Nearly a thousand institutional investors, from insurance companies to government pension funds to private foundations, with more than $6.4 trillion in assets have committed to divestment as of 2018. These investors are also increasingly looking to renewable and clean energy investment alternatives.
The report demonstrates investors’ growing confidence that divestment is a fiscally responsible choice and that market-level performance can be achieved without exposure to fossil fuels. It also notes that many investors see a fiduciary duty in divestment as experts acknowledge the significant reputational, financial, and potentially even legal risks posed by fossil fuel ownership.
“We’re confident that sound portfolios can be created without exposure to fossil fuels, and our investment performance supports that belief four years into the divestment process,” Stephen Heintz, president of the Rockefeller Brothers Fund, told CleanTechIQ in a recent interview. “Given the decline in the energy sector since oil prices began falling and our concerns about stranded assets—at least 60 percent of all known fossil fuel reserves have to remain unburned if we have any chance of meeting the two-degree target set at Paris—we also believe divestment from fossil fuels contributes to less volatility in the portfolio over time.”
The Fund announced its intent to divest from fossil fuels in 2014, citing the moral tension arising from its work on climate change on the one hand and its investments in fossil fuels on the other. We also set a portfolio allocation target of 20 percent for impact investments. As of December 31, 2017, 11 percent of our investment portfolio was committed to impact investments including clean energy development. In addition, 27 percent is invested according to ESG criteria, and approximately 98 percent of the portfolio is fossil fuel-free.