Voice Through Divestment

Abstract

A common argument against divestment is that it discards voting power and has a small effect on stock prices. We argue that divestment is a statement of disapproval that aligns actions with words for effectiveness. We show that the Go Fossil Free divestment movement is a narrative with impact. Viral divestment pledges depressed the share prices of all high carbon emitters, including those with no divestment. Peak virality coincided with a concurrent rise in the carbon premium and preceded net-zero commitments. The introduction of these commitments effectively recast divestment from a moral statement to a strategic exercise in risk management.

Keywords: Divestment, fossil free, carbon budget, shareholder engagement, responsible investment, climate change, carbon premium, economic narratives, net-zero commitments, social preferences, tweets as data

JEL Classification: D23, K22, G32, G34