In the weeks since Putin invaded Ukraine, investors have ditched stakes in Russian oil and gas with unprecedented speed.
The financial sector is finally acting on the calls campaigners have been making for years. Banks, pension funds and investors are unshackling themselves from problematic investments in companies and states complicit in destruction in Ukraine – and they’re doing it fast.
This transformation happened within weeks – and demonstrates that divesting from fossil fuels can be a bold political move that raises the standard for corporate behaviour in those companies.
This was evident in the actions of Russia’s second largest oil company, Lukoil. Days after investors raced to divest from the energy giant, it became the first major Russian company to break ranks with Putin, calling for the “soonest termination of the armed conflict”.
If the financial world can divest this rapidly from companies linked to Russia’s imperial war – with dramatic political consequences – it can also part ways with the other companies fueling the climate fire. For a safe and prosperous future for us all, this must be a reckoning for the financial world.
Fossil Fuel Conflict
This devastating war, and the rush to divest from the Russian companies funding it, is a case study in fossil fuel-funded conflict.
Putin used revenues from oil and gas to build Russian military power in the run-up to the war on Ukraine. Forty percent of Russia’s federal budget comes from oil and gas. Russian oil, gas and mining companies paid the Russian state £39 billion in taxes in 2020. This is just shy of the £41.7 billion Russia spent on its military in 2019.
But this is just one example in a devastating pattern of the fossil fuel economy financing violence – a pattern repeated around the world. Whether it is the execution of Ken Saro Wiwa in the Niger Delta or Saudi Arabia’s war in Yemen, the murders of indigenous environmental protectors in the Amazon or conflict in the Cabo Delgado – fossil fuel economies play an instrumental role in perpetuating violence around the world.
Climate breakdown and war have a cause in common – the fossil fuel economy. Increased temperatures and rainfall from climate change have been found to increase the likelihood and intensity of conflict and violence.
Put simply, the fossil fuel economy and the climate sacrifices it demands pose such a significant risk to life on earth that no investment in it can have any viable moral, economic or political justification.
As we reckon with this war and the measures we can and should take to accelerate its end, we must be unafraid to challenge the inconsistencies in our response to this conflict and other crises.
The conflict in Ukraine and the movement to divest from Russian companies must set a precedent for how we respond to all conflict and human rights violations across the world. Ending all fossil fuel finance would be a good start.