Bill Gates, a revolutionary of our time, made some recent comments that fossil fuel divestment has had zero impact on fossil fuel emissions (1). This statement, while often repeated by divestment critics, takes on a different tone when someone as respected and intelligent uses this common tactic to dismiss divestment’s necessary role. And it ignores the massive impact that divestment has had on solving climate change, by narrowly focusing on one aspect of it.

Divestment, in a boiled down sense, is the investment based equivalent of the labor-based strike. Someone temporarily, removes their investment in a company, regarding management’s decisions with the promise to return it in return for management altering their decision. The idea is that if enough divest, the financial pressure it will exert on a company not only will make it necessary for publicity sake, but financial sake.

Bill Gates’ is kind of right in this sense. When it comes to stock divestment, the impact of $11 trillion dollars in a wide range of fossil fuel companies is a drop in the bucket on the market forces for their stock prices. Especially because it has no impact on the direct financial outcomes of the company because the sale of stock does not take place between the company and the current owner, but between a prospective owner and the current owner. When someone divests from Exxon Mobil, they only shift the control of that company into someone else’s hand. Therefore financially, stock divestment has little to no impact.

But if you remember Standing Rock and the divestment movements spurred from there, they were not only talking about stock divestment, but bank divestment. This is where the real power lies. When someone withdraws their $10,000 account from SunTrust or Bank of America, not only do they withdraw $10,000 of loan capital, but due to fractional lending they withdraw up to $100,000 of loan capital (see the Federal Reserve’s Reserve Requirements; Source 2). If enough divest to total just $1 billion dollars, which is less than a quarter of what Defund DAPL spurred (3), that will remove $10 billion in loan capital from polluting banks.

$10 billion is nothing to ignore even for the world’s largest banks and so there is an impact. That is why we saw European banks end relationships with fossil fuel companies and American banks pretend to and then walk back their commitments. Bank divestments has helped decrease fossil fuel emissions and without it we be in a lot worse of place in relation to climate change.

But the financial impact goes further because Bill Gate’s later mentions that investment in emerging technologies is what is needed. And again, he is 100% right. But for the average investor, they don’t have billions of dollars to play with. To be able to invest in these technologies they must divest from others, specifically fossil fuels. Bill Gates ignores that every divestment leader across this country advocates for reinvestment into the future of our planet and society and that this reinvestment can only occur when we divest. Investing is a zero-sum game (unless you margin invest) and so to shift portfolios to the future, divestment is necessary.

And if these financial arguments were not enough, divestment at the end of the day is a moral statement on valuing human life. By owning a portion of any fossil fuel company, you are owning a portion of the innocent lives they sacrifice for an extra dollar here and there. You are owning a portion of the climate refuges streaming out of Bangladesh and humiliated as they try to find a new home. You are owning a portion of the native rights violated to build fossil fuel projects in every single country they go. To divest, is the same statement as saying I choose not to harm innocent lives. Therefore, by continuing to invest in these companies you are owning a portion of machine that sacrifices our communities and those who live in them.

So maybe Bill Gates is right about stock divestment not impacting emissions. But he is wrong about bank divestment. But he is wrong about what divestment means for the average person’s financial portfolio. But he is wrong about the moral consequences of not divesting. Bill Gates, if you even find this article, see that divestment is more complicated than you make it out to be. And for the sake of the planet, divest with us!

Sources:

1. https://www.ft.com/content/21009e1c-d8c9-11e9-8f9b-77216ebe1f17

2. https://www.federalreserve.gov/monetarypolicy/reservereq.htm

3. https://www.defunddapl.org/