Responsible Divestment from Fossil Fuels

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Written by: Luis Scungio

Written by: Sara Fleischer

Published on: 3 March 2026

reading time 5 minutes

For over fifty years, science has warned that fossil fuels are the main driver of the climate crisis, now responsible for nearly 70 per cent(opens in new window) of global greenhouse gas emissions. Yet, the production has continued to rise (opens in new window) even after parties pledged to limit warming to 1.5°C in the 2015 Paris Agreement. But while three decades of UN climate negotiations have failed to stop the industry, the long-avoided imperative to phase-out coal, oil, and gas is finally taking centre stage at the First Conference on Transitioning Away from Fossil Fuels(opens in new window) in Colombia in April 2026.

Justice at the centre of fossil fuel phase out

A rapid phase-out is urgently needed, but the way in which divestment from fossil fuels takes place, the ‘how’ is also of fundamental importance. A just energy transition must ensure that the transition away from fossil fuels is grounded in responsible divestment, putting the voices of people affected at the centre of the process. For too long, profits have flowed to the fossil fuel industry, while environmental damage and livelihood losses have disproportionately affected front-line and historically marginalised communities. Rectifying this imbalance is inseparable from the just transition.

Beyond that, responsible phase-out must confront the vast, deeply embedded infrastructure the industry leaves behind. From open-pit mines and polluting power plants, to drilling rigs, offshore platforms, pumping stations, storage terminals, and pipelines stretching for thousands of kilometres: all of this has to be repurposed or retired.

Responsible divestment from coal, oil and gas projects, therefore, requires the safe decommissioning of infrastructure, adequate restoration of ecosystems, remediation of rights’ violations, and ensuring that affected people are active participants in the divestment process.

The cost of irresponsible exits

Fossil fuel companies are often far from acting responsibly when exiting extraction and power projects. Cases from different countries of the Global South show how they often try to cut ties with extraction sites without paying for the damages incurred or responsibly dismantling polluting infrastructure.

In the Niger Delta, multinational corporations that led the country’s fossil fuel extraction for decades are walking away from a toxic legacy of widespread oil contamination. Shell, for example, is leaving behind polluted land, mangroves, creeks, and the devastated livelihood of millions of people by selling oil assets to new companies with no track record of operational safety and no transparency about their financial capacity to address environmental degradation. A recent SOMO analysis shows how the already worrisome situation in the region is likely to worsen due to a massive unpaid bill for the safe decommissioning of a large network of unsealed wellheads, leaking pipelines, and other malfunctioning infrastructure scattered across the Delta. These abandoned infrastructures are nothing but further ecological and social disasters waiting to happen.

In Colombia, communities in the northern provinces of Cesar have suffered from the effects of human rights abuse, including widespread forced evictions to make space for industrial coal mining by multinationals like Glencore and Drummond. These harms, which in some cases have gone decades without proper remediation, are aggravated by the companies’ plans to discontinue operations without adequate rehabilitation of the area. The prospect of irresponsible divestment from the mining operations also threatens the livelihoods of thousands of workers(opens in new window) who depend on coal-related jobs, with the risk that entire areas that previously depended on the coal economy could turn into ghost towns.

In Chile, the government’s plans to phase-out(opens in new window) coal power were good news for the energy transition. However, a case filed by AIDA and two other organisations alleges(opens in new window) that despite being scheduled for shutdown, a thermoelectric facility in the northern part of the country rapidly burned more than 90,000 tons of coal stored at the plant, affecting a population already saturated with pollution and health risks. In doing so, it sets a dangerous precedent for the country’s energy transition: prioritising the depletion of coal stockpiles, despite closure orders, and placing industry interests above the health and well-being of the communities living near the plant.

Problematic fossil fuel divestment is not confined to the Global South; it is a systemic issue that spans regions and economies across the world. When the government of the Netherlands, for instance, decided to close a gas field in the province of Groningen, Shell and ExxonMobil suddenly stopped paying compensation to families whose homes and livelihoods were destroyed by decades of earthquakes from their gas extraction. The multinationals’ refusal to keep paying compensation is all the more scandalous given the enormous profits they made from nearly 60 years of their business activity in the region. Instead of delivering on the outstanding sums to repair people’s homes and address livelihood losses, the corporations started arbitration cases against the Dutch state over the early closure order.

Setting the standards for responsible divestment

Against this backdrop, we must ensure a just energy transition that delivers rapid phase-out and responsible divestment from fossil fuels all at once. The shift away from fossil fuels cannot reproduce the very energy model it seeks to dismantle. It must break with a paradigm rooted in neo-colonial dynamics and rights’ violations, and implement a new energy paradigm that drastically reduces consumption, delivers equal and universal access to energy while respecting planetary boundaries. There are many ways to reclaim existing wealth for funding the just transition, from making polluters pay and ending fossil fuel subsidies to debt relief and creating a “wealth tax” to ensure remediation and redistribution.

Forests, soil and water contaminated by oil leakages and environmental damage from coal mining must be cleaned up and restored. Fossil power plants must shut down and be dismantled, while wellheads, pipelines and other oil and gas infrastructures must be safely decommissioned. People affected by fossil fuel extraction must be compensated and the damage to their livelihoods restored, and workers facing job losses due to the phase-out must be provided alternative employment opportunities.

To ensure these elements are embedded in the energy transition, SOMO, together with the support of AIDA(opens in new window) and SDN(opens in new window) , has developed the International Principles on Responsible Divestment from Fossil Fuels. These Principles complement existing guidance on responsible exit by providing a people-centred approach to the phase-out. They demand that companies take responsibility for the impacts of the phase-out and ensure that the costs of high-risk and toxic oil, coal and gas assets are not offloaded onto producer countries and communities.