Philanthropies Are Divesting From Fossil Fuels—But Does It Matter?

The movement to divest financial holdings in oil, gas, and coal companies is growing. Turning up the heat on the industry, however, won’t be easy or fast.

View of the Syncrude oil sands extraction facility near the town of Fort McMurray in Alberta Province, Canada on October 25, 2009. Greenpeace is calling for an end to oil sands mining in the region due to their greenhouse gas emissions and have recently staged sit-ins which briefly halted production at several mines. At an estimated 175 billion barrels, Alberta's oil sands are the second largest oil reserve in the world behind Saudi Arabia, but they were neglected for years, except by local companies, because of high extraction costs. Since 2000, skyrocketing crude oil prices and improved extraction methods have made exploitation more economical, and have lured several multinational oil companies to mine the sands.  
National Journal
Ben Geman
Add to Briefcase
See more stories about...
Ben Geman
Sept. 21, 2014, 5:30 p.m.

Fifty phil­an­throp­ies are go­ing pub­lic with plans to dump their shares in pet­ro­leum and coal com­pan­ies, pledges that ar­rive shortly be­fore Tues­day’s big United Na­tions cli­mate-change sum­mit in New York.

Ad­voc­ates say pledges from found­a­tions that jointly con­trol sev­er­al bil­lion dol­lars in as­sets, in­clud­ing the $860 mil­lion Rock­e­feller Broth­ers Fund, show mo­mentum for the fossil-fuel di­vest­ment move­ment.

Those plans, and new pledges from many wealthy in­di­vidu­als, are tal­lied in a new re­port that rep­res­ents the most de­tailed sur­vey to date of the di­vest­ment plans of vari­ous uni­versit­ies, churches, phil­an­throp­ies, cit­ies, and oth­er en­tit­ies.

Ac­cord­ing to the re­port from the um­brella Di­vest-In­vest co­ali­tion, 180 in­sti­tu­tions and loc­al gov­ern­ments and 654 in­di­vidu­als rep­res­ent­ing $50 bil­lion in as­sets have made di­vest­ment pledges as of mid-Septem­ber.

“Since Janu­ary 2014, the num­ber of com­mit­ments by cam­puses, churches, cit­ies, states, hos­pit­als, pen­sion funds, and oth­er in­sti­tu­tions—both in the United States and abroad—have more than doubled, from 74 to 180,” states the re­port, which was writ­ten by Ar­a­bella Ad­visors, a com­pany that works with found­a­tions and in­di­vidu­al in­vestors.

Nearly half of the $50 bil­lion in fin­an­cial as­sets un­der man­age­ment that are sub­ject to di­vest­ment com­mit­ments are held by loc­al gov­ern­ments, while col­leges and uni­versit­ies ac­count for 38 per­cent, the re­port states.

Phil­an­throp­ies are now 8 per­cent. The 50 found­a­tions an­noun­cing di­vest­ment plans Monday, in­clud­ing the V. Kann Rasmussen Found­a­tion and the Edu­ca­tion­al Found­a­tion of Amer­ica, jointly con­trol $2.4 bil­lion in as­sets, ac­cord­ing to the re­port, adding to found­a­tions con­trolling $1.8 bil­lion in as­sets that an­nounced di­vest­ment pledges in Janu­ary.

El­len Dorsey, ex­ec­ut­ive dir­ect­or of the Wal­lace Glob­al Fund, said in an in­ter­view Sat­urday that the new com­mit­ments from found­a­tions and in­di­vidu­al in­vestors show a turn­ing point for the di­vest­ment move­ment that began just a few years ago.

“It marks the very rap­id growth of the move­ment in a very short peri­od of time, and its move in­to the main­stream, with main­stream and power­ful thought lead­ers with­in the phil­an­thropy, health, and faith com­munit­ies,” said Dorsey, whose found­a­tion provides grants to sev­er­al groups in­volved in the di­vest­ment move­ment, in­clud­ing Bill McK­ib­ben’s She has played a key role in or­gan­iz­ing phil­an­throp­ies to di­vest.

The an­nounce­ments are part of a slew of cli­mate-re­lated events ahead of Tues­day’s United Na­tions cli­mate-change sum­mit in New York City, and they ar­rive on the heels of a ma­jor cli­mate-change march in Man­hat­tan that or­gan­izers say drew more than 300,000 people.

Ad­voc­ates say di­vest­ment can be an im­port­ant tool against cli­mate change, ar­guing that bey­ond the fin­an­cial ef­fect, it can sap the polit­ic­al in­flu­ence of the in­dustry by build­ing a move­ment that openly de­clares the hold­ings in car­bon-heavy in­dus­tries un­ac­cept­able. Di­vest­ment act­iv­ists say that the re­sources are bet­ter channeled in­to clean-en­ergy in­vest­ments.

They also want to make in­vest­ments in oil and coal com­pan­ies risky.

