Market reaction to fossil fuel divestment announcements: Evidence from the United States

Abstract

Fossil fuel divestment movements have gained momentum since 2011, aimed at ending fossil fuel use and a move toward a cleaner, affordable, and sustainable energy system, for business and society. The present study investigates the direct impact of fossil fuel divestment announcements on stock prices of firms listed on the United States' stock exchanges. Using an event study and guided by the United Nation's sustainable development goals (SDGs), we test the effects of 116 divestments announcements between 2014 and 2019 on 51 publicly traded fossil fuel companies. Our results suggest that there is a negative effect of these announcements on fossil fuel firm stock prices. Also, we find that the type of fossil fuel firm (coal or oil and gas), the type of divestment (partial, coal only, or full), the timing of the announcement, and the size of the divesting investor have some explanatory power in relation to the (cumulative) abnormal returns following the divestment announcements. While the negative impact on stock prices is not surprising, the reaction from the divested firms after such large divestitures is not consistent with

Achieving transformational change through the consilience of behavioral science and radical alternatives

“…There is ample evidence that divesting from fossil fuels does not increase the financial risk of the organizations that do so (Trinks et al 2018;Bassen et al 2021;Plantinga and Scholtens 2021). However, there is mixed evidence on whether divestments inflict significant economic harm on fossil fuel companies (Dordi and Weber 2019;Hansen and Pollin 2022;Zori et al 2022). This disagreement could suggest that not enough organizations have divested from fossil fuels to have a significant impact, meaning that designing behavioral interventions based on research about organizational leaders' divestment decisions could be particularly helpful.…”

Physicochemical Characterization and Butanol Impact on Canola and Waste Cooking Oil Biodiesels: A Comparative Analysis with Binary Biodiesel Blends

“…In recent years, the interest in alternative and renewable energy sources has surged due to the escalating global population, the increasing energy demand, the dwindling reserves of fossil fuels, and the adverse effects of these fuels on human health and the environment, primarily through the rise in carbon dioxide levels in the atmosphere from combustion (Vaka et al, 2020;Zori et al, 2022). When examining Turkey's energy situation, it is observed that the country relies on external sources for approximately 70% of its total energy and is highly dependent on oil, accounting for about 90%.…”