This year’s Earth Day (22 April) is themed “Invest in Our Planet.” It is a fitting and timely message, given the numerous ecological problems we all are facing.
It is hard not to sound like a broken record, but it is worth repeating again and again because we are talking about our collective present and future. We all know that the climate crisis is caused by pollutive operations from the continuous burning of fossil fuels.
Fossil fuels include coal, which the Philippines is so dependent on for its energy needs that it partly causes the expensive monthly bills we are all shouldering. It includes oil, which is the same type of fluid that is currently spilling across the waters south of Luzon Island. It includes gas, which the current leadership insists we substitute for coal even though it is a similarly imported, pollutive fuel that would only slow down our just transition toward renewable energy.
Yet the rate of implementing solutions is still way behind the speed at which our climate is changing. A major cause of this is that businesses continue to pour large amounts of finance into fossil fuel industries.
Studies have shown that investing or funding these industries would cause up to trillions of dollars of stranded assets for said institutions. This would in turn inflict huge socioeconomic losses that hinder national development.
On these accounts, it is not a matter of if, but when financing institutions should divest from fossil fuels. The correct answer is years ago.
The longer businesses delay ending the era of fossil fuels, the worse off everyone would be. No business is safe from the impacts of climate change, especially if they still prioritize short-term gains over long-term sustainability. To believe otherwise is nothing short of foolish.
Fossil fuel divestment, or applying pressure on financial institutions to withdraw all forms of financing from dirty energy, is an issue that does not just concern businesses. In fact, all of us are capable of being key players in this movement.
This is where indirect divestment comes into play. As it stands, there are two types of this action.
The usual definition of indirect divestment involves the withdrawal of funds from banks, corporations, and other financial institutions that invest in fossil fuel industries.
An example of this is the commitment of the Catholic Bishops’ Conference of the Philippines to divest all its assets from banks still funding fossil fuels by 2025. This follows its pastoral letter in 2019 that highlights divestment as one of the 13 ecological actions that Filipino Catholics can do to help address the ecological crisis.
A few Philippine banks have also publicly announced their intent to partially divest from coal. Among them are the Bank of the Philippine Islands (by 2033), Security Bank (by 2033), and Rizal Commercial Banking Corporation (by 2031).
It should be noted, however, that the diverse nature of portfolios among companies makes it difficult to easily identify all indirect investments. This partially explains why banks and companies usually limit their divestment policies to direct financing only.
However, there is a clear need to drastically cut all forms of financing to fossil fuels across the value chain if we are serious about addressing the climate crisis. There is also a difference between a public announcement and actually following through with such commitment.
Actions such as a policy environment that enables more investments in more sustainable ventures like renewable energy, monitoring accountability and transparency among divesting institutions, and consistent dialogues and collaboration among stakeholders will be important in the coming years.
The second form of indirect divestment involves the pressure applied by stakeholders who do not have any formal representation in finance institutions, such as shareholders and depositors in banks.
Despite this lack of representation, the potential impacts of businesses that fund fossil fuel operations do not get any less significant. This arguably means that all of us are stakeholders in the activities of financial institutions. And we have the capacity to influence the divestment process, especially with regard to protecting our environmental rights and other human rights.
In this context, even the “little things” that we have been taught by our parents and teachers since we were young become even more important. Habits like reducing energy consumption, conserving food and water, using energy-efficient appliances, and reducing generated waste (including avoiding single-use plastics that are created using fossil fuels) matter in this different type of indirect divestment.
Boycotting products by companies known to be engaged in environmentally-harmful activities, including fossil fuels, also helps amplify pressure on them to finally transition away from said materials.
Not to sound like a broken record again, but divestment, direct or indirect, is not an overnight phenomenon. It takes consistent activity from all stakeholders involved to realize such a massive transformation of our economies and societies. It is difficult, but not impossible.
It does sound hard to imagine a greener, better world when we have been so used to what we have now. Yet if we really want to achieve it, we must invest in our planet.
John Leo is the Deputy Executive Director for Programs and Campaigns of Living Laudato Si’ Philippines and a member of Aksyon Klima Pilipinas and the Youth Advisory Group for Environmental and Climate Justice under the UNDP in Asia and the Pacific. He is a climate and environment journalist since 2016.