Cost-Benefit Analysis of Fossil Fuel Divestment

Abstract

Anthropogenic climate change is impacting the lives of people around the world; many institutions have, therefore, committed to reducing their greenhouse gas emissions (Cabusch et al). Fossil fuel investment, the act of selling off subsidiary investments, is one tool for targeted environmental impact reduction. Divest Dalhousie (n.d. a) is a student group campaigning for Dalhousie University to divest its endowment fund from the top 200 fossil fuel companies (Top 200); one concern with divestment is the potential negative impact on the fiduciary responsibility to Dalhousie’s investors (Dalhousie Board of Governors, 2014). In this report, we examine the returns on investment for Dalhousie’s endowment fund holdings in the Top 200; we then compare these returns to a hypothetical renewable energy portfolio. Our findings suggest that Dalhousie’s Top 200 investments generated a negative return rate in the 2017/2018 fiscal year. Our hypothetical renewable energy portfolio generated a higher return. We also discuss the implications of diversification and risk, as well as longer timelines for investments.