Support Climate Action while Profiting from Fossil Fuels?
Exposure of how Investment Funds, Government Funds, and Large Foundations that have an active role fighting Climate Change profit from the fossil fuel industry is an invitation to question transparency decision-making in public finance and explore the possibilities for this money if it were instead reinvested to support affordable and clean energy.
Tate Williams from Inside Philanthropy documented that since 2015, a divestment movement grew across universities, faith-based institutions, governments, and more—now totaling $12 trillion in committed assets. While nearly 200 foundations worldwide have committed to divest, many thousands have not, and the largest American foundations with explicit missions to combat climate change have opted not to divest.
Divestment leaders say that since the push to get foundations to divest began around five years ago, they’ve backed away from philanthropies and focused on other, more promising targets such as insurance companies and pension funds.
The problem is not a lack of public support.
Most Americans give priority to developing alternatives to Fossil Fuels. Since 2017, the Pew Research Center survey found that 65% of Americans prioritize developing alternative energy sources, compared with 27% who would emphasize the expanded production of fossil fuel sources.
In 2020 a survey from Pew Research Center shows that 72% of US residents favor Natural Gas over Oil and Coal. Most People people in the surveyed areas say the priority for energy production should be increasing renewable sources.
Banks are major funders of climate change.
BankFwd documents that despite the known risks of climate change to the economy and humanity, many banks are accelerating their fossil fuel funding. Since 2016, the top 35 banks have provided $2.7 trillion to the fossil fuel industry. The largest provider of fossil fuel finance is JPMorgan Chase, followed by Wells Fargo, Citibank, and Bank of America.
Profits are a driving force, even among Charitable Foundations.
As documented by Inside Philanthropy (see sources) Since 2014, the number of foundations signed on to Divest-Invest Philanthropy grew from an initial cohort of 17 to almost 200, with assets totaling $24 billion. These foundations commit over five years to divest from the biggest companies holding fossil fuel reserves and invest 5 percent of their portfolios toward climate solutions.
Tate Williams from Inside Philanthropy explains that 'With some exceptions, like RBF and the U.K.-based Children’s Investment Fund Foundation, signatories are mostly small and medium-sized foundations. Large funders like Ford, Hewlett, Packard, and MacArthur foundations are not divesting, although some have partial screens on coal, for example.'
The principal argument of these large investment pools is that they need to be able to maximize returns on their investments. There are several facts that seem to contradict the myth of reliance on Fossil Fuels as a key mechanism for ROI.
In a 2019 Divest Invest Philanthropy report, 94%, said that their financial performance since taking the pledge has been positively or neutrally affected.
Rockefeller Brothers reports that their returns have outperformed all benchmarks since divesting (as of 2018, they are 98.7 percent fossil-fuel-free, with 14 percent going toward impact investing).
In 2018, renowned investment strategist and environmental philanthropist Jeremy Grantham led an analysis he called “The mythical peril of divesting from fossil fuels,” that found, to his surprise, that if you divested from any single major sector in the S&P 500, it basically did not impact returns.
“It means that if investors take out fossil fuel companies from their portfolios, their starting assumption should not be that you have destroyed the value. Their starting assumption should be, until proven otherwise, that it will have very little effect and is just as likely to be positive,” Grantham writes.
Climate advocacy groups
Environmental justice groups
Local and Federal Government officials and agencies
Renewable energy companies
Money Managers and Financial Advisors
There are some potential areas of work:
Transparency and free access to data related to investments
Providing public access to data where people can see how the companies they shop from, the foundations they support with their charitable giving, or the local government funds, support Fossil Fuels
A movement to Divest from Fossil Fuels and invest in affordable and clean energy, holding members of the movement accountable for driving change
Divest Philanthropy is a movement that started in Jan 2014 and it is reporting great progress
“ More than 1,110 organizations of all kinds have committed to divest from fossil fuels. Collectively, these institutions manage assets of more than $11 trillion.”
This paper: DIVEST INVEST PHILANTHROPY: FIVE YEARS AFTER LAUNCH details many of the findings after 5 years of starting the movement. Research for this paper was supported by Rockefeller Brothers Fund, The Russel Family Foundation, Compton Foundation, Wallace Global Fund, and Divest-Invest. The project was designed to take stock of the progress five years after Divest-Invest launched and to provide lessons learned and guidance for existing participants and to other philanthropic foundations considering joining the Divest-Invest movement.
Evolve Lending Practices that support Fossil Fuel.
Daniel Growald, Peter Gill Case, and Valerie Rockefeller — fifth-generation members of the Rockefeller Family — launched BankFWD, which is a network of powerful individuals and institutions aimed at persuading banks to change their lending practices.
Banks are fueling Climate Change - BankFwd 2020
Major Climate Funders Are Still Invested in Fossil Fuels. Why Is That? - Inside Philanthropy 2019 - Tate Williams
Natural gas viewed more positively than other fossil fuels across 20 global publics - Pew Research Center 2020 - Brian Kennedy, Alison Spencer and Cary Funk
Two-thirds of Americans give priority to developing alternative energy over fossil fuels - Pew Research Center 2017 - Brian Kennedy
Divest Invest Philanthropy - 5 years after launch - Croatan Institute, Divest Invest Network - 2019
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