Current Status on Fossil Fuel Divestment Commitments

According to the Go Fossil Free movement, over $6 trillion in assets have been committed by nearly 900 organizations and some 58,000 individual investors to be divested from their fossil fuel investments.  Below are a few sample listings of such commitments from some of these groups.

 

Who What type of divestment How Much When
French multinational insurance firm AXA announced expansions to existing divestment and renewable energy investment targets.in May of 2015, AXA announced that it would divest from €500 million worth of coal assets by ending investments into companies which derive over 50% of their revenue from coal. This week, AXA has decided to increase its divestment five-fold to €2.4 billion by divesting from companies which derive 30% of their revenue from coal, have a coal-based energy mix that exceeds 30%, actively builds new coal plants, or produces more than 20 million tonnes of coal per year. AXA also announced that they would divest over €700 million from the main oil sands producers and associated pipelines, and discontinuation of further investments in these businesses. Additionally, AXA announced back in 2015 a commitment to reach €3 billion in green investments by 2020. Considering that AXA already reached this target, the group has decided to quadruple its original target and aim for €12 billion by 2020. €2.4 billion of insurance business and 12 billion in investments
20201
Guardian Media Group to divest its £800m fund from fossil fuels

GMG becomes largest fund yet known to pull out of coal, oil and gas companies in a move chair Neil Berkett calls a ‘hard-nosed business decision’ justified on ethical and financial grounds.  GMG, which owns the Guardian and Observer newspapers and website, has set a target of a “couple of years” to sell its direct fossil fuel investments, such as company shares and bonds, and five years to divest “co-mingled” funds which contained some fossil fuel assets. He said GMG would also be increasing its socially responsible investments.

£800m  
January 10, 2018, Mayor Bill de Blasio announced that the City of New York’s pension funds would divest its pension funds of about $5bn in fossil fuel-linked money over the next five years. New York’s total pension fund for its teachers, firefighters and other city workers is worth about $189bn.  Bill de Blasio, New York’s mayor, also revealed the city is suing the world’s largest oil and gas companies over their role in knowingly creating dangerous global warming in a two-pronged assault that he said is aimed at “standing up for future generations”.   Comptroller Scott Stringer mentioned that it had taken two years to arrive at this decision, and that the implementation of a divestment strategy would be “complex”. The complexity Stringer referred to is driven in part by the laws that govern the behavior of pension fiduciaries.
The city will divest $5 billion from its five pension funds, which comprise the fourth-largest retirement plan in the United States and hold about $181 billion of assets under management. 20233
Dutch multinational bank ING announced its intention to reduce the company’s exposure to coal power generation down to close to zero by 2025. Specifically, by the end of 2025 ING will:

  • By the end of 2025, we’ll no longer finance clients in the utilities sector that are over 5% reliant on coal fired power in their energy mix. We will however continue to finance non-coal energy projects for these clients in support of their energy transition.
  • As of today, we’ll support new clients in the utilities sector only when their reliance on coal is 10% or less and they have a strategy to reduce their coal percentage to close to zero by 2025. This is a sharp reduction from the coal policy update that was launched ahead of the Paris Climate Conference in 2015 where representatives of 196 parties agreed to combat climate change by keeping a global temperature rise this century well below 2 degrees Celsius. At that time we said we’d no longer finance any new clients whose business is over 50% reliant on operating coal-fired power plants.
  • We will phase out our lending to individual coal-fired power plants by the end of 2025. In 2015 we said that we wouldn’t finance any new coal-fired power plants, excluding standing commitments. As a result, lending to individual coal-fired power plants has already decreased by 9% in 2016.
20251
The RBF has made a commitment to combating climate change through its Sustainable Development program and in September 2014, the Fund pledged to a two-step process to address its desire to divest from investments in fossil fuels as part of its mission-aligned investment efforts. Our immediate focus was on coal and tar sands, two of the most intensive sources of carbon emissions. We have worked to eliminate the Fund’s exposure to these energy sources as quickly as possible.   As of March 31, 2018:

  • the Fund’s exposure to coal and tar sands oil has been reduced to less than 0.1% of our total portfolio. (At the time of the RBF’s first comprehensive analysis of its exposure in April 2014, it was 1.6%.)
  • the Fund’s total fossil fuel exposure is estimated to be 1.6%. (In April 2014, it was 6.6%.)
Rockefeller Brothers Fund ($860m (£582m)), a fortune that originated from the company that became ExxonMobil.
20194
Attending the One Planet Summit in December 2017, World Bank Group President Jim Yong Kim announced that the World Bank would cease financing upstream oil and gas after 2019. The announcement is one of five made by the World Bank at the Summit in line with its ongoing support to aid developing countries effectively implement the goals of the Paris Climate Agreement.
Financing of upstream oil and gas projects ended and IFC will invest up to $325 million in the Green Cornerstone Bond Fund, a partnership with Amundi 20191

World Council of Churches rules out fossil fuel investments

An umbrella group of churches, which represents over half a billion Christians worldwide, has decided to rule out future investments in fossil fuel companies.  The move by the World Council of Churches, which has 345 member churches including the Church of England but not the Catholic church, was welcomed as a “major victory” by climate campaigners who have been calling on companies and institutions such as pension funds, universities and local governments to divest from coal, oil and gas. 

