaigns began on college and university campuses in the United States in 2011. Students encouraged their schools to change investments in the fossil fuel industry to support clean energy and communities affected by climate change. In 2012, Unity College in Maine became the first college to stop investing in fossil fuels. While fossil fuel divestment focuses on managing financial investments, a related movement called Fossil Free Research encourages universities to stop accepting research funding and sponsorships from fossil fuel companies.

By 2015, fossil fuel divestment was reported to be the fastest growing movement to stop investing in fossil fuels. As of July 2023, more than 1,593 institutions worldwide with over $40.5 trillion in assets had started or committed to divesting from fossil fuels.

People who choose to divest have several reasons. For some, it helps match their investments with their values. For others, it is a way to fight the fossil fuel industry. For others, it is a method to protect their investments from financial risks caused by climate change. Studies show that over time, divesting from fossil fuels has helped investors earn better returns.

Motivations for divestment

Fossil fuel divestment aims to lower carbon emissions by speeding up the shift to renewable energy. This is done by putting public pressure on companies that extract fossil fuels to invest in renewable energy instead.

The Intergovernmental Panel on Climate Change (IPCC) found that future carbon dioxide emissions must stay below 1,000 gigatonnes to have a 66% chance of avoiding dangerous climate change. This total includes all sources of carbon emissions. To avoid dangerous climate change, only 33% of known fossil fuel reserves can be used. However, if other carbon emissions, such as those from deforestation or cement production, increase, even less than 10% of fossil fuel reserves can be used to stay within safe limits.

According to the US Environmental Protection Agency, Earth’s average temperature has risen by 0.78°C (1.4°F) over the past 100 years. Scientists predict it could rise another 1.1 to 6.4°C (2 to 11.5°F) over the next 100 years if carbon emissions continue at current rates. This rise would exceed the level of warming considered safe for life on Earth.

— Naomi Klein (author of This Changes Everything: Capitalism vs. the Climate), The Guardian, 2014.

This Agreement aims to strengthen the global response to climate change by keeping global temperature rise below 2°C and ensuring financial support aligns with low-emission, climate-resilient development.

— Paris Agreement, Article 2 (2015).

The Toronto Principle is a strategy for fossil fuel divestment that supports the goals of the Paris Agreement. It was introduced by Benjamin A. Franta in an article in the Harvard Crimson, referencing the University of Toronto’s fossil fuel divestment process.

After 350.org submitted a divestment petition in March 2014, President Gertler formed an advisory committee to study the issue. In December 2015, the committee recommended that the University of Toronto divest from fossil fuel companies that ignore international efforts to limit global temperature rise to no more than 1.5°C above pre-industrial levels by 2050. These companies are considered incompatible with the Paris Agreement.

Franta called this approach the Toronto Principle, arguing that institutions should align their actions with the Paris Agreement. He suggested divesting from companies involved in coal, oil from the Arctic or tar sands, and those that mislead the public about climate change. He believed institutions could use their influence to support climate goals.

In 2016, the University of Toronto rejected the committee’s recommendations, but in 2021, President Gertler announced a plan to divest by 2030.

The Lofoten Declaration, created in August 2017, is an international statement calling for an end to fossil fuel exploration and a shift to a low-carbon economy. It urges countries that benefited most from fossil fuels to lead climate action. The declaration is named after the Lofoten archipelago, where public opposition stopped offshore oil development.

Stranded assets, also called the "carbon bubble," occur when fossil fuel reserves are deemed unusable due to environmental concerns. Currently, stock prices of fossil fuel companies assume all reserves will be used, ignoring the true cost of carbon emissions.

In 2013, a study by HSBC found that 40% to 60% of the value of BP, Royal Dutch Shell, and other European fossil fuel companies could be lost due to stranded assets from carbon regulations. In 2015, Bank of England governor Mark Carney stated that most fossil fuel reserves are "unburnable" if global warming is to stay below 2°C. He warned that companies not moving toward zero emissions could face financial penalties or bankruptcy.

In 2014, the International Energy Agency estimated that $300 billion in fossil fuel investments could be lost by 2035 if carbon emissions are cut to limit warming to 2°C.

