Why we need to divest from fossil fuels
What is divestment?
Divestment is the opposite of investment. It means moving money out of unethical companies by getting rid of stocks, shares, bonds or investment funds. This includes the fossil fuel industry, which is wreaking havoc on people and planet while still being propped up financially, politically and socially by countless institutions.
Take pension funds, for example. A large number of these invest in fossil fuel companies. In fact, UK Divest revealed that UK local authority pensions alone are investing at least £12.2 billion and perhaps as much as £16 billion in coal, oil and gas.
But the tide is changing. Institutions all over the world, including entire cities, are cutting ties with the fossil fuel industry.
Fossil fuel giants like BP and Shell are some of the wealthiest and most powerful companies on the planet, yet they’re using their money and influence to block every serious attempt to stop the climate crisis. Divestment gives people like you the chance to say, "I don’t want my money invested in companies that behave like this."
Every time people convince well-respected institutions to divest, the reputation and power of the fossil fuel industry takes a massive hit. What's more, it signals to government that the public wants a greener, fairer future.
Divestment is one of the most direct ways that people in the UK can take action to support those in poorer countries. Places like Mozambique and Nigeria are some of the worst affected by exploitative fossil fuel giants and face human rights abuses such as land grabbing and blackmail.
It also makes financial sense. Share prices for renewable companies have grown over 7 times as much as for fossil fuels over the past decade. It’s becoming increasingly risky to invest in coal, oil and gas, and increasingly prudent to invest in sustainable businesses instead.
What's Friends of the Earth doing?
We partner with Friends of the Earth Scotland and Platform to run UK Divest, a coalition supporting a network of more than 60 community groups across the country campaigning for councils to divest their pension funds.
From Divest Falkirk to Fossil Free Wiltshire, we’re lobbying local authorities (with petitions, divestment motions, trade union campaigns and more) to ditch dirty energy investments, and to ensure the financial security of the more than 6 million people receiving a local government pension. And it’s working.
Five local authority pension funds have already committed to divest, and Waltham Forest became the first council to fully divest in 2022, removing over £53 million in oil, gas and coal stocks. Many more are taking steps to reduce their fossil fuel investments, and over 60 councils have passed motions in support of divestment.
We also pioneered Money Movers, a powerful movement of women using peer support to take climate action through their finances. Meeting together in their homes, workplaces, parenting groups or local cafes, peer groups learn from each other and act together. Across the country, these women are developing greater financial confidence and switching to greener pensions and financial products.
Since 2019 Money Movers has divested £1.9 million out of fossil fuels, with a further £6.3 million in planned actions.
[Money Movers] felt liberating. In both the training and my actual project, we worked together to create a non-judgemental space where we could open up about our feelings and experiences. I didn’t feel ashamed to admit how much I still have to learn. Instead, I felt motivated to take action.Catherine Queen, Money Movers participant
What can you do?
Switch to green banking
Divesting your personal finances is one of the most impactful things you can do for the planet as an individual. Before making any decisions, especially regarding pensions, we strongly recommend contacting an ethical financial adviser. Start by finding out more about ethical banking on the Ethical Consumer website.
We’re proud to be partnered with the very best ethical banks. Our partners Triodos Bank and The Co-operative Bank offer a wide range of sustainable banking products, including current accounts, savings accounts, ISAs and more.
Triodos Bank is a pioneer in sustainable banking. It has ethical investment policies supporting low-carbon initiatives and publicly discloses its investments. The bank offers financial services to a range of projects including nature conservation, renewable energy and social housing.
The Co-operative Bank has blazed a trail in transparent and ethical banking. Its unique customer-led Ethical Policy, which gives its customers a say in how their money is used, outlines its commitments to planet, people and communities. Since 1998, The Co-operative Bank hasn't provided banking services to businesses involved in fossil fuel extraction and is the only UK high street bank to join the Fossil Free Banking Alliance. The bank has set an ambitious 2030 net zero target for its direct and indirect emissions, as well as a 2050 target for its supply chains and customers. Not only are its products green, but it's also partnered with us to bring back nature to the most nature-deprived spaces across the country through the expansion of our Postcode Gardener programme.
You can use MotherTree’s ranking of the climate impacts of UK banks to assess other current account banking options and find out more about the environmental impact of your money.
Direct investments and funds
Direct investments and crowd-funded projects offer interesting, if somewhat riskier, options. Ethical Consumer has assessed 15 divested funds and identified those with strong positive investments such as FP WHEB Sustainability, which invests in environmental technologies.
Crowd-funding platforms such as ETHEX, Abundance Investment, Energy4All and Sharenergy have also become a big part of the green revolution and provide a great option for carbon-free investments.
- Occupational pension schemes. These tend to be heavily invested in fossil fuels, but most financial advisers agree that, if you’re lucky enough to be in one of these, staying put makes financial sense. Shareaction is among a number of groups that can help you lobby your fund manager for carbon divestment.
- Auto-enrolment schemes. Ethical Consumer has assessed 11 auto-enrolment pensions on their ethical credentials.
- Private fund/personal pension. These can be linked to an existing ethical investment fund or even to a carbon-divested fund.
- “Off-piste” saving. This involves bundling up a number of ethically managed options, such as property, direct investments and ISAs, but this approach comes with more risk.
Push institutions to divest
To support UK Divest’s campaign, you can:
- Join a divestment campaign group in your area.
- Use UK Divest's online tool to uncover your local authority's fossil fuel investments in more detail.
- Email your local councillor asking them to support divestment.
- Support campaigns to push other institutions, such as churches, charities and universities, to divest.