Government divesting from fossil fuels

2010-06-30

in Economics, Politics, The environment

One complication related to the BP oil spill is the anticipated harm that cancelling dividends will do to pension funds. It is not ultimately inappropriate for those investors to lose money. They were benefiting before when BP’s lax safety standards generated unjustified profits. Still, there are political difficulties associated with making people bear the burden of even such limited exposure to BP’s new risks.

Right now, there is a significant conflict of interest when government officials have an individual or collective interest in the continued profitability of the fossil fuel sector. Perhaps the appropriate response is a program of divestment, wherein government pension plans and officials scale down and eventually eliminate their holdings of stocks and bonds from fossil fuel companies. That way, they will individually be in a more impartial position from which to make decisions on climate and energy policy.

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{ 1 comment… read it below or add one }

R.K. July 1, 2010 at 1:57 am

It seems that government officials investing produces conflicts of interest regardless of what the rules are.

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