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Reasons to consider fossil fuel divestment

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Once you’ve read our information on what divestment is, take a look at why your charity should consider divesting from fossil fuels on this page.

How climate change could impact charities

Charities work to create a better world. But the climate crisis is threatening our future. It is likely to impact many charities.

The United Nations (UN) has described climate change as a risk multiplier. This means that it will make existing challenges for our communities, local and worldwide, even more difficult.

Climate change is likely to have an impact on different areas of our society including:

Read the United Nations' article on the impact of climate change

Charities have always been leading the way in addressing major crises and responding to climate change is no exception.

To create a better future, society must act on climate change now. Fossil fuel divestment offers practical action charities can consider taking to secure a brighter future for our communities.

Charity case study: Pilotlight's fossil fuel divestment journey

In conversation with Ed Mayo, chief executive of Pilotlight

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Reasons for charities to consider divesting from fossil fuels

Addressing social inequality

Climate change will affect all of us but not everyone will be impacted equally. The severity of the impact will depend on intersectional factors such as:

Charities are likely to find it harder to achieve their charitable objectives during a rapidly growing crisis that will create and worsen social inequalities.

Additionally, Russia’s war in Ukraine and the current cost of living crisis remind us that the need to move away from fossil fuels to renewable energy is also necessary. It is not just an environmental issue but one of human rights.

Learn more about intersectionality

Potential operational risk

Climate change is likely to cause immeasurable and irreversible damage to people and our planet if we don’t act now.

Charities could be overwhelmed by the demand for support, affecting our day-to-day work. Charities’ budgets, plans and strategies are likely to struggle due to the unpredictable and increasing crises to follow if we allow climate change to continue.

Responding on the frontlines, charities know the devastating impact these crises have on our communities.

We would like charities to consider whether investing in fossil fuels conflicts with their charitable purposes and whether similar investment returns can be achieved in other ways.

Considering financial risk

There are many suggestions that there is a real financial risk of fossil fuel assets losing value in the medium term.

Recent economic modelling (a way of predicting what will happen in future based on current information) suggests stocks of fossil fuel businesses are currently overvalued.

This is because fossil fuel businesses own assets that may become worthless in future. For example, pipelines and oil platforms that can never be used and oil and gas reserves that can never be burned if we are to stay below 2°C of warming. This is known as stranded assets.

The UN International Energy Agency also predicts global oil demand will significantly fall by 2030. This is because more and more governments are likely to legislate to limit fossil fuel use. Renewable energy is also set to become cheaper and more easily available.

Members of the public are also more likely to make choices that limit fossil fuel consumption.

Read the report that suggests that fossil fuel businesses are currently overvalued

Awareness of reputational risk

Investing in fossil fuels could harm your charity’s reputation making it more difficult to fundraise and recruit staff and volunteers or both. As a result, this could impact the delivery of services.

According to recent ONS data, climate change is the second biggest concern for adults in Great Britain, topped only by the current cost of living. This suggests the high levels of awareness members of the public have about climate change.

Arts charities like the Royal Shakespeare Company have already ended partnerships with fossil fuel businesses in response to criticism from supporters. In the future, other charities may face similar criticism about their investments.

Charities are leaders for change

Charities are a trusted source of information working with local communities across the country.

By divesting from fossil fuels, charities can send a clear message to members of the public that fossil fuels are unsustainable.

This also encourages other charities and organisations to act. These actions aim to weaken the social license (the view by the public that an area of work is socially acceptable) of oil, gas and coal businesses.

Divesting from fossil fuels puts pressure on the government to change law and policy for a more sustainable future.

The decisions we make today about our investments are likely to impact future generations. By divesting from fossil fuels, charities can once again step forward as leaders of change.

Overview of options charities can take to divest from fossil fuels

Take a look at this page first to learn about options your organisation can take to divest from fossil fuels

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