A coalition of seventeen foundations with nearly $2 billion in assets has announced that its members will divest their portfolios from fossil-fuel companies and invest instead in the emerging clean energy economy.
In a letter to the philanthropic community, the DivestInvest Philanthropy coalition called on other foundations to realign their portfolios away from investments in coal, gas, and oil companies and to investments in renewables, arguing that mission-based institutions whose constituencies are threatened by the extraction and combustion of fossil fuels should not seek to profit from them. Founding members of the coalition include the Wallace Global Fund and John Merck Fund in Boston; the Educational Foundation of America in Fairfield, Connecticut; the Park Foundation in Ithaca, New York; the Russell Family Foundation in Gig Harbor, Washington; and the Joseph Rowntree Charitable Trust in the United Kingdom.
"Investments cannot undercut the philanthropic mission — serving the public good," the letter states. It goes on to urge foundation leaders to assess the extent of their investments in fossil fuels, consult with their board and staff on an investment strategy aligned with their mission, and commit to a timetable for eliminating fossil fuels from their portfolios. The letter also points out that continuing to invest in the stocks of fossil fuel companies — the values of which are linked to reserves that cannot be burned if the potentially catastrophic effects of climate change are to be avoided — puts endowments at risk of future losses, while the near-term risk in divesting from fossil fuels is negligible.
"While markets have yet to internalize climate risks, members of DivestInvest Philanthropy are guided by science in taking this step," said Ruth Hennig, executive director of the John Merck Fund. "And we are relying on a growing list of financial analyses that refute the conventional wisdom that divesting from fossil fuel stocks leads to greater risk or lower returns."
Ellen Dorsey, executive director of the Wallace Global Fund, whose investment portfolio already is almost completely divested of fossil fuel companies, told the New York Times she hopes a number of larger foundations will commit to the effort in the coming months — a view that is shared by others.
"Given the ongoing failure of governments and business to lead in the epic fight against climate change, we need our most prominent institutions to take a powerful, moral, and practical lead," said Bill McKibben, co-founder of the advocacy group 350.org. "Just as the South African divestment movement helped speed the fall of apartheid, the fossil-free movement is accelerating our independence from fossil fuels."