Rockefeller philanthropy headlines $50B push away from fossil fuel industry

Source: Benjamin Hulac, E&E reporter • Posted: Wednesday, September 24, 2014

The fossil fuel divestment effort gained serious financial clout and recognition yesterday when an assembly of 800 institutions, endowments and wealthy individuals — including the Rockefeller Brothers Fund — pledged in New York City to sell coal, oil and natural gas holdings.

Spearheaded by the “Divest-Invest” philanthropy, the group pledged to sell $50 billion in fossil fuel holdings. Signatories included the Sierra Club Foundation, the Ben & Jerry’s Foundation and the World Council of Churches.

“In the pursuit of short-term profits, companies spend half a trillion dollars a year searching for more fuel,” said retired Anglican Archbishop Desmond Tutu, one of the speakers at yesterday’s announcement, of the fossil fuel industry. “No one should profit from rising temperatures, seas.”

Climate change is already visibly harming the world’s poorest, most vulnerable citizens, Tutu said, by spiking food costs, spreading diseases favorably incubated by warmer climates, and forcing people from their homes with extreme weather.

“[Climate change] has become the human rights challenge of our time,” Tutu said.

In New York City, an estimated 300,000 marchers Sunday demanded policy action in response to the world’s shifting climate — the opening salvo to a week in which climate change will be a main focus at the United Nations and within environmental circles.

“It’s a very important signal to the world,” said Stephen Heintz, president of the Rockefeller Brothers Fund, which boasts a $860 million portfolio, of Sunday’s “People’s Climate March.”

Rolling the divestment announcement into the headline-grabbing throng that clogged up much of Midtown Manhattan and its Upper West Side, Heintz said humans must consume less than 25 percent of known fossil fuel reserves if they want to limit the increase in the Earth’s average temperature to below 2 degrees Celsius — a threshold scientists say is key to avoiding catastrophic climate change.

The march was “a collective expression of love for our planet and a collective demand for action,” Heintz said. “We ought to be thinking of that 25 percent as transition fuel.”

The Rockefeller fund’s investment team is reviewing the philanthropy’s portfolio, he said, and will immediately begin divesting its coal and tar sands-related stocks.

Industry calls Rockfeller move ‘puzzling’

For the Rockfellers to extricate their philanthropy from coal assets — particularly since the family has strong ties to coal-heavy West Virginia, which Jay Rockefeller has represented in the Senate since 1985 — is puzzling, according to Luke Popovich, spokesman for the National Mining Association.

“It does seem to be particularly curious, given the reliance on fossil energy to support jobs and revenue,” Popovich said, calling the move a “symbolic gesture” and questioning the economic impact it would have upon fossil fuel corporations. “I don’t think it’s covered by a political color or patina.”

Roughly two years ago, students at small liberal arts schools like Swarthmore, Hampshire, Pitzer and Unity colleges initiated grass-roots campaigns, pushing their campus administrators to jettison coal, oil and natural gas holdings.

After lobbying for divestment within school endowments, yesterday’s announcement, paired with the Rockfeller name, appears to be the biggest move within the divestment effort to date.

Primarily, these student groups have targeted the “Carbon Underground 200” — the 200 largest publicly traded coal, oil and natural gas companies in the world.

The Carbon 200 index is undeniably top-heavy, with state-run firms in China, India, Russia and other emerging markets registering massive fossil fuel reserves.

Several independent fossil fuel companies rank toward the top — Exxon Mobil Corp. is No. 3, BP is No. 6, Chevron is No. 9 and Total comes in at 10 among oil and gas companies, while BHP Billiton and Peabody Energy rank No. 5 and No. 10, respectively, among coal companies.

But the energy reserves on tap for state-run companies dwarf those owned by private entities.

The No. 1-ranked coal target on the list is Coal India, with 57.7 gigatons’ worth of coal emissions estimated to be underground, according to Fossil Free Indexes, a group that publishes the Carbon Underground list. Shenhua Group, a nationally owned Chinese firm with the second-largest coal reserves, has 31.5 gigatons trapped below the Earth’s crust, according to the list.

Within the oil and gas sector, Russian state-owned Gazprom and Rosneft are the two largest companies, and PetroChina ranks third, possessing 43.5, 12.0 and 8.6 gigatons’ worth of carbon dioxide in their stockpiles.

Given vast fossil fuel investments from developing nations — projects that significantly dictate financial trends within global energy markets — financial markets rapidly absorb fossil fuel divestments, Popovich said.

“I don’t think anyone who understands these markets believes it’s going to significantly fall,” he said of the fossil fuel industry as a whole.

Oil and natural gas prop up retirement funds

Together, the three arms of the fossil fuel industry are one of the world’s largest asset groups, worth about $5 trillion, according to current stock market valuations.

Brian Straessle, a spokesman for the American Petroleum Institute, said fossil fuel stocks have been strong investments after the financial crisis of 2008.

“The oil and natural gas industry is one of the few bright spots in our economic recovery, and millions of retirees and pension holders depend on income from oil and natural gas investments to make ends meet,” Straessle wrote in a statement. “These investments have outperformed most all other investments.”

Actor Mark Ruffalo, another speaker at the announcement and someone who has pressed for a ban on hydraulic fracturing and opposed the Keystone XL oil pipeline, called the financial boycott a “particularly heartening and bold symbolic move,” praising the investment decision to move away from carbon-centric companies as environmentally and economically savvy.

“There are so many market opportunities in the green energy realm,” he said, but criticized the idea that natural gas is a “bridge fuel” between a fossil fuel past and a renewable energy future.

“Methane is not a clean energy,” he said, describing energy industries related to methane and natural gas as a “gangplank” to failed investments.

David Blood, of Generation Investment Management, which focused on long-term sustainable investment, told the audience yesterday that dropping fossil fuel holdings is a “complete no-brainer.”

“There are significant carbon assets in those portfolios, and that’s a risk,” Blood said of average diversified investment portfolios. “Investors are starting to understand that.”