In an article for the Guardian in April, Archbishop Desmond Tutu said that “people of conscience need to break their ties with corporations financing the injustice of climate change” and events sponsored by fossil fuel companies could even be boycotted.

Bill McKibben, the founder of climate campaign group 350.org, said in a statement: “The World Council of Churches reminds us that morality demands thinking as much about the future as about ourselves – and that there’s no threat to the future greater than the unchecked burning of fossil fuels. This is a remarkable moment for the 590 million Christians in its member denominations: a huge percentage of humanity says today ‘this far and no further’.”

TBD TBD

 

 

Further Information for those seeking to divest from fossil fuels

 

This table provides additional resources for those looking to understand which companies pose the greatest threat to carbon emissions and which other groups are divesting. We shall continue to add to this information when possible.

Go Fossil Free    (See their full listing of divesting entities here)
Fossil Free Indexes:   In November 2012, Stuart Braman, adjunct associate research scientist at Lamont-Doherty Earth Observatory and former Managing Director at Standard & Poor’s, attended the New York City show on Bill McKibben’s “Do the Math” tour, which kicked off the Go Fossil Free divestment campaign. Being very concerned about climate change, Braman began considering how to divest his own retirement portfolio.  Since he was an index investor, he began looking for information on “fossil free indexes” but didn’t find any.  So, in April 2013, Stuart established Fossil Free Indexes LLC and began to gather a team, drawing former colleagues from S&P, DRI, and Reuters, with financial sector, risk management, product development, and intensive data analysis experience.  Now Fossil Free Indexes provides a number of services including The Fossil Free Indexes, which are a suite of benchmarks based on the Solactive US Large Cap Index (PR) and screened for the largest public coal, oil and gas companies ranked by the carbon content of reported reserves.  These indexes are designed for funds that provide broad market exposure to index investors who wish to divest from fossil fuel companies.  Additionally, the group has developed and licenses a suite of data services, including The Carbon Underground 200 data subscriptions, index strategies, financed emissions assessment and stranded asset risk analysis for institutional investors, pension funds, family offices, endowments, foundations, NGOs, and other investment professionals who wish to integrate ESG and ethical investment into their decision processes.
DivestInvest

DivestInvest is a group that invites you to “Join the global investor movement accelerating the sustainable energy transition,” allows you to take a pledge to divest and then helps you figure out how to make it happen.

Why divesting is harder than you would think.

It is one thing to try to convince a group that does not accept the science of climate change that they should divest.  It is another thing, however, when groups that really do understand the crisis of climate change don’t divest. It turns out, in the complicated world of sophisticated investors such as pension funds, it is not so easy to do.  Erin Mundahl, writing in InsideSources6, explains some of the issues faced by sophisticated investor, which include having committed funds to certain private equity investments, which can involve ten-year or longer commitments.  Ms. Mundahl writes:

What is more surprising is that nonprofits who loudly support these causes also invest in conventional energy, even as they encourage others to divest. According to leaked documents, environmental groups, including the World Wildlife Fund (WWF), the American Museum of Natural History, and several left-leaning funds had investments in private equity firms specializing in oil and gas even as their public messaging hyped concerns about the role of fossil fuel use in climate change.

According to documents revealed in the Paradise Papers, a trove of 13 million documents detailing offshore investments, nonprofits including the American Museum of Natural History, the World Wildlife Fund, and the University of Washington invested in a fund known for its investments in oil, natural gas, and mining.

The papers show that the WWF invested $2 million with Denham Capital, an international private equity firm specializing in oil and gas investments. The WWF entered into an agreement with the firm in 2008 and which is not slated to expire until 2020. Getting out of the deal early would be difficult, say financial observers.

WWF was not the only environmental group to invest with Denham. The American Museum of Natural History in New York City committed $5 million to the fund even after putting on a series of exhibits highlighting the connection between fossil fuels and global warming.

Because the investments were through a private equity firm, their existence was hidden prior to the release of the Paradise Papers. Tax forms filed by nonprofits do not require a detailed list of these types of investments. Without the leak, most of the investments would likely not have been uncovered.

The papers are another example of the difficulty of severing all ties to fossil fuels when putting together an investment portfolio. Despite widespread pushes for divestment on the part of green groups, large institutions like cities and universities have found it next to impossible to cut all ties.

 

 

References

  1.  Clean Technica, World Bank, ING, & AXA Announce Fossil Fuel Divestment Worth Billions, Joshua S Hill, December 13th, 2017 
  2.  Inside Sources, Divesting From Fossil Fuels Is Harder Than Green Groups, Liberal Cities Might Have Thought, by Erin Mundahl, May 22, 2018
  3.  FFI Perspectives, Navigating the Complexities of Public Pension Divestment, by
  4.  The Guardian, The Rockefeller Brothers Fund: It is our moral duty to divest from fossil fuels, by Suzanne Goldenberg, March 27, 2015
  5.  The Guardian, World Council of Churches rules out fossil fuel investments, by Adam Vaughan, July 11, 2014
  6.  InsideSources, Divesting From Fossil Fuels Is Harder Than Green Groups, Liberal Cities Might Have Thought, by Erin Mundahl, May 22, 2018
2018-10-21T19:23:22+00:00

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