You write, “Money taken out of fossil fuels increases the financial risk of fossil fuels for other investors, drawing other investors away from fossil fuels....”
No, that’s not how the market would work. Let’s assume, very charitably, that there’s enough divestment to exert downward pressure on the stock price. It’s undeniable that there’s still a huge amount of investor money that assesses stocks solely on economic grounds. The lower price will produce a lower P/E ratio and make the stock more attractive to those strictly-from-commercial types.
Furthermore, the point the author made (in the article I linked) that I agreed with is that divestment doesn’t reduce the consumption of fossil fuels. Even if the stock price fell, what effect would that have? Management generally seeks to maximize stock price, especially over the short term, but there’s a limit to what can be done. As noted in the article you linked in #1, a big MNC could respond to South African divestment by getting out of South Africa but it’s not plausible to expect BP or Exxon/Mobil to get out of the fossil fuel business. Any fall in the stock price will be something they just have to put up with.
Nor will a fall in the stock price reduce the capital they have for building new pipelines or the like. Money paid for shares already issued goes to the former owner, not to the issuing corporation. I expect that most of those companies are sitting on all the cash they need anyway.
You add, “and when that money is instead invested in green projects it accelerates the development and deployment of those green projects, decreasing the financial risk for green projects, drawing other investors into green projects.” First, it assumes that divested money will go into green projects instead of into other MNC stocks. Many institutional investors would be constrained in where they could invest, and would have to buy McDonald’s or the like rather than backing some guy who wants to build a wind farm. Beyond that, here again the market works differently. An investor who wants to back a green project will pick the one that seems to have the best chance of success. The next such investor will pick the best of the rest. As more investors enter the field, the competition means that the expected returns go down, not up.
You write:
I'd also like to point out that divestment isn't just a tactic, it also comes from a felt ethical sense that investing in fossil fuels is wrong.
. . . .
I'm kind of horrified you would want people to ignore their personal sense of integrity and stop advocating divestment.
Divestment is the right thing to do, regardless of whether it's profitable or not.
I understand that people feel uncomfortable profiting, directly or indirectly, from acts that cause climate change. I wasn’t demanding that people ignore their opinions on that score. I was simply addressing a different point: What is the practical effect of divestment? If the practical effect is limited or nonexistent, then that’s one factor that must be considered in determining what’s the right thing to do.
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