Does Divestment Even Work?

Jul 21, 2016 · 2 min read

Anti-fossil fuel activists frequently point to the divestment campaign that targeted South African Apartheid is often cited as the prime example of the effectiveness of their tactics divestment campaigns by the folks behind the fossil fuel divestment movement.

Bill McKibben, founder of, the organization leading the divestment movement, claimed the divestment campaign against South Africa actually inspired them to launch the divestment effort campaign against fossil fuels.

Although it is insulting that McKibben advances an extremist argument comparing the oil and gas sector, an industry that has lifted billions out of poverty and furthers financial equality worldwide, to something as heinous as apartheid, he still wrote: “Some of us thought that a divestment campaign modeled on the one that helped defeat the apartheid government of South Africa might make sense, as one front in the ongoing fight to slow global warming.”

And their website, proclaimed, ‘The largest and most impactful [divestment campaign] targeted South African Apartheid, which helped break the back of the Apartheid government.”

But did the divestment campaign against South African Apartheid actually work? Not according to research done by economists from ULCA, Berkeley and UC Irvine. Check out this episode of Freakonomics Radio that recently aired on NPR. (The section on South Africa starts at 14:00.)

HOST: It was generally assumed that the divestment campaign hurt the South African economy and hastened the end of apartheid. Was that the lever?

UCLA ECONOMIST IVO WELCH: Unfortunately when we started measuring it, we found that it has no impact whatsoever.

You can read the details in his research paper on the topic entitled, The Effect of Socially Activist Investment Policies on The Financial Markets: Evidence From the South African Boycott. Dr. Welch goes on to explain why fossil fuels divestment is equally silly in this op-ed he wrote for the New York Times.

As Dr. Welch said in his New York Times op-ed, the apartheid regime in South Africa was not ended by divestment. Instead, the clear moral argument eventually — and thankfully — forced the government to the negotiating table.

Thankfully, when it comes to petroleum fuel and petrochemical manufacturing, the moral argument is also winning: Affordable, abundant energy is the lifeblood of the global economy and fossil fuels are necessary to drive the growth that will continue lifting billions out of poverty. Universities, pensions and the public are recognizing that anti-fossil fuel efforts like divestment only work to counter such progress.

It turns out that the divestment advocates know this already, though you wouldn’t know it to hear them talk about their campaign.

For more discussion on divestment, join the Keep It Grounded In Fact Facebook page.


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American Fuel & Petrochemical Manufacturers: our members serve America by manufacturing products for your life every day. #AFPM

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