, 8 tweets, 2 min read Read on Twitter
Thread. I also think it's *really* important to distinguish the types of divestment here -- equity, credit, and customer.

I think there's a decent case that equity divestment has very little direct impact, but the latter two are a whole different matter.
If NiceFunds LLC divests its equity stake in BadCo Inc. then BadFunds LLC can just buy it at below-market rates and outperform.

I don't really disagree with that but it depends on the fact that the equity market is broad, deep and diverse.
The credit market isn't like that. If NiceBank Ltd. says it won't lend to BadCo Inc.'s new project, BadCo has a problem.

There's only a few dozen possible lenders out there, and unlike equity investors they're conservative and focused on the downside.
Most major projects -- say a fossil-fuel mine or generation plant -- will have a loan syndicate of up to a dozen bankers.

If people start dropping off that list, those who remain start asking if they're making a mistake.
Even if they're convinced it's a great project, they want the chance to sell out in five years or so to another lender. If other creditors are backing out you start to get worried that you won't be able to do this and will end up stuck for ~30 years.
Similarly, a lot of insurers are backing away from writing insurance on coal investments, which means the dwindling pool that remain can demand higher premiums. Supply and demand!
We're even starting to see this with some suppliers and contractors, too.

All of these go to raise the cost of capital on fossil fuel investments. Given the way they're being undercut by renewables prices now, that's a serious problem.
And to go back to @CarbonBubble original point, the equity divestment plays a role here as it damages social license to operate.

Essentially it's the gateway drug to the far more damaging credit and customer divestment.
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