Fossil Fuels Divestment: A Strategy for Sustainability?

This chapter examines the potential influence of the global fossil fuel divestment movement in contributing to sustainability and how legal governance can improve the divestment movement. It aspires not only to spur political action on climate change through tougher laws, but also to harness the market as a surrogate regulator to weaken offending companies financially. Under the auspices of transnational networks such as 350.org’s Fossil Free, the divestment campaign pressures investors to shun the biggest carbon emitters – mainly oil and coal companies – in the hope that they will change their ways or go out of business. ‘Divestment’ means withdrawing financial ties, such as selling a company’s stocks or bonds, and refusing bank loans. The investors targeted by the movement, which took off globally in 2014, include pension funds, university endowments, banks, insurers and sovereign wealth funds. Thereby, fossil fuel divestment contributes to the broader agenda of sustainable development by helping to accelerate the shift to a low carbon economy.