Abstract
Divestment has been demonstrated to be an ineffective tool for diverting capital flows, and within the context of the fossil fuel sector, it amounts to nothing more than greenwashing. Despite the fact that divestment is generally popular—and that fossil fuel divestment is believed to be the most effective divestment campaign attempted—the practice of divestment actually attracts capital to the targeted sector, rather than impeding its flow. The act of divestment necessarily entails simultaneous investment by another party, to buy the asset that is being divested by the seller. This process not only fails to achieve sustainable finance goals, but it can result in new incentives for the buyer to improve the asset being purchased, which could conceivably make the fossil fuel problem worse. Running off assets can be much more effective than divestment, in that the approach develops a plan for removing the offending asset from the market. On its own, though, divestment is clearly a form of greenwashing.
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