Fossil Fuel Divestment

  • Smokestacks near Manchester, England.
    Photo by Gerry Machen.

For more than 75 years, the environment has been one of the Rockefeller Brothers Fund’s most enduring commitments. The RBF began in earnest its work on climate change in the 1990s and, in 2005, concentrated its entire sustainable development budget on addressing the issue.

Citing the moral tension arising from this work on climate change on the one hand and its investments in fossil fuels on the other, in 2014 the Fund pledged to a two-step process to divest from fossil fuels [PDF]. We committed to reducing our exposure to coal and tar sands—two of the most intensive sources of carbon emissions—to less than one percent of the total portfolio by the end of that year. At the same time, we began a comprehensive analysis of our exposure to other fossil fuel investments and began developing a strategy to eliminate the Fund’s exposure to these energy sources as quickly as possible.

Given the structure of some commingled investment funds and investments in highly diversified energy companies, the Fund maintains minimal investments in fossil fuels. We continue to work with the RBF Investment Committee and board of trustees to determine an appropriate strategy to achieve the ultimate goal of complete divestment. As of January 31, 2019:

  • The Fund’s exposure to coal and tar sands oil has been reduced to less than 0.2 percent of our total portfolio. (At the time of the RBF’s first comprehensive analysis of its exposure in April 2014, it was 1.6 percent.)
  • The Fund’s total fossil fuel exposure is estimated to be 1.3 percent. (In April 2014, it was 6.6 percent.)*

Divestment from fossil fuels has fiscal and fiduciary, as well as ethical, significance. At least 60 percent of all known fossil fuel reserves have to remain unburned if the world has any chance of meeting the two-degree target set at the Paris Climate Summit in 2015, meaning these assets are likely to become stranded and lose value over time. As a result, more and more institutions are deciding to divest, and asset managers are increasingly willing to offer fossil fuel-free funds. We’re confident that sound portfolios can be created without exposure to fossil fuels, and our investment performance since 2014 supports that belief.

*The Fund uses the MSCI Fossil Fuel Reserves Screen to evaluate its fossil fuel exposure for publicly listed holdings. All public companies with evidence of owning fossil fuel reserves, regardless of industry, are captured in the screen. For private holdings and funds where individual holdings are not available, total energy sector exposure is used to conservatively estimate fossil fuel exposure.