Divestment, Fallstricke einer Nachhaltigkeitsstrategie
Friedrich Thießen
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Friedrich Thießen: Department of Economics, Chemnitz University of Technology
No 52, Chemnitz Economic Papers from Department of Economics, Chemnitz University of Technology
Abstract: Divestment is a subset of sustainability-oriented financial strategies. The intention of divestment is to socially brand corporate fossil fuel producers and users in order to force them to abandon these activities. This paper first examines how affected companies respond to attacks by divestment activists. Then, divestment is examined from the perspective of market economy concepts and from the viewpoint of democracy and the rule of law. It turns out that affected companies try to evade the pressure. Critical assets are shifted to unaffected market segments. Corporate structures are being redesigned to improve sustainability indicators. The structures are no longer the result of adaptation to scarcity, but the result of evasion. Activities shift to national spheres, where they receive less international attention and more appreciation (e.g. jobs). Divestment leads to a departure from the organized capital markets, while private equity grows. Investors of alternative assets profit. In the light of concepts of market economy, divestment is suboptimal. A clear regulatory framework free of arbitrariness does not emerge. This makes it easy for companies to move critical assets to unchallenged market segments. From a rule-of-law perspective, divestment is problematic as a rather diffuse, unregulated activity. It would be better to adapt the legal framework.
Keywords: Divestment; Sustainable Finance; Stranded Assets; Fossil Fuel Industry; Market Economy; Ordoliberalism; Rule of Law; Democracy (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2021-10, Revised 2021-10
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Published in Chemnitz Economic Papers, October 2021, pages 1-47
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https://www.tu-chemnitz.de/wirtschaft/vwl1/RePEc/d ... /CEP052_Thießen.pdf First version, 2021 (application/pdf)
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