A report by the Carbon Tracker Initiative found that the US coal sector lost 76% of its value between 2010 and 2015, including the closure of 200 mines. Peabody Energy, the world’s largest private coal company, lost 80% of its share price during this time due to environmental regulations and competition from shale gas.

In 2013, fossil fuel companies invested $670 billion in new oil and gas exploration.

According to 2021 research, about half of the world’s fossil fuel assets could lose value by 2036 under a net-zero transition.

A 2015 study of 20 fossil fuel companies found that the hidden economic cost of their carbon emissions to society was greater than their profits, except for ExxonMobil in 2008. Coal companies fared worse, with their costs exceeding their total revenue.

In 2014, financial analysts projected $28 trillion in lost value for fossil fuel companies under a regulatory scenario targeting 450 parts per million of carbon dioxide in the atmosphere.

Effects of divestment

A study by the Smith School of Enterprise and the Environment at the University of Oxford found that negative attention toward fossil fuel companies because of divestment can make future money for these companies less certain. This uncertainty can cause the value of these companies, such as their share price compared to earnings (P/E ratio), to drop permanently.

The study also explains that the goal of divestment campaigns is to create new moral standards worldwide. These standards can change how the market views fossil fuel investments.

Recent evidence shows that divestment not only affects society but also makes it harder for fossil fuel companies to operate. In recent years, the cost of money needed for fossil fuel projects has increased. Fossil fuel companies themselves have said this increase is partly due to pressure from divestment efforts.

According to a 2019 analysis by the Institute for Energy Economics and Financial Analysis, the energy sector in the S&P 500, which includes many fossil fuel companies, has performed worse than the overall index since 1989.

Legal cases

In November 2014, seven undergraduate, graduate, and law students filed a legal case in the Suffolk County Superior Court against the president and fellows of Harvard College and others. They accused Harvard of "mismanaging charitable funds" and "intentionally investing in dangerous activities" related to Harvard's investments in fossil-fuel companies. In March 2015, the court dismissed the case. The judge stated, "The students' arguments are strong, but the court cannot provide the help they are seeking."

In early 2021, students from Harvard and Boston College reported problems to the Massachusetts Attorney General, claiming that Harvard's investments in fossil fuels broke state laws about fiduciary duty. In September 2021, Harvard announced it would stop investing in fossil fuels, stating that its decision was based on its legal responsibility to manage funds properly.

Reaction from the fossil-fuel industry

In October 2014, ExxonMobil said that removing investments from fossil-fuel companies was "not aligned with real-world situations" and that "not using fossil fuels is similar to not using energy at all, and that is not possible."

In March 2014, John Felmy, the head economist of the American Petroleum Institute, said the movement to remove investments from fossil-fuel companies "finds very upsetting" and claimed that academics and activists who support this movement are not fully informed or are dishonest. Felmy specifically criticized the environmentalist and writer Bill McKibben.

The World Coal Association noted that removing investments from fossil-fuel companies does not always lead to less demand for fossil fuels. Instead, it may cause environmentally focused investors to lose influence over how these companies operate. Benjamin Sporton, the acting chief executive of the World Coal Association in 2013, stated that coal has been the fastest-growing energy source over the past ten years and is an essential material for producing steel and cement in developing countries.

Exponential growth into a global divestment movement

In 2011, the campaign started on six college campuses, asking their leaders to stop investing in coal and other fossil fuels and instead support clean energy and "just transition" strategies that help people most affected by environmental harm and climate change. By spring 2012, the campaign had reached about 50 campuses. By September 2014, 181 institutions and 656 individuals had agreed to stop investing over $50 billion in fossil fuels. By September 2015, the numbers had increased to 436 institutions and 2,040 individuals in 43 countries, managing $2.6 trillion in assets. Of these, 56% came from pension funds and 37% from private companies. By April 2016, 515 institutions had joined, including 27% faith-based groups, 24% foundations, 13% government organizations, 13% pension funds, and 12% colleges, universities, and schools. Together with individual investors, these groups managed $3.4 trillion in assets. By April 2020, 1,192 institutions were involved, with a total of $14.14 trillion in assets. As of July 2023, more than 1,593 institutions worldwide had started or committed to divesting fossil fuels, managing over $40.5 trillion in assets.

Groups involved in divestment campaigns

In 2006, a student group called People & Planet, based in the United Kingdom, started a campaign named "Ditch Dirty Development." This campaign was one of the first of its kind and later inspired similar efforts by students in the United States and the United Kingdom. The campaign first focused on stopping the UK government from funding projects that used fossil fuels, such as oil and coal. Later, the group worked with other organizations like PLATFORM and BankTrack to pressure banks, such as RBS, to stop funding oil and gas projects.

The divestment campaign at the Australian National University (ANU) is one of the longest lasting in the world. Although the university has not completely stopped investing in fossil fuels, it has made important progress, especially in 2011 and 2014.

Fossil Free ANU was created by students in the ANU Environment Collective (EC), a group that works without leaders and makes decisions through agreement. This group is part of the Australian Student Environment Network. In 2011, students learned from activists in Northern Rivers, NSW, that ANU was one of the top 12 shareholders in a coal seam gas company called Metgasco. After student protests, including an event called "ANU Gets Fracked," where students built a fake gas rig in Union Court, the ANU Council announced in October 2013 that it would stop investing in Metgasco. The decision was based on student concerns and the opinion of Australian Ethical Investment. Tom Stayner, an activist from the EC, said in the ANU student newspaper Woroni that the university's leader, the Vice-Chancellor, showed leadership on this important issue.

In 2012, students raised concerns again when they found out that ANU had only reduced its shares in Metgasco from over 4 million to 2.5 million. In 2013, Tom Swann asked the ANU for all documents from 2012 that showed the university's ownership of shares in companies that produce oil, coal, gas, or uranium. These documents showed that ANU had many shares in major fossil fuel companies and had been buying shares in Santos while selling shares in Metgasco. After student efforts and public pressure, the ANU Council created a Socially Responsible Investment Policy (SRI) in late 2013, modeled after Stanford University. This policy aims to avoid investments that could cause serious harm to society.

In 2014, students from Fossil Free ANU held the first student-led referendum at ANU. In September, more than 82% of students voted to have the university stop investing in fossil fuels, the highest turnout in a student election in over a decade. In October 2014, the ANU Council announced it would stop investing in seven companies, two of which, Santos and Oil Search, were found to be poor choices in a review by the Centre for Australian Ethical Research. This decision caused a month-long controversy, with the Australian Financial Review publishing over 53 stories criticizing the decision, including 12 front-page articles. The editor-in-chief of the newspaper called the decision "as disingenuous as banning the burqa." The Canberra Times called the criticism "verging on hysterical," and members of the Abbott government, including Treasurer Joe Hockey, Education Minister Christopher Pyne, and Prime Minister Tony Abbott, also criticized the decision. In response, Louis Klee, an activist from Fossil Free ANU, wrote in The Age that the reaction showed "the complicity of state power with the mining industry."

Vice-Chancellor of ANU, Ian Young, supported the decision. After meeting with students, he told activists from Fossil Free ANU that he had once thought divestment was "a sideshow," but the strong reaction from mining companies showed that students "were right all along."

ANU still holds shares in fossil fuel companies, and Fossil Free ANU continues to push for the university to "Divest the Rest."

350.org is an international group that works to reduce carbon dioxide levels in the atmosphere. The group believes that raising awareness about rising carbon dioxide levels will pressure world leaders to act on climate change and lower levels from 400 parts per million to 350 parts per million. In 2012, 350.org started a campaign called "Go Fossil Free: Divest from Fossil Fuels!" This campaign asks colleges, cities, religious groups, and pension funds to stop investing in fossil fuel companies. From 2013 to 2020, Australian members of 350.org created local groups across the country to encourage institutions to stop investing in fossil fuels.

Divest-Invest Philanthropy is a global group for organizations that support fossil fuel divestment.

In March 2015, The Guardian launched a campaign called "Keep it in the Ground," asking the Wellcome Trust and the Bill & Melinda Gates Foundation to stop investing in fossil fuel companies. These organizations had at least $1.4 billion invested in such companies. The Wellcome Trust had £450 million invested in Shell, BHP Billiton, Rio Tinto, and BP. The campaign collected more than 140,000 signatures by the end of March 2015.

In January 2020, The Guardian stopped accepting advertisements from fossil fuel companies.

Fossil Free Stanford is one of the most well-known university divestment campaigns in the United States. In May 2014, the university, which had an endowment worth $18.7 billion, stopped investing in companies that mined coal after a long campaign by undergraduate students. Author Naomi Klein called this action "the most significant victory in the youth climate movement to date."

The campaign has strong support from students, shown through campus-wide votes. In April 2014 and April 2018, students voted 75% and 81% in favor of stopping investments in all fossil fuels. The Stanford Undergraduate Senate and Stanford Graduate Student Council also passed resolutions in 2014 calling for full fossil fuel divestment. In 2016, student leaders from the 2015–2016 and 2016–2017 school years wrote a letter asking the university's leadership to support the student opinion on fossil fuel divestment.

In January 2015, more than 300 Stanford faculty members signed a letter calling for full fossil fuel divestment. The letter gained international attention, and more faculty joined, bringing the total to 457 signatories. These included a former university president, department chairs, a vice provost, Nobel Laureates, and members of all seven of the university's schools.

In November 2015, before the UNFCCC COP 21 climate talks that led to the Paris Agreement, over 100 students staged a non-violent sit-in outside the university president's office for five days and four nights, risking arrest. The sit-in ended when the university president, John Hennessy, agreed to a public meeting with the students. In response to the students' plans, the university's board of trustees sent a letter to the UNFCCC calling for strong climate action.

In April 2016, the university's board said it would not

Support for fossil fuel divestment

It is clear that moving to a clean energy future is unavoidable, helpful, and already happening. Investors have an important role in this process.

— Ban Ki-moon, secretary-general of the United Nations (2016).

Many people and groups support stopping investments in fossil fuels, including:
• Ban Ki-moon, secretary-general of the United Nations
• Ed Davey
• Leonardo DiCaprio
• Bianca Jagger
• Barack Obama
• Yotam Ottolenghi
• Tilda Swinton

In March 2015, Mary Robinson, who was Ban Ki-moon’s special envoy on climate change and a former Irish president, said, “It is almost a necessary step to consider ending investments in companies that produce dirty energy.”

Desmond Tutu supported fossil fuel divestment and compared it to the decision to stop investing in South Africa during the time of apartheid.

In September 2020, 12 mayors from the C40 Cities coalition released a statement called “Divesting from Fossil Fuels, Investing in a Sustainable Future,” showing their support for fossil fuel divestment.

At the 5th annual World Pensions & Investments Forum in December 2015, Jeffrey Sachs, director of the Earth Institute, encouraged institutional investors to reduce risks by divesting from fossil fuels.

In February 2015, Harvard University alumni, including Natalie Portman, Robert F. Kennedy Jr., Darren Aronofsky, and Susan Faludi, wrote an open letter to Harvard, asking it to stop investing its $35.9 billion endowment in coal, gas, and oil companies.

— Open letter to Harvard University from notable alumni, 2014

Harvard’s decision not to divest was explained in an open letter from University President Drew Faust.

On November 23, 2019, during the Harvard-Yale football game, about 200 people who support divestment took over the field to protest Harvard and Yale’s lack of action on this issue. This disrupted the game for about 30 minutes. Legal charges against ten Harvard students involved in the protest were later dropped.

On February 4, 2020, the Harvard Faculty of Arts and Sciences voted 179–20 in favor of a motion asking the Harvard Corporation to divest its endowment from fossil fuels.

In 2020, three candidates for the Harvard Board of Overseers were elected based on their support for climate action and social justice, with fossil fuel divestment as a central part of their campaign.

The University of Glasgow became the first university in Europe to agree to stop investing in fossil fuels. Edward Snowden commented:

Groups divesting or taking official steps toward divestment by country

Governments and pension funds in the United States that have partially or fully removed or are working to remove investments from fossil fuels include (listed alphabetically):

• Amherst, Cambridge, Northampton, Provincetown, and Truro, Massachusetts – by 2014, city councils or town meetings in these areas passed resolutions asking pension managers to stop investing in fossil fuels.
• Ann Arbor, Michigan – in October 2013, the city council voted 9–2 to approve a nonbinding resolution asking the city’s retirement system to stop making new investments in the top 100 coal and top 100 gas and oil companies and to remove existing investments within five years.
• Berkeley, California – in 2013, the city council voted to adopt a policy to stop investing city funds in publicly traded fossil-fuel companies. The city plans to complete this process within five years.
• Boston, Massachusetts – in November 2021, the Boston City Council voted unanimously to fully remove city funds from the fossil fuel industry by 2025. This includes all city investments, except pension funds, which are governed by state law.
• Burlington, Vermont – in December 2014, the city council approved a study on possible removal of investments from major fossil-fuel companies. A group of city officials and others was formed to research the proposal and provide recommendations within one year.
• Denver, Colorado – in April 2019, Mayor Michael Hancock announced that the city would remove its fossil fuel investments.
• Eugene, Oregon – in January 2014, the city council voted to discuss the fossil-fuel issue at a future meeting.
• Ithaca, New York – in 2013, Mayor Svante Myrick stated the city had no fossil fuel investments and would not make any such investments during his time as mayor. He also encouraged state pension funds to remove their investments.
• Madison, Wisconsin – in July 2013, the city passed a resolution stating it would not invest in fossil-fuel companies. This does not apply to the Madison Metropolitan School District or two municipal insurance companies.
• Maine – in June 2021, the Maine Legislature passed a law requiring the state and its pension fund to remove fossil fuel investments by 2026. This includes $70 million and $1.2 billion, respectively. Maine became the first U.S. state to require such action.
• New York City – in January 2018, the city announced it would remove $5 billion from fossil fuel investments over five years. It also filed lawsuits against major oil companies for climate-related costs.
• Providence, Rhode Island – in June 2013, the city council voted 11–1 to direct the city’s investment board to remove investments from the world’s largest coal, oil, and gas companies within five years and to avoid new investments in such firms.
• San Francisco, California – in 2013, the Board of Supervisors passed a nonbinding resolution urging the city’s retirement system to remove fossil fuel investments. In 2015, the retirement system began a step toward removal.
• Santa Monica, California – committed to removing fossil fuel investments in 2013 and completed the process (about $700,000) within one year.
• Seattle, Washington – the mayor pledged to remove investments in 2012, but the city and pension fund have not finished the process.
• Somerville, Massachusetts – the city’s retirement board voted in 2017 to move 4.5% of its portfolio into a fund without fossil fuel companies. This action was later blocked by the state’s pension oversight board. Efforts to allow local control over such decisions continue.
• Washington, D.C. – in June 2016, the city council and DC Divest announced that the city’s $6.4 billion retirement fund had removed investments in the top 200 fossil fuel companies.

Colleges and universities that have fully or partially removed investments or are working to do so include (listed alphabetically):

• American University (Washington, D.C.)
• Brandeis University (Waltham, Massachusetts)
• Brevard College (Brevard, North Carolina, U.S.) – in February 2015, the college’s board approved a plan to remove its $25 million endowment from fossil fuels by 2018. At the time, about $600,000 (4%) of the college’s portfolio was invested in fossil fuels. The college became the first in the Southeastern U.S. to remove such investments.
• Brown University (Providence, Rhode Island, U.S.)
• California Institute of the Arts (Valencia, California, U.S.) – in December 2014, the institute announced it would reduce its fossil fuel investments by 25% (about $3.6 million) and avoid future investments in fossil fuels. It also planned to monitor and reduce its remaining carbon exposure over five years.
• California State University, Chico (Chico, California, U.S.) – in December 2014, the university’s foundation voted to remove investments in fossil fuel companies. At the time, the foundation had no direct investments in fossil fuels but had about 2% of its portfolio in managed funds that included fossil fuels. The policy required removing all such investments within four years.
• Case Western Reserve University (Cleveland, Ohio) – in November 2021, the university announced it had removed its remaining $3 million in fossil fuel investments. It also plans to remove about $50 million in private holdings over the next few years as contracts expire. The university has not made new fossil fuel investments since 2017.
• College of the Atlantic (Bar Harbor, Maine, U.S.) – in March 2013, the college’s board voted to remove investments in fossil fuel companies. About $1 million of its $30 million endowment was invested in such companies.
• College of the Marshall Islands (Marshall Islands) – in D