Act­iv­ists ar­gue that if the cli­mate move­ment suc­ceeds in push­ing gov­ern­ments to im­ple­ment strict con­trols on car­bon di­ox­ide emis­sions, in­dustry cap­it­al spent on oil-sands de­vel­op­ment, ex­pens­ive deep­wa­ter pro­jects, and oth­er fossil-fuel re­serves will be­come “stran­ded as­sets.”

But while the scale of di­vest­ment com­mit­ments is grow­ing, it’s still small in com­par­is­on with the scope of the fossil-fuel in­dustry.

And the move­ment, which has been very act­ive on a slew of col­lege cam­puses, has faced some re­cent set­backs as Yale Uni­versity and the Uni­versity of Cali­for­nia de­clined act­iv­ists’ calls to dump their en­dow­ments’ hold­ings.

A re­cent re­port from the re­search and ana­lys­is com­pany Bloomberg New En­ergy Fin­ance notes that nearly 1,500 ex­change-lis­ted oil-and-gas com­pan­ies are to­geth­er val­ued at $4.65 tril­lion, al­though the coal in­dustry’s valu­ation is far smal­ler. “Fossil fuels are in­vestor fa­vor­ites for a reas­on. Few sec­tors of­fer the scale, li­quid­ity, growth, and yield of these cen­tury-old busi­nesses vi­tal to today’s eco­nomy,” BNEF said.

In ad­di­tion, oil and gas com­pan­ies have ample fin­an­cial re­sources and ac­cess to cap­it­al mar­kets to fund pro­jects, and di­vest­ment crit­ics point out that when one party dumps a stock, an­oth­er buys it.

In a May New York Times op-ed, Uni­versity of Cali­for­nia (Los Angeles) fin­ance pro­fess­or Ivo Welch offered sev­er­al reas­ons why he be­lieves the di­vest­ment move­ment will be in­ef­fect­ive at spur­ring changes in cor­por­ate or na­tion­al policies. Us­ing Stan­ford Uni­versity’s re­cent de­cision to dump hold­ings in coal com­pan­ies as a jump­ing-off point, he writes: “Glob­al pub­lic equity mar­kets con­sti­tute about $60 tril­lion of mar­ket cap­it­al­iz­a­tion. With about $19 bil­lion, Stan­ford’s en­dow­ment rep­res­ents only about five-hun­dredths of 1 per­cent of the world’s cap­it­al­iz­a­tion. Even if Stan­ford di­vested it­self fully of all its stocks, both fossil and non­fossil, it would prob­ably take the mar­ket less than an hour to ab­sorb the shares.”

But Dorsey said di­vest­ment ad­voc­ates are well aware that they’re not po­si­tioned to deal a fin­an­cial knock­out blow to the massive fossil-fuel in­dustry any time soon.

“The pur­pose of di­vest­ment is not to dir­ectly and im­me­di­ately im­pact the value of the fossil-fuel in­dustry. It is to raise the specter of the fin­an­cial risks and to com­pel eth­ic­al ac­tion, and also to cap­it­al­ize the solu­tions,” she said.

Fossil-fuel di­vest­ment act­iv­ists mod­el their cam­paign off the anti-apartheid di­vest­ment cam­paigns that pres­sured the South Afric­an gov­ern­ment in the 1970s and 1980s, as well as the anti-to­bacco move­ment.

Arch­bish­op Des­mond Tutu, the No­bel Prize-win­ning anti-apartheid lead­er, will join by video a Monday press con­fer­ence on the new pledges. Dorsey, act­or and act­iv­ist Mark Ruf­falo, Rock­e­feller Broth­ers Fund Pres­id­ent Steph­en Heintz, and oth­ers will take part in the rol­lout in New York City.

What We're Following See More »
Mueller Investigating Tony Podesta and His Firm
21 hours ago

"Tony Podesta and the Podesta Group are now the subjects of a federal investigation being led by Special Counsel Robert Mueller, three sources with knowledge of the matter told NBC News. The probe of Podesta and his Democratic-leaning lobbying firm grew out of Mueller's inquiry into the finances of former Trump campaign chairman Paul Manafort."

House Intel Will Interview Trump Digital Director
23 hours ago

"President Donald Trump’s campaign digital director, Brad Parscale, will be interviewed Tuesday by the House Intelligence Committee, his first appearance before any of the panels examining the issue of Russian interference in the 2016 election. Mr. Parscale confirmed his scheduled appearance. The Senate committees also probing interference haven’t scheduled time with Mr. Parscale, he said, declining to comment further."

Trump Promises No Changes to 401(k) Plan
23 hours ago
Senate Intel Postpones Testimony by Cohen
3 days ago
Senate Rejects Effort to Nix SALT Tax Changes
4 days ago

"Senate Democrats on Thursday failed in their first attempt to save the state and local tax deduction, which helps many residents of California and other high-cost states reduce their federal income tax bills. The Republican-controlled Senate voted 52-47 to reject an amendment that would have prevented the Senate from considering any bill that repeals or limits the deduction as part of a planned tax overhaul."


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.