A comparative analysis of the anti-Apartheid and fossil fuel divestment campaigns

Hunt, Chelsie; Weber, Olaf; Dordi, Truzaar

doi:10.1080/20430795.2016.1202641

Cited by 35 publications

(15 citation statements)

References 30 publications

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“…Nuances in the design framework of these studies have led to conflicting results [61]. There is evidence that the fossil fuel divestment movement shares similarities with the anti-Apartheid divestment movement [25] and thus, this method of analysis is applicable in the context of fossil-fuel divestment. However, a common feature of these studies was that the companies themselves announced the divestment from South-African businesses.…”

Section: Event Studiesmentioning

confidence: 99%

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The Impact of Divestment Announcements on the Share Price of Fossil Fuel Stocks

Dordi

Weber

2019

Sustainability

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Several prominent institutional investors concerned about climate change have announced their intention or have divested from fossil fuel shares, to limit their exposure to the industry. The act of fossil fuel divestment may directly depress share prices or stigmatize the industry’s reputation, resulting in lower share value. While there has been considerable research conducted on the performance of the fossil fuel industry, there is not yet any empirical evidence that divestment announcements influence share prices. Adopting an event study methodology, this study measures abnormal deviations in stock prices of the top 200 global oil, gas, and coal companies by proven reserves, on days of prominent divestment announcements. Events are analyzed independently and in aggregate. The results make several notable contributions. While many events experienced short-term negative abnormal returns around the event day, the effects of events were more pronounced over longer event windows following the New York Climate March, suggesting a shift in investor perception. The results also find that divestment announcements related to campaigns, pledges, and endorsements all have a significant effect over the short-term event window. Finally, the results control for the general underperformance of the industry over the estimation window, attesting that the price change is caused by divestment announcements. Several robustness tests using alternate expected returns models and statistical tests were conducted to ensure the accuracy of the result. Overall, this study finds that divestment announcements decrease the share price of the fossil fuel companies, and thus, we conclude that ‘divestors’ can influence the share price of their target companies. Theoretically, the result adds new knowledge regarding the efficacy of the efficient market hypothesis in relation to divestment.

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Section: Event Studiesmentioning

confidence: 99%

“…Recent studies have analyzed the financial returns of fossil fuel investments [12,13,15,25], suggesting that divestment does not impair portfolio performance. Trinks et al [13] suggest that fossil fuel companies have not contributed to portfolio diversification since as early as 1927.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Divestment Announcements on the Share Price of Fossil Fuel Stocks

Dordi

Weber

2019

Sustainability

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“…The Quakers instituted exclusion criteria for their investments to avoid supporting or engaging in the slave trade, which they deemed abhorrent in light of their religious beliefs. This approach of screening portfolios, based on exclusion criteria or engaging in socially responsible investment (SRI)as the practice became known-gained greater prominence during divestment campaigns, in particular in the US in the wake of the Vietnam War, as well as campaigns implemented by US universities to challenge Apartheid in South Africa in the 1970s and 1980s (Molthan 2003;Hunt et al 2017). Exclusion criteria are applied to this day, as illustrated, for example, by the recent and ongoing divestment campaigns that shun fossil fuel investments.…”

Section: From Sustainable Finance 10 To Sustainable Finance 30mentioning

confidence: 99%

Impact investments: a call for (re)orientation

et al. 2021

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Practitioners and academics have been using different terms to describe investments in the sustainability context. The latest inflationary term is impact investments—investments that focus on real-world changes in terms of solving social challenges and/or mitigating ecological degradation. At the core of this definition is an emphasis on transformational changes. However, the term impact investment is often used interchangeably for any investment that incorporates environmental, social, and governance (ESG) aspects. In the latter instance, achieving transformational change is not the main purpose of such investments, which therefore carries the risk of impact washing (akin to “green washing”). To offer (re-)orientation from an academic perspective, we derive a new typology of sustainable investments. This typology delivers a precise definition of what impact investments are and what they should cover. As one central contribution, we propose distinguishing between impact-aligned investments and impact-generating investments. Based on these insights, we hope to lay the foundation for future research and debates in the field of impact investing by practitioners, policymakers, and academics alike.

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“…This typically describes grassroot forms of finance-led activism, such as the anti-apartheid movement as well as shareholder initiatives led by religious groups. The former is widely recognised by scholars as a central source of inspiration for later forms of finance-led activism (see, for instance, [27,57,58]). In later phases, as niche innovations find wider acceptance, they start competing with the established regime or can be co-opted by incumbents-the increasing ubiquity of investments labelled SRI [23], ESG indices, and rating agencies [59] are good examples of the latter dynamic.…”

Section: Finance As a Socio-technical System: Making Sense Of The Susmentioning

confidence: 99%

Dirty Banking: Probing the Gap in Sustainable Finance

Urban

Wójcik

2019

Sustainability

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In 2016, the Global Sustainable Investment Alliance estimated the market for sustainable investments to have reached 22.89 trillion USD of assets under management. While financial institutions have embraced the idea of sustainable finance as a business opportunity, they have arguably done little, but to piggy-back on investors’ demand. Today, it is not unusual for a single firm to retail fossil free investment funds and concomitantly offer commercial loans towards fracking, coal, and Arctic drilling. This paradox is underpinned by a major gap in the way sustainability has permeated primary and secondary markets which, we argue, calls for a serious rethinking of the sustainability transition in finance. This article proposes two contributions in this direction. First, we develop an original conceptualisation of finance as a socio-technical system to discuss the dynamics that both hinder and promote a transition from mainstream to sustainable finance. Second, we propose to study how investment banks integrate sustainability in their underwriting services. To do so, we filter through close to half a million of debt and equity underwriting deals (2005–2017) using the Government Pension Fund Global of Norway’s list of 153 excluded companies. Our results suggest that investment banks do not shy away from underwriting companies that have been flagged for major environmental, social, and governance misconduct, neither do they restrain from underwriting companies providing contentious products, such as tobacco, coal, and nuclear weapons. Moving forward, we suggest ways to address this problem and call for further research on the responsibility and agency of finance and advanced business services firms in sustainability transitions.

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A comparative analysis of the anti-Apartheid and fossil fuel divestment campaigns

Cited by 35 publications

References 30 publications

The Impact of Divestment Announcements on the Share Price of Fossil Fuel Stocks

The Impact of Divestment Announcements on the Share Price of Fossil Fuel Stocks

Impact investments: a call for (re)orientation

Dirty Banking: Probing the Gap in Sustainable Finance

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