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Divesting in Fossil Fuels Shapes the Financial Market

We posted back in January about the first major event on climate change for investors and business at a meeting called “The 2016 Investor Summit on Climate Risk” held at the United Nations in NYC. The summit hosted some 500 global investors who, in total, represented an estimated $22tn in assets and represented a new direction in divesting in fossil fuels.

Since that meeting there has been a surge of information and news reports about investment strategies to divest in fossil fuels because of their direct, negative impact on the environment and on climate change. The financial community has seen the value of fossil fuels plummet offering weaker returns. Alternately companies have come to realize that investing in sustainable, low carbon assets are seeing stronger returns. According to Michael Liebriech, the chairman of Bloomberg New Energy Finance, two fossil fuels have dramatically gone down in value: coal and gas. A recent  Citibank report predicted that oil was likely to “bottom out” in 2016. Vitol Oil Holding Group, a global energy and commodity trading company, also said that crude oil is expected to hold at  $60 a barrel for at least 10 years.

Others are stressing the importance of investing in clean energy instead of pouring dollars into fossil fuels. But there are challenges with any new investment strategy. The American Council on Renewable Energy (ACORE) has illustrated that clean energy investments pose many challenges because the rates of different types of renewables have fluctuated.

High profile companies getting involved in clean energy investments include Walmart, Ikea, Apple and Google. Groups who have long called for Wall Street to seriously invest in  renewable forms of energy include Greenpeace, the World Resources InstituteWorld Wildlife Fund and Rocky Mountain InstituteCDPWe Mean Business and the RE100

 
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