On Monday, the family whose patriarch made his fortune from Standard Oil will divest from fossil fuels.
According to the New York Times, the $860-million Rockefeller Brothers Fund — the philanthropic organization set up by the heirs of oil baron John D. Rockefeller — intends to join the growing movement of foundations, colleges, local governments, and other organizations to remove coal, oil and natural gas from their invested assets. The announcement is timed to arrive in between the massive climate march that descended on New York City on Sunday, and the United Nations climate summit that will begin in the city on Tuesday.
“We see this as having both a moral and economic dimension,” Steven Rockefeller, one of the fund’s trustees, told the Times. Rockefeller pointed towards once become known as the “carbon bubble” — the massive amount of known-but-as-yet-untapped fossil fuel reserves whose extraction companies and portfolios around the world have already invested in, but which will have to stay in the ground to avoid dangerous levels of climate change.
Stephen Heintz, the president of the Rockefeller Brothers Fund, added that the group has already rid itself of coal and tar sands investments. But unwinding the fund’s remaining ties to fossil fuel will take a while longer. “We’re moving soberly, but with real commitment,” he said.
A report in August from Bloomberg New Energy Finance (BNEF) added up the total valuation of all listed oil and natural gas companies at $4.65 trillion, while coal companies came in at a much lower $233 billion. That makes coal something a low hanging fruit, with oil and gas the considerably tougher nuts to crack. “Fossil fuels are investor favourites for a reason. Few sectors offer the scale, liquidity, growth, and yield of these century-old businesses vital to today’s economy,” BNEF explained.
Another report that just came out from Arabella Advisors — a firm that consults with socially conscious investors and philanthropies — estimates that the combined assets of all the groups that have now pledged to divest from fossil fuels total $50 billion. Individuals who have signed on with the movement account for another $1 billion. It’s a small slice of the total pie of oil, gas, and coal assets. But the momentum is also building: according to the report, the number of institutions committed to divestment doubled from 74 to 180 just since January of this year.
And building cultural awareness and moral pressure is an important first step for the movement on the path to eventually gaining enough leverage to cause the fossil fuel industries real economic pan. “The purpose of divestment is not to directly and immediately to impact the value of the fossil fuel industry,” Ellen Dorsey, executive director of the Wallace Global Fund, a group that’s joined the divestment movement, explained to National Journal. “It is to raise the specter of the financial risks and to compel ethical action, and also to capitalize the solutions.”
Just under half of the $50 billion in divestment commitments come from local governments, while another 38 percent come from colleges, universities, and other educational groups. Philanthropic organizations, faith-based organizations, and individuals make up much of the rest. They include the World Council of Churches which committed to divestment in July; seventeen other foundations with various missions which committed in January; and even Stanford University.
Beyond the organizations and institutions involved in the divestment movement, concern over the carbon bubble and the damage climate change could do to international infrastructure, supply chains, and businesses is also growing among global investors. A statement released last week by 340 global investors worth over $24 trillion explicitly called for international governments to get serious about setting up reliable, ongoing, and economically meaningful carbon pricing, and a coinciding report by many of the same organizers laid out their case in detail.
Sunday’s climate march also served as something of a fulcrum for the divestment movement and the investor movement. The recent spate of announcements, pledges, and reports were timed to cluster around the event and the corresponding U.N. summit, and many of the groups involved will participate in either the march or the summit.
“This is very different. It’s not just policy leaders,” Mindy Lubber, president of Ceres, a non-profit sustainability group that was involved in several of the reports, told USA Today. Lubber added that the number of companies, investors, and finance ministers involved this time is “unprecedented.”
“It’s a snowballing movement,” added Heintz.