Foundations Lead Dumping $50 Billion In Fossil Fuel Investments

September 22, 2014       The NonProfit Times      

The Rockefeller Brothers Fund (RBF), spawned from the wealth of John D. Rockefeller, co-founder of Standard Oil Co., is leading 800 global investors, 67 of which are foundations, in divesting approximately $50 billion in fossil fuel investments.

The 74-year-old private charitable foundation made the announcement today, on the heels of the People’s Climate March in New York City and ahead of the United Nations climate change summit this week. Some 300,000 people converged on Manhattan yesterday for the march.

More than 800 global investors are now committed to divest their holdings in fossil fuels, according to the Divest-Investment movement, which counts an additional 50 new foundations added to 17 that pledged in January. Together, the institutions hold more than $50 billion in total assets. Signers of the pledge aim to divest from fossil fuels over five years through a variety of approaches.

“John D. Rockefeller, the founder of Standard Oil, moved America out of whale oil and into petroleum,” said Stephen Heintz, president of RBF. “We are quite convinced that if he were alive today, as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy,” he said.

RBF reported total assets valued at $860 million as of July 31, with 41 percent classified in global equities and 19 percent in private capital – its two largest allocations.

“Given the RBF’s deep commitment to combating climate change, the fund is now committing to a two-step process to address its desire to divest from investments in fossil fuels. Our immediate focus will be on coal and tar sands, two of the most intensive sources of carbon emissions. We are working to eliminate the fund’s exposure to these energy sources as quickly as possible,” RBF officials said via a statement. “Given the structure of some commingled investment funds and investments in highly diversified energy companies, we recognize there may continue to be minimal investments in our portfolio in those energy sectors, but we are committed to reducing our exposure to coal and tar sands to less than 1 percent of the total portfolio by the end of 2014.”

The divestment will be accomplished through a careful process of “evaluating our exposure and a phased approach that proceeds as quickly as is prudent.” The organization will adhere to the mandate of its board that assets be invested with the goal of achieving financial returns that will enable the foundation to “meets its annual philanthropic obligations while maintaining the purchasing power of its endowment.”

RBF said it’s been working to better align endowed assets with its mission since 2010, when the board approved a commitment of up to 10 percent of the endowment to investments that are consistent with its sustainable development program goals. Initial priorities for this pool are focused on support for clean energy technologies and other business strategies that advance energy efficiency, decrease dependence on fossil fuels and mitigate the effects of climate change.

The foundation also will seek investment opportunities to align with its other program goals “in the fields of democratic practice and peacebuilding, and in the fund’s ‘pivotal places’ – specific geographic areas the fund considers to be of exceptional regional or global significance.” The percentage of mission-aligned investments targeted to clean energy development in the coming years are expected to grow, the organization said, as “we actively seek solid investments that will advance both our program and long-term financial goals.”

RBF’s announcement came a week after officials at the California Public Employees’ Retirement System (CalPERS) announced the elimination of its hedge fund program as part of an ongoing effort to reduce complexity and costs in its investment program. CalPERS will exit 24 hedge funs and six hedge fund-of-funds, valued at approximately $4 billion. It is the largest pension fund in the country, with assets of about $300 billion.