Divestering

Divestering (divestment) is the process of disposing of assets, investments, or business units to reduce exposure, reallocate capital, or pursue ethical or policy objectives. It is used by individuals, financial institutions, corporations, and governments. Divestment is distinct from active investing, which aims to acquire assets for growth or income.

Common forms include portfolio divestment, where financial assets are sold; sectoral or geographic divestment, which excludes entire industries or regions; and corporate divestiture, encompassing spin-offs, split-offs, or sale of a subsidiary. Sovereign or policy-driven divestment can also arise from sanctions or budget priorities.

Motivations range from financial considerations, such as risk reduction, liquidity management, and capital reallocation, to ethical, environmental, or social objectives, including climate action, human rights concerns, or alignment with long-term strategic goals. In recent decades, divestment campaigns targeting fossil fuels have gained visibility, alongside broader responsible or impact investing trends.

Process typically involves asset assessment, strategic decision-making, regulatory and fiduciary review, execution of sales (which can occur in one or multiple transactions), and post-divestment monitoring. The speed and method of divestment depend on factors such as market liquidity, asset type, and fiduciary duties.

Impact and debate surround divestment. Proponents argue it reallocates capital toward productive or sustainable activities and can influence corporate behavior; critics contend it may reduce liquidity, distort prices, or cause unintended consequences for employees and communities. As a governance and strategy tool, divestment remains a widely used option in financial and organizational management.