Divesting is the process of selling an asset. It is done for either financial or social goals. Divesting is the opposite of investing. The term is often used in a business context to describe companies or governments that divest some of their holdings by selling them off.
How a goal of carbon neutrality may not actually reduce emissions
Carbon neutrality continues to be a great idea in the fight against climate change, but it’s complicated in practice. As companies are faced with changing sustainability demands from their stakeholders, including investors, customers, and regulatory bodies, those with the highest carbon emissions have the option to divest (just sell those polluting assets!). Emissions are wiped from their carbon neutrality equation and there’s a nice boon to the balance sheet. Easy win for the climate right? But what’s really happening? Who does divestiture actually benefit?
Through divestiture, emissions have simply been transferred to an entity that likely has less demanding stakeholders and less transparency with the world at large. There is no true climate benefit and no actual carbon emissions removed from the atmosphere. As long as we push companies to solve for carbon neutrality, we will see companies optimizing their responsibilities through practices like divestitures. We must reframe the solution from carbon neutrality to finding better ways to do things through actual emissions reductions.
Tri is the founder and President of CarbonBetter. He expanded his energy business beyond logistics to help tackle climate change from the inside. When he’s not helping his team support energy and decarbonization clients, you can find him spending time with his family. Connect with Tri on LinkedIn and subscribe below to be notified about new stories.