An Event Study Analysis of the Fossil Fuel Divestment Movement


Dordi, T. . (2016). An Event Study Analysis of the Fossil Fuel Divestment Movement. University of Waterloo, School of Environment, Enterprise, and Development. Retrieved from

Thesis Type:

Masters Thesis


In a relatively short time, the fossil-fuel divestment movement has emerged with global momentum, in light of the industry’s influence on carbon induced anthropogenic climate change. Divestment is pursued by investors as a means to either mitigate against the risks of a tightening carbon budget and of stranding assets or as a means of activism to force change on the fossil fuel industry. Literature on the topic to date suggests that divestment may have a direct impact on share prices or indirect impact stigmatizing the fossil fuel industry. Conversely, skeptics argue that divestment may be too small to have a measurable impact. However, there is no empirical study that distinctly measures the impact of divestment and related events on the fossil fuel industry. The objective of this thesis is to objectively measure the impact of divestment events and compare its efficacy relative to similar events. Thus, the purpose of this thesis is two-fold, asking whether divestment events impact the fossil fuel industry and whether divestment events are more impactful than events on the carbon budget and stranded assets. In line with existing literature from the anti-Apartheid divestment movement, this study adopts the event study methodology to measure the impact. The findings indicate that announcements of fossil-fuel divestment, stranded assets, and the carbon budget do negatively impact the share price of fossil fuel firms equally, on and around the event date. These results infer that the financial market perceives divestment and related events to be a material threat to the performance of fossil fuel firms. This thesis contributes to existing literature on fossil-fuel divestment by strengthening the ethical case that divestment can not only ‘do well’ as a financial tool but ‘do good’ as an activism tool as well.


Publisher's Version

Last updated on 06/14/2019