News and analysis
January 30, 2014

17 Foundations Join Forces to Divest Fossil-Fuel Stocks

James Ennis on Flickr

Students at some colleges, like Tufts University, have rallied to have their institutions divest from fossil-fuel companies. None of those colleges have yet joined Divest-Invest Philanthropy.

Seventeen foundations with nearly $2-billion in assets have vowed to divest the fossil-fuel stocks in their endowments and invest at least 5 percent of their assets in clean-energy companies, and they are urging other foundations to follow their lead.

The foundations are scheduled to announce the campaign, dubbed Divest-Invest Philanthropy, at a news conference in Washington today. They say the threat posed by global warming requires foundations to do more than merely make grants to charities that are focused on the problem.

“Grant making alone is insufficient to meet this challenge,” says Ellen Dorsey, executive director of the Wallace Global Fund, a Washington foundation. “We think that we should be employing all of our tools to address the climate crisis.”

Among the organizations that have agreed to divest are the Ben & Jerry’s Foundation and the Schmidt Family Foundation, created by Google’s executive chairman, Eric Schmidt.

Financial Concerns, Not Just Moral Ones

Officials at the foundations argue that the moves make sense from both a moral and a financial perspective. The value of fossil-fuel stocks is derived from their oil, gas, and coal reserves, but if those reserves are extracted and burned, “we will irrevocably cook the planet,” Ms. Dorsey argues.

The financial case for divestment, she says, rests on the theory that citizens and governments will ultimately prohibit fossil-fuel companies from extracting those reserves, which would cause the value of their stocks to decline.

Ms. Dorsey says the Wallace Global Fund spent about a year revamping its endowment, which she says is now “virtually fossil-fuel free” and has 10 percent of assets in clean-energy investments.

Foundations could start the divestment process, Ms. Dorsey says, by making sure that they don’t have any direct investments in 200 companies identified by the Carbon Tracker Initiative as controlling the largest shares of fossil-fuel reserves.

Clean-tech investments could include businesses focused on solar and wind energy and recycling, as well as creating revolving-loan funds to help nonprofits become more energy efficient.

Dig deeper: Read an opinion piece from a foundation trustee urging philanthropies to shed fossil-fuel stocks. Plus, see how foundations have been grappling with the debate over fracking.