Roddick and Sainsbury dynasty latest to make low carbon pledge, as fund managers say movement is now “mainstream”
Pic: Light Brigading/Flickr
By Ed King
Over 100 foundations and trusts with assets worth in excess of US $5 billion have committed to ditch fossil fuel holdings and invest in the green economy.
New members of the Divest Invest initiative include the Roddick Foundation and a group of holdings linked to the Sainsbury’s dynasty, including the Mark Leonard Trust and Ashden Trust, which already funds green energy projects.
They join existing supporters of the fast growing divestment movement such as the Rockefeller Brothers’ Fund, Ben & Jerry’s Foundation and the Wallace Global Fund.
In a statement, the 18 latest signatories to plans to reduce their exposure to oil, gas and coal holdings said they were driven by fears those assets would radically fall in value in the future.
“The future of those returns is now far less certain due to falling costs of renewable energy and rising costs of exploration and extraction of fossil fuels,” they said.
“Add to this the likely introduction of policies to limit emissions of greenhouse gases and fossil fuel assets will probably become stranded.”
Ethical drive
In a conference call, executive chair of the Ashden Trust Sarah Butler-Sloss cited “overwhelmingly strong financial and ethical reasons” for the move.
Human misery linked to climate change would likely be “immense and immeasurable” she said.
The numbers of foundations would rise to 200 by the end of 2015, Butler-Sloss predicted, ahead of a proposed UN climate pact set to be signed in Paris this December.
Ellen Dorsey, executive director of the Wallace Global Fund, said she wanted to combat huge levels of funding the fossil fuel sector was ploughing into denial of the science.
“This is a crisis where the world’s most powerful have a lot to lose,” she said, adding there was a “rare alignment of ethical and financial reasons to act”.
Growing success
The UN-backed divestment movement was born in 2011 on US university campuses, with activists calling for shares in the world’s top 200 polluting companies to be sold.
Stanford, Oxford and Georgetown are among 33 US and UK academic centres to promise to slash their fossil fuel holdings, along with 44 cities ranging from San Francisco to Dunedin, New Zealand.
The Church of England and other faith groups are getting on board. Despite the Pope’s recent appeal for climate action, the Vatican’s bank is hesitating to join in.
In May, Axa, one of the world’s top insurers, said it would sell €500 million of coal assets before 2016, citing climate concerns.
Norway’s giant sovereign wealth fund is to ditch an estimated $8 billion of coal holdings, affecting 122 companies, after a parliamentary vote last month.
California lawmakers are considering a similