For over a century, fossil fuels have been more than just the world's primary energy source; they've been a bedrock of the global financial system, an engine of economic growth and a safe investment for governments, pension funds, charitable endowments and other institutions around the world. If we hope to stop climate change before its effects become catastrophic, that will inevitably have to change — and many climate activists want it to change as soon as possible.

“Public money is being invested in companies that are directly contributing to climate change,” says Deborah McNamara, an activist with the Colorado Coalition for a Livable Climate, which includes more than two dozen environmental and social-justice groups from around the state. “Here in Colorado, money is being invested in fracking companies. Do we want our public money being invested in these companies that are polluting our air and water?”

After years of disappointment, the “Fossil Free” investing movement has picked up steam around the world and in Colorado, where — despite opposition from the state's powerful oil and gas industry — it’s won some small victories, including an announcement last month that the City and County of Denver plans to dump its investments in fossil fuel companies.

Globally, activists say, they’ve secured divestment commitments from more than 1,000 public and private institutions in dozens of countries, representing $8.7 trillion in managed assets. Last year, New York City announced plans to begin divesting its $200 billion pension system from fossil fuels within the next five years, by far the largest public divestment pledge yet made in the U.S.

But global financial markets change slowly, and short-term incentives still largely favor continued fossil fuel development and investment in the companies that profit from it. By and large, there remains a lack of political will for divestment on the massive scale that some environmental groups believe is urgently needed — a reality that Colorado divestment activists once again encountered earlier this week.

After an hour-long hearing at the State Capitol on Monday, April 8, lawmakers on the House Finance Committee voted overwhelmingly to defeat House Bill 1270, a proposal to require the state’s pension system to simply study the risks of its fossil fuel investments.

The two-page bill would have directed the Public Employees Retirement Association, which manages the pensions of half a million current and former state employees, to hire an independent firm to assess its portfolio’s “climate-related financial risk.” PERA’s leadership opposed the legislation, claiming that its own internal policies and procedures are enough to properly assess those risks, and six Democrats on the committee agreed, joining Republicans in killing the bill on a 10-1 vote.

“It’s a shame,” says McNamara, who testified in support of the bill. “The study would’ve allowed PERA to be on the leading edge in the U.S. in terms of pension funds considering climate risk in a more robust way. What I walk away with is the feeling that PERA is choosing the status quo.”

Like previous movements to discourage investment in Big Tobacco or apartheid South Africa, many advocates for fossil fuel divestment object to supporting oil, gas and coal development on moral grounds. The burning of fossil fuels is warming the climate to the point of global catastrophe, and they argue that it’s unethical for public institutions like PERA to continue to fund the industry.

But an important difference between campaigns like Fossil Free PERA and other divestment efforts is that when it comes to fossil fuels, there’s increasingly a financial argument to be made for divestment, too. As the world continues to transition away from fossil fuels in the coming decades, investments in oil and gas are at risk of becoming “stranded assets,” suffering sharp declines in value that leave institutional investors like pension funds on the hook for billions, or even trillions, in losses.

“If you look at what happened to coal in the last decade, those assets have done incredibly poorly,” says Dan Carreno, an analyst with Change Finance, a sustainability-focused investment firm. “We’re starting to see the exact same thing happen with natural gas, relative to wind and solar. And we could see the same thing happen with oil.”

"I talk to PERA members who say, 'I'm going to retire in the year 2035,' or 2050," says McNamara. "And these are the key benchmark years when it comes to what the IPCC has been telling us about climate change. So they want to make sure PERA is doing something now, so that by the time they are retiring, they're not dealing with the fallout from the climate crisis, and the potential fallout from stranded assets."

At Monday's hearing, PERA Chief Investment Officer Amy McGarrity told lawmakers that direct investments in the energy sector make up about 6 percent of the association's assets, but added that up to 14 percent could be considered fossil fuel-related.

As the defeat of HB 1270 proved, the Fossil Free PERA campaign faces an uphill battle, and several previous divestment campaigns in Colorado have ended in disappointment. In 2017, divestment activists unsuccessfully petitioned the University of Denver's Board of Trustees to sell off any investments in fossil fuels within its $607 million endowment, and efforts to convince the University of Colorado system to divest have also failed. So far, the only academic institution in Colorado to have dumped its fossil fuel investments is Boulder’s Naropa University.

But the movement has had more success at the local level in Colorado — including in Denver. Speaking at a mayoral debate at the Alliance Center last month, Mayor Michael Hancock announced that the city's Department of Finance is pursuing divestment from fossil fuels in order to ensure that its investments more closely “align with our values around sustainability and equity.”

“We’ve already started the process,” Hancock said. “The City of Denver has a $5 billion investment portfolio. Less than 1 percent was invested in companies that may be doing business in fossil fuels, and they’re coming to an end.”

In fact, fossil fuel holdings made up more than 3 percent of Denver’s investments at the end of 2018, according to documents obtained through an open-records request. The city owns nearly $180 million in corporate bonds issued by Chevron and Exxon Mobil — the most recent of which, a $5 million investment in Chevron, was purchased in December 2018.

A spokesperson for Hancock did not return a request for comment on when the City began its divestment process, or when it's expected to be completed.

Beyond direct investments in oil and gas, Denver's investment portfolio also includes significant investments in JP Morgan Chase and Wells Fargo, two financial institutions that have been criticized by activists for their role in financing major fossil fuel projects like the Keystone XL and Dakota Access pipelines. Today, April 10, activists with the environmental group 350.org plan to target JP Morgan Chase with a series of "Defund Disaster" events held across the country.

Over the past six months, increasingly dire warnings from climate scientists have led to new sense of urgency and momentum in climate advocacy, from protests in the halls of Congress to bold new policy proposals like the Green New Deal. And with New York City's landmark, multibillion-dollar divestment effort under way, activists hope that the tide has turned for the divestment movement nationwide — even in oil- and gas-rich Colorado.

“I think the pressure is mounting,” says McNamara. “The level of understanding and awareness around the issue is increasing. My worry is just that it’s not going to happen fast enough.”

Divestment alone won't solve the climate crisis, but activists view it as an important strategy for pressuring governments, private institutions and even fossil fuel companies themselves into taking necessary action. Alongside regulation, market incentives, shifts in consumer habits and other factors, a greater focus on sustainability in investing could help steer the world away from climate-wrecking fossil fuels — before it's too late.

“It’s one more market signal,” says Carreno. “You have this cumulative effect of everything from renewable energy to electric-vehicle adoption, and you combine that with cities and other governments divesting from fossil fuels — all of that influences how companies operate.”

