Frontiers: Divestment – or sustainable investment?


Universities, religious institutions, and even local governments around the globe are weighing the pros and cons of divestment – a climate change mitigation strategy that focuses on phasing out endowment investments in fossil fuel companies.

Portrait: Matthew FitzmauriceMatthew Fitzmaurice, founder and managing partner of AWJ Capital Partners LLC, explained the opportunities and shortcomings of divestment in his Frontiers in the Environment presentation Nov. 6.

In “Divestment: A Call to Arms vs. Sustainable Investing: A Catalyst for Global Change,” Fitzmaurice argued that divestment, while a laudable goal, may not be realistic for institutions.

“The divestment movement has been an extraordinarily successful call to arms or call to action,” he said. “I don’t think it will be successful in and of itself. In other words, I don’t believe that institutions will divest, or if they do divest they won’t divest because we’ve asked them to, they will divest because it’s in their economic self-interest. On the other hand, sustainable investing is a massive catalyst for change.”

One such sustainable investment strategy is “solutions investing” – which involves investing in environmental solutions, like renewable energy, because they are economically beneficial. Solutions investing will be more effective at phasing out fossil fuel companies, argued Fitzmaurice, providing the example of two German utility companies struggling to stay in business in the face of growing demand for solar power.

“Their stocks are not down because somebody stood up and said we needed to divest,” Fitzmaurice said. “They’re down because folks are starting to find out that their business models are fundamentally flawed.”

Solutions investing was just one part of Fitzmaurice’s broader message that environmental problem-solving needs to benefit the bottom line as well as the planet.

“We do understand the institutional asset owner’s mentality because they are the folks that invest with us,” he said. “That’s on the one hand, and yet on the other hand, we think that there is something really interesting going on in this sustainable investing space and it’s driven by economics and economic self-interest, along with policy, advocacy, philanthropy, etc.”

Environmentalists have long focused on demanding sweeping policy reform and fundraising to solve problems from pollution to deforestation to climate change. But Fitzmaurice believes it’s time for the conversation to look at how sustainability can be a win-win solution for the environment and the economy.

“Clearly we need policy, and clearly we need philanthropy, and clearly we need advocacy,” he said, “but I’m about winning this problem, and I want to win as quickly as we can. I think focusing on economics and investment gets us there the quickest.”

Watch Fitzmaurice’s full presentation online.

John Sisser is a communications assistant with the Institute on the Environment.