In the face of increasing public awareness of climate change’s causes, the threat posed to financial markets is twofold: to public companies susceptible to an increasingly environmentally aware investing community, and to shareholders whose portfolios could see diminishing returns for investments in companies with carbon-intensive operations.

 

Divestment from the fossil fuels industry has been building momentum in recent years. According to 350.org's campaign Fossil Free, faith-based organizations, philanthropic foundations, governments, educational institutions, and pension funds make up the top five divesting institutions in terms of funds withdrawn.[1] These actors have led the way ​in mainstreaming the notion that a portfolio's integrity is just as important as its returns.

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As a result, the market capitalization of firms that significantly contribute to climate change stands to see steady decline in growth in the upcoming decades, as individual stakeholders and various funds withdraw assets, and—perhaps just as influential—the latest generation of investors makes it a point of principle to avoid irresponsible investments.

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