Fossil fuel divestment for the climate: will next generations change institutions?

Our institutions must adapt in the face of a disastrous climate crisis, but who will make this happen? This research extends institutional theory and incorporates pro-environmental behavior literature to consider whether and how the interests and motivations of the next generations might shape existing investment institutions. Alongside theoretical discussion and related contributions, a quantitative study is undertaken to address the question: Would and how might the next generations change financial institutions through their investment preferences, and why? Hypotheses are developed in the context of university students considering how they might influence investment institutions towards mainstreaming ethical investment and divesting from fossil fuels. Survey data from a sample of university students is analyzed using a structural equation model, finding that those wanting a career related to climate change mitigation are likely to engage in institutional change. Also, feeling a responsibility to address an issue, such as climate change, motivates change-oriented behaviors. We find that ethical drivers within a learning environment influence students’ interests in investment decisions toward putting pressure on the investment industry to mainstream responsible investment practices and divest from fossil fuels. Overall, we contribute to a deeper understanding of the intergenerational potential for changing institutions.