In the run-up to a United Nations summit this week aimed at combating climate change, a small but growing number of multimillion-dollar investors are demanding more aggressive steps to wean countries from fossil-fuel consumption.
The fledgling movement to divest shares tied to fossil fuels, which started at a handful of universities and foundations, has grown to 180 institutions and local governments and 654 individuals, with a total of $50 billion in assets, according to a report to be issued Monday afternoon by an activist group that works with investors.
Foundations that have recently decided to divest from fossil-fuel holdings include the Rockefeller Brothers Fund, a philanthropy with more than $700 million in assets that was created by the grandchildren of the oil magnate John D. Rockefeller Sr.
“John D. Rockefeller, the founder of Standard Oil, moved America out of whale oil and into petroleum,” said Stephen Heintz, president of the Rockefeller Brothers Fund, which currently has about 7% of its assets invested in fossil fuels. “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.”
Separately, almost 350 global institutional investors representing more than $24 trillion in assets have called on governments to put a price on carbon dioxide emissions and phase out subsidies to fossil-fuel industries. The signatories to the carbon-price statement include the California Public Employees' Retirement System, or CalPERS, BlackRock and major investors from Europe, Asia and Australia.
The moves illustrate a potentially important shift in the position that many business interests have taken regarding climate change. Even while the subject remains controversial among political figures, with many Republican officials in the U.S. disputing the existence of man-made climate change, growing numbers of investors and corporations are trying to curtail fossil-fuel consumption and prepare for global warming’s damage.
“Investors are owners of large segments of the global economy as well as custodians of citizens’ savings around the world,” said Achim Steiner, U.N. undersecretary-general and executive director of the U.N. Environment Program. “Having such a critical mass of them demand a transition to the low-carbon and green economy is exactly the signal governments need in order to move to ambitious action quickly.”
The combustion of fossil fuels, such as oil, coal or natural gas, releases carbon dioxide, the main driver of a considerable rise in average global temperatures over the last 150 years. Scientists say the effects of climate change are already being felt in areas including agriculture and public health. To avoid widespread damage, governments must soon cut emissions sharply, most scientists say.
In January, 17 foundations with about $1.8 billion in assets had committed to divest, said Ellen Dorsey, executive director of the Wallace Global Fund and a founder of the group issuing the report, the Global Divest/Invest Coalition. Since then, another 50 foundations with billions more in assets have signed on, she said.
Worldwide, 30 municipalities have chosen to divest including Oakland, Santa Monica and Berkeley. Stanford University decided to shed investments in coal from its $18.7-billion endowment, although it retains other fossil-fuel investments.
The divestment effort is far from an easy sell, however. On Friday, the University of California Regents decided to continue holding fossil-fuel investments.
Harvard and Yale, which have the two largest university endowments in the country, also declined to divest. Still, Yale’s chief investment officer, David Swensen, wrote to money managers about the perils of investing in fossil fuels, asking them to assess “the direct costs of the consequences of climate change on the expected returns” from their investments. Investments “with relatively small greenhouse gas footprints will be advantaged” relative to ones with a larger impact on the climate, he wrote.