Stephen Heintz, left, with Valerie Rockefeller Wayne and Steven Rockefeller on Tuesday.
Credit
Hiroko Masuike/The New York Times
Rockefellers, Heirs to an Oil Fortune, Will Divest Charity of Fossil Fuels
New York Times
John D. Rockefeller built a vast fortune on oil. Now his heirs are abandoning fossil fuels.
The
family whose legendary wealth flowed from Standard Oil is planning to
announce on Monday that its $860 million philanthropic organization, the
Rockefeller Brothers Fund, is joining the divestment movement that began a couple years ago on college campuses.
The announcement, timed to precede Tuesday’s opening of the United Nations climate change summit meeting in New York City, is part of a broader and accelerating initiative.
In
recent years, 180 institutions — including philanthropies, religious
organizations, pension funds and local governments — as well as hundreds
of wealthy individual investors have pledged to sell assets tied to
fossil fuel companies from their portfolios and to invest in cleaner
alternatives. In all, the groups have pledged to divest assets worth
more than $50 billion from portfolios, and the individuals more than $1
billion, according to Arabella Advisors, a firm that consults with philanthropists and investors to use their resources to achieve social goals.
The
people who are selling shares of energy stocks are well aware that
their actions are unlikely to have an immediate impact on the companies,
given their enormous market capitalizations and cash flow.
Even
so, some say they are taking action to align their assets with their
environmental principles. Others want to shame companies that they
believe are recklessly contributing to a warming planet. Still others
say that the fight to limit climate change will lead to new regulations and disruptive new technologies that will make these companies an increasingly risky investment.
Ultimately,
the activist investors say, their actions, like those of the
anti-apartheid divestment fights of the 1980s, could help spur
international debate, while the shift of investment funds to energy
alternatives could lead to solutions to the carbon puzzle.
“This
is a threshold moment,” said Ellen Dorsey, executive director of the
Wallace Global Fund, which has coordinated the effort to recruit
foundations to the cause. “This movement has gone from a small activist
band quickly into the mainstream.”
Not
everyone will divest completely or right away, Ms. Dorsey noted, and
some are divesting just from specific sectors of the fossil fuel
industry, such as coal.
“The key thing is that they are moving along toward a common destination,” she said.
Among
the individual investors joining in the announcement on Monday is Mark
Ruffalo, the actor. The news conference will include a videotaped
message from Bishop Desmond Tutu,
who said that because climate change has a disproportionate impact on
the poor, it is “the human rights challenge of our time.”
Just how transparent the various funds and institutions will be about the progress of their asset sales is uncertain.
At
the Rockefeller Brothers Fund, there is no equivocation but there is
caution, said Stephen Heintz, its president. The fund has already
eliminated investments involved in coal and tar sands entirely while increasing its investment in alternate energy sources.
Unwinding
other investments in a complex portfolio from the broader realm of
fossil fuels will take longer. “We’re moving soberly, but with real
commitment,” he said.
Steven
Rockefeller, a son of Nelson A. Rockefeller and a trustee of the fund,
said that he foresees financial problems ahead for companies that have
stockpiled more reserves than they can burn without contributing
significantly to climate damage. “We see this as having both a moral and
economic dimension,” he said.
Activism to divest from fossil fuel companies began on college campuses, but the record of success there has been mixed.
The university with the biggest endowment, Harvard, has declined to divest, despite pressure from many students and outside organizations.
Drew Gilpin Faust,
Harvard’s president, has issued statements that she and her colleagues
do not believe that divestment is “warranted or wise,” and argued that
the school’s $32.7 billion endowment “is a resource, not an instrument
to impel social or political change.”
Stanford recently announced it would divest its holdings in the coal industry; Yale University’s investment office asked its money managers to examine how its investments affect climate change and to look into avoiding companies that do not take sensible “steps to reduce greenhouse gas emissions.” The announcement did not satisfy students pressing for divestment.
Pitzer College, however, is one of a number of schools that have promised
more extensive efforts to remove fossil fuels from their endowments.
Donald P. Gould, a trustee and chair of the Pitzer investment committee
and president of Gould Asset Management, said that everyone involved in
the decision knew that the direct and immediate effect on the companies
would be minimal.
“I
don’t think that anyone who favors divestment is arguing that the
institutions’ sale of the fossil fuel company stock is going to have
much impact, if any, on either the stocks or the companies themselves,”
he said, since the market capitalizations of the companies is immense.
Even
if the movement were to depress share prices, the energy companies,
which make enormous profits from their products, do not need to go to
capital markets to raise money, he noted. But in the long term, he said,
“divestment seeks to work indirectly on these companies by changing the
conversation about the climate.”
Pension funds have proved a harder sell. While Hesta Australia, a health care industry retirement fund worth $26 billion, announced last week
that it would get out of coal, many others have not. PensionDanmark
said in a statement that it has invested 7 percent of its $26 billion
portfolio in renewable energy with plans to raise that percentage over
time. “Divestment will itself not contribute to solving the challenges
of global climate change, and we believe it is not a very wise way to
try and solve the issue,” the company said.
Torben Moger Pedersen, the fund’s chief executive, added that if the returns from a traditional carbon-based power plant and a wind farm were equal, the fund would invest in the wind farm. But, he added, “We are not missionaries.”
In
an interview last week at the Rockefeller family’s longtime New York
offices at 30 Rockefeller Center, Mr. Heintz, Mr. Rockefeller and
Valerie Rockefeller Wayne, the chairwoman of the fund, spoke of the
family’s longstanding commitment to use the fund to advance
environmental issues.
The family has also engaged in shareholder activism with Exxon Mobil,
the largest successor to Standard Oil. Members have met privately with
the company over the years in efforts to get it to moderate its stance
on issues pertaining to the environment and climate change. They
acknowledged that they have not caused the company to greatly alter its
course.
The
Rockefellers have also tried to spur change through direct investment.
In the 1980s, Mr. Rockefeller said, members of the family formed a $2
million fund to invest directly in renewable-energy alternatives. They
were too early.
“The fund didn’t survive, which was a lesson,” he said. Nevertheless, he added, the failure of the fund was “a badge of honor.”
Ms.
Wayne said the family’s commitment is intergenerational, and
continuing. She said that her 8-year-old daughter lectures her on the destruction of orangutan habitat to create palm oil plantations.
“If I’m wearing lipstick, she won’t kiss me,” she said, “because there’s palm oil in it.”
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