Ethical divestment quietly, by regular individuals: mostly useless.
Ethical divestment loudly (publicized), by respected institutions or famous investors can be useful if done correctly.
The utility of divestment comes in its' signaling power. A large, well-respected university divesting signals that the university expects the future value of oil to be less than it is today. The expectation is backed up by putting it's money where it's mouth is (see: http://longbets.org/).
If I'm an unscrupulous investor and see powerful institutions signaling that they believe society will change in some way such that an investment in oil is less valuable, I should probably believe them. They are, after all, powerful institutions for a reason (partially b/c they are good at surviving), and their divestment ensures that those institutions will welcome carbon taxes or other measures that reduce the value of oil.
Lastly, divestment can start to signal social stigma against the industry, making that industry less attractive to skilled talent.
Ethical divestment quietly, by regular individuals: mostly useless.
Ethical divestment loudly (publicized), by respected institutions or famous investors can be useful if done correctly.
The utility of divestment comes in its' signaling power. A large, well-respected university divesting signals that the university expects the future value of oil to be less than it is today. The expectation is backed up by putting it's money where it's mouth is (see: http://longbets.org/).
If I'm an unscrupulous investor and see powerful institutions signaling that they believe society will change in some way such that an investment in oil is less valuable, I should probably believe them. They are, after all, powerful institutions for a reason (partially b/c they are good at surviving), and their divestment ensures that those institutions will welcome carbon taxes or other measures that reduce the value of oil.
Lastly, divestment can start to signal social stigma against the industry, making that industry less attractive to skilled talent.