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Comment by noego | Hacker News Reader

The argument made by most economists and Bill Gates is that divestment does not drive down the stock price, unless it is practiced by a overwhelming majority of all investors. The reasoning is that anyone not participating in the divestment scheme will simply bid the share price back up to near the market value.

If divestment did indeed drive down share price, it would succeed in hurting the company. The company would have to issue more shares when raising capital in future. It would also have to issue its employees more shares to remain competitive in compensation.

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Is capital raising relevant? When was the last time a fossil fuel company raised capital? How is that the way to hurt a company?

Also, markets price in these sorts of things. If divestment was a real threat, that would already be factored into the price. It is partly why the P/E ratio of BHP is 13.94, whereas it is 75.56 for Amazon.

Lastly, with a lot of money in index funds (~50%), divestment seems close to impossible. Unless index funds specifically were pegged to non-fossil fuel indexes, they will alway be investing in those companies.

This seems likes the investment version of the plastic straws ban: ineffectual at best.

> Also, markets price in these sorts of things.

Markets price in the expected value of them, but since if divestment works, the impact is driven by the funds-available-for-investment weighted aggregate of public opinion, markets can only price it in if they have advance knowledge of both the content and wealth-distribution of future public opinion. Which they obviously don't.

(Even if they did, all this would be saying is "if divestment works, then it not only works but works retrocausally to reduce the stock price even before the decision to divest occurs." Which, whatever it is, isn't an argument against divestment.) If divestment was a real threat, that would already be factored into the price.

> When was the last time a fossil fuel company raised capital?

cough all the time? Fracking projects, refineries, exploratory initiatives, site/rig expansions... through bonds and equity partnerships.

Capital is their life blood for anything new.

Source: I live in an energy state

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