divestments

Divestment is the act of selling off or disposing of assets, investments, or holdings, typically to reduce risk, reallocate capital, or align a portfolio with ethical, social, or policy objectives.

Historically associated with opposition to apartheid in South Africa in the 1980s, divestment has since become a broader tool in campaigns addressing climate change, fossil fuels, tobacco, weapons, and other controversial sectors.

Institutions carry out divestment by selling securities, withdrawing from funds, or applying screening criteria that exclude certain industries. Divestment can be staged gradually or implemented as full disinvestment, and it may be accompanied by public statements of intent.

Common actors include university endowments, pension funds, religious groups, charitable foundations, and sovereign or municipal investment funds. The process typically involves identifying holdings that meet exclusion criteria, evaluating financial and reputational risk, executing trades, and monitoring outcomes.

Impact and debate: Proponents argue divestment can stigmatize targeted industries, shift capital toward sustainable alternatives, and drive governance improvements. Critics question whether divestment reduces risk or emissions, pointing to potential leakage, market effects, or poorer investment performance if decisions are not aligned with fiduciary duties.

Divestment is distinct from shareholder engagement, and some programs combine selling with ongoing dialogue with companies to influence behavior and policies.