Divestment refers to selling or otherwise disposing of investments in specific companies, industries, or sectors, often as a deliberate action to reduce or eliminate financial holdings considered ethically or socially undesirable. In the context of environmental, social, and governance (ESG) considerations, divestment is often used by investors or organisations to remove investments from companies associated with activities deemed harmful to the environment, society, or human rights.
That can include divestment from fossil fuel companies, weapons manufacturers, tobacco producers, and other sectors or industries with negative social or environmental impacts. Divestment is typically driven by ethical, social, or sustainability concerns and is seen as a way to align investment portfolios with specific values or principles.
Divestment can also be used as activism to pressure companies to change their practices or policies. It is important to note that divestment can have financial implications, as it involves selling or divesting from certain investments and may have implications for risk management and financial performance.