Divestment or freezing fossil fuel holdings is an important strategy for addressing climate change. The continued burning of fossil fuels will dramatically effect food production, water availability, air pollution, and the emergence and spread of human infectious diseases. Divestment can help bring attention to these risks and the effect they will have on public health and the overall health of the planet.
- What is divestment?
- Are there alternatives to full divestment?
- Why should the health sector divest or freeze fossil fuel holdings?
- Will divesting or freezing fossil fuels investments damage returns?
- Who’s demonstrated climate leadership by divesting or freezing their fossil fuel holdings?
- What’s the health sector’s experience with divestment?
Divestment is the process of selling stock holdings or investment funds to demonstrate moral or ethical objections to a specific practice or behavior. One of the best-known and most successful examples is the divestment movement that transformed South Africa’s system of apartheid.
In the case of fossil fuels, divestment means selling stock holdings or investment funds that are invested in fossil fuels like gas, oil, and coal. The Carbon Tracker 200 is a list of the top 200 publicly traded companies with the largest reserve of fossil fuels that are being focused on for divestment.
Yes. An alternative to full divestment is freezing future fossil fuel investments. For example, Gundersen Health, based in La Crosse, WI announced on September 22, 2014 that it is freezing future fossil fuel investments. Another option is divesting or freezing holdings in a specific type of fossil fuel like coal. Hesta Australia, a health care industry retirement fund worth $26 billion, announced on September 15, 2014 that it is divesting from coal.
The health care sector is a massive energy consumer. Its use of advanced medical technology and the 24/7 nature of hospitals make them the second most intensive user of energy in the economy.
The climate crisis is intimately linked to a plethora of negative health outcomes such as heat stress, food insecurity, increased asthma and respiratory diseases, the spread of mosquito borne diseases like Dengue Fever and malaria and the spread of water borne diseases during times of flooding. The World Health Organization has called climate change the greatest public health threat of the 21st century.
For institutions whose mission is to protect and improve the health of people and communities, it is particularly important to align investments to promote improved health outcomes.
As governments take action to reduce carbon emissions, renewable energy is becoming more competitive than fossil fuels. For example, today in the United States wind power is cheaper than coal. Additionally, as public awareness increases about the perils of climate change, the market value of fossil fuel investments is likely to sharply decline. The World Bank, US AID and European financial institutions have all made clear statements that they will no longer fund coal projects and are evaluating other fossil fuel investments with a broader economic lens that includes environmental and health “externalities” related to fossil fuel energy generation.
As part of a diversified portfolio, renewables and alternative energy may prove to be stronger long-term investment than coal and other fossil fuels.
Gundersen Health and Hesta Australia now join the British Medical Association, and over 180 universities, foundations, religious institutions, and cities that have announced their intention to divest or freeze their fossil fuel investments in order to address climate change.
On September 22, 2014, fifty foundations – including the $860 million Rockefeller Brothers Fund – announced it will sell off their fossil fuel assets. In all, the groups have pledged to divest assets worth more than $50 billion from portfolios and more than $1 billion from individuals.
In the largest divestment in the academic sector, Stanford University pledged in May 2014 that its $18.7 billion endowment would no longer be used to invest in coal.
In the 1990s, hospitals played a key leadership role in the tobacco control movement. Hospitals educated the public about the dangers of smoking, worked with health organizations and government agencies on policy initiatives, and in some cases, divested their tobacco holdings.
Hospitals and health organizations that divested from tobacco included: Kaiser Permanente, Yale-New Haven Hospital, Catholic Healthcare West (now Dignity Health), Johns Hopkins School of Medicine, Sloan Kettering Medical Center, New England Deaconess Hospital, Robert Wood Johnson Foundation, the World Health Organization, the American Medical Association, and the Henry J Kaiser Family Foundation.
“Certainly it is a paradox for any school of public health, medical school or hospital to invest in tobacco,” stated Dr. Michael Barry of Yale University School of Medicine in a New England Journal of Medicine article. “As citizens and health providers…we have an imperative to place social, economic and political pressure on an industry that has a prodigious impact on health…” The same can be said for fossil fuels.
Just as the health sector played an important leadership role in the anti-tobacco movement, the health sector has a critical role to play in addressing climate change. Divesting or freezing fossil fuels is a powerful action that demonstrates important climate leadership and should be pursued by every hospital.