Divestment From Fossil Fuels: Evidence From Ownership Data

Benjamin Trouvé and Alain Naef ()
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Benjamin Trouvé: IFPEN - IFP Energies nouvelles, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique
Alain Naef: ESSEC Business School

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Abstract: There is a lot of talk about fossil divestment. Is there any action? We built a new database on investor divestment based on ownership data. Instead of focusing on prices, we look at the actual ownership of investors. Our database contains 30 million investor positions in the 312 largest fossil fuel companies. We show that certain religious organizations, universities and public organizations divested from fossil fuel. Looking at all large investors, we find a heterogeneous behavior between short-and long-term divestment. Using a Structural Vector Autoregression (SVAR) and a Vector Error Correction model (VECM) both resulting from behavioral assumptions, we find that commodity price returns are the major drivers of short-term divestment and environmental and climate policy likelihood exhibit a cointegration relationship with long-term divestment. It shows that investors react strongly to fluctuations in the market energy prices in the short term. Only very few investors adjust their fossil fuel holdings in the long term, considering the risk of climate and environmental policy implementation.

Keywords: Divestment; Climate finance; Ownership structure; Stock market (search for similar items in EconPapers)
Date: 2025-01-27
Note: View the original document on HAL open archive server: https://essec.hal.science/hal-04918263v1
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