This post is extracted from articles appearing in the online version of the environment section of The Guardian, which has excellent reporting on issues related to sustainability and impact investing.
“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,” said Stephen Heintz of John D Rockefeller as he announced that the heirs to one of America’s most famous dynasties, which was built on oil, were pulling their philanthropic funds out of fossil fuels. Stephen Heintz is the president of the Rockefeller Brothers Fund.
With its roots in US campuses, the campaign to get institutions to pull their financial investments as a way of tackling climate change has seen a total of $50bn divested so far, according to the US Fossil Free Campaign. The University of Oxford says the campaign has grown faster than any other previous divestment movement, including those against apartheid in South Africa and tobacco.
The report from The University of Oxford compares the current fossil fuel divestment campaign, which has attracted 41 institutions since 2010, with those against tobacco, apartheid in South Africa, armaments, gambling (and a word that Morgan Stanley’s editing software would not let me include, I’ll let you guess). It concludes that the direct financial impact of such campaigns on share prices or the ability to raise funds is small but the reputational damage can still have major financial consequences.
US colleges and universities have been in the vanguard. “Here’s my bet: the kids are going to win, and when they do, it’s going to matter,” Bill McKibben, the environmentalist and one of the figureheads of the movement, told Rolling Stone.
The 13 US universities and colleges that have divested so far are mostly relatively small institutions, with the notable exception of Stanford, which in May said it would pull its investments from coal after a long-running student campaign. The university’s total endowment is worth $18.7bn, though it’s not divulging how much of that was in coal.
Elsewhere, the divestment campaign has scored some moral victories, persuading individual churches and groups of churches to pull their funds. In July, the World Council of Churches, which represents over half a billion Christians, said it was pulling its fossil fuel investments.
Bill McKibben, who leads the 350.org divestment campaign which is expanding from the US into Europe this autumn, said: “This divestment campaign is just one front in the climate fight, but of all the actions people can take to bring about structural change, it’s probably the easiest. Severing our ties with the guys digging up the carbon won’t bankrupt them–but it will start to politically bankrupt them, and make their job of dominating the planet’s politics that much harder.”
A report in April backed by climate economist Lord Stern found that at least two-thirds of the fossil fuels listed as assets by the world’s fossil fuel companies would have to remain in the ground if governments were to fulfil their pledge of keeping climate change below the danger limit of 2C. The UN’s Intergovernmental Panel on Climate Change (IPCC), backed by 193 governments, reached a similar conclusion at the end of September.
David Nussbaum, chief executive at WWF-UK, said: “With the IPCC giving us the clearest signal yet of the threats posed by a changing climate, it’s clear that we must consider the risks to businesses and investors posed by investments in fossil fuels. Prudent investors want to be ahead of pack, not following the herd, so they will be preparing for a world where we leave fossil fuels in the ground.”