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Published date: 
2014

This paper on divestment in fossil fuels is authored by David Knight and reflects his personal views and opinions

Divestment is  the selling up of all fossil fuel share holdings.  However it is currently difficult to decide which fuel should have priority for this. Four main reasons have been suggested for divesting from fossil fuels:

1. It is morally right.
2. Fossil fuel shares are volatile, overvalued and risky.
3. Divestment sends a strong message to fossil fuel companies, banks that finance them, governments that subsidise them, and to the public, helping to strip the companies of their enormous and undemocratic political power. 
4. It could reduce fossil fuel production and emissions which would be good for both climate and environment.

This report seeks to evaluate each argument critically and concludes that the moral argument is compelling for individuals and organisations concerned about the negative impacts of fossil fuel use, while the argument that fossil fuel investments are highly overvalued, risky and volatile has the potential to influence many individual investors and fund managers. Although divestment could send a strong message to the fossil fuel companies, it will take more than this to strip them of their immense wealth and political power.

The overall conclusion is that although there is a strong case for divestment, it does not provide a direct mechanism for reducing the negative impact of fossil fuel use. Divestment therefore needs to be accompanied by a raft of additional far-reaching social, economic, legal, and governmental measures if extremely dangerous climate change is to be prevented.

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