« The political economy of whale wars | Blog home | The Great Barrier Reef: Are we getting it wrong? »

business learning training articles new learning business training opportunities finance learning training deposit money learning making training art loan learning training deposits make learning your training home good income learning outcome training issue medicine learning training drugs market learning money training trends self learning roof training repairing market learning training online secure skin learning training tools wedding learning training jewellery newspaper learning for training magazine geo learning training places business learning training design Car learning and training Jips production learning training business ladies learning cosmetics training sector sport learning and training fat burn vat learning insurance training price fitness learning training program furniture learning at training home which learning insurance training firms new learning devoloping training technology healthy learning training nutrition dress learning training up company learning training income insurance learning and training life dream learning training home create learning new training business individual learning loan training form cooking learning training ingredients which learning firms training is good choosing learning most training efficient business comment learning on training goods technology learning training business secret learning of training business company learning training redirects credits learning in training business guide learning for training business cheap learning insurance training tips selling learning training abroad protein learning training diets improve learning your training home security learning training importance

Recent announcement by ANU that it has dumped some of its holdings of shares in resource and fossil fuel intensive companies has created a lot of media attention. Even the PM himself stood up to brand this decision as being ‘stupid’. In response, ANU’s VC published a comment, defending his University’s action.

ANUs move is a really a part of a global movement to divest in shares of businesses that are seen as fossil fuel intensive.

While there are significant ethical principles that underpin this divestment drive, to which I am personally strongly sympathetic, it is important to understand the economic/finance workings to assess how effective the divestment might be. There are in general two types of sources of finance for big businesses: debt (i.e. borrowing from the banks, or issuing corporate debt instruments) and equity (i.e. issuing shares). The divestment campaign directly targets the latter, but the resource businesses have been increasingly relying on the former (for some actual numbers refer to PwC’s Mine 2014 publication). That’s not surprising given that debt is cheap in the current economic conditions. Those conditions have already lasted for several years now, and will likely last for several more. There is cheap credit everywhere, and companies like BHP or Exxon do not have any trouble borrowing funds at very low rates.

So, the divestment in shares by few Universities around the world, of which not many in Australia,
is not going to do much harm to the finances of corporations operating in resource and fossil fuel sectors. The whole campaign might provide a warm fuzzy feeling for the students and academics in those Universities who divest, but unfortunately, it is not going to make that much of a difference.

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Enter the code shown below before pressing post