While controlling the COVID-19 pandemic remains the highest global priority, those concerned with public health have not lost sight of how reconstruction in the wake of the pandemic could either affirm the importance of planetary health or further entrench unsustainable industries. Healthcare institutions must rise to this opportunity by divesting their endowments from fossil fuel corporations.
The fossil fuel divestment movement has surged to 1,195 organizations in 2020 from 440 organizations in 2015. These organizations, including sovereign wealth funds, universities and philanthropic foundations, have divested more than $14 trillion USD from fossil fuels. The list of institutions committed to divestment continues to grow even as the pandemic unfolds – in the past month, both Guelph University and Oxford University have committed to fossil fuel divestment.
The case for divestment
Many healthcare institutions have substantial endowments, some in excess of $1 billion CAD, and there is a strong moral case for divesting these funds from fossil fuels. With climate change the greatest long-term threat to health, a commitment to divest from fossil fuels aligns with hospitals’ missions to improve health. Furthermore, a hospital that divests sends a powerful message to the community that climate change is a dire health issue demanding bold, collective action. Conversely, a hospital that chooses to continue profiting from fossil fuels may be considered complicit in the operation of an industry that has orchestrated decades-long misinformation campaigns serving to delay climate action and endanger public health.
Some individuals – in particular the foundation trustees responsible for investment decisions – may be sympathetic to the moral arguments for divestment but may nonetheless feel bound not to divest out of adherence to fiduciary duty and doubts about the financial performance of a fossil-fuel-free investment portfolio.
Yet, concerns about the viability of fossil fuel-free portfolios have long been questioned and are increasingly untenable. Catalyzed by an OPEC price war and oil demand that has slumped to a 25-year low, global turmoil has enveloped the fossil fuel industry. This volatility has put hundreds of U.S. shale gas producers at risk of near-term bankruptcy. Shell, an oil supermajor and one of the leading natural gas producers, is cutting shareholder dividends for the first time since 1940. Explaining the rationale for the cuts, Jessica Uhl, Shell chief executive officer, publicly stated that the company faces “major demand destruction” they “don’t even know will come back.” On May 11, the $1.1 billion USD Rockefeller Brothers Fund, managed by the heirs of the billionaire founder of Standard Oil, announced that its investment portfolio has outstripped industry averages, despite its decision to divest from fossil fuels five years ago. Valerie Rockefeller, chair of the fund’s board of trustees, said: “Oil is obviously a definitional part of my family’s past. But it has no place in our future.”
Barriers to divestment
Fossil fuel divestment is not without its detractors. Some argue that shareholder activism is more effective than divestment in changing corporate behaviour. Unfortunately, decades of inaction on climate change mean that the energy transition needed to limit warming to 1.5C or even 2C will require rapid, far-reaching and unprecedented changes to all aspects of society. We are at a point where proposals for action that meet the scale of the problem include nationalizing the fossil fuel industry to implement a managed decline. Given the fossil fuel industry’s legacy of refusing to meaningfully invest in decarbonization, it does not appear likely that the transformative change necessary to adequately preserve health will be realized within the bounds of a shareholder meeting.
Others argue that divestment campaigns needlessly politicize healthcare institutions and the health professionals advocating for divestment. But if fossil fuel divestment is political, so is remaining invested in fossil fuel corporations. There is historical precedent for the health sector to organize and campaign to delegitimize a product as well – one needs to look no further than the tobacco industry. More recently, we have seen increasing collective action by health professionals in response to the climate crisis with some arguing that tactics as bold as civil disobedience belong in health professionals’ advocacy toolkits.
The time is now
Despite the compelling arguments for fossil fuel divestment, only one of the 1,195 institutions that have committed to divest from fossil fuels is a healthcare institution. Health organizations like the British Medical Association and the Canadian Medical Association have divested from fossil fuels but they lack the highly visible, community-anchored physical infrastructure of healthcare institutions, making the institutions an important site of fossil fuel divestment in their own right.
The health sector has been lionized in the midst of this pandemic, privileged by society with power and responsibility for providing leadership on matters of health. The health sector should use its voice to take no less strong a stand on the mounting health crisis that is climate change.
It’s time that health professionals organize to demand that their hospitals divest from fossil fuels to reinvest in a healthy and sustainable future for all. The health of the planet and all that depend on it can wait no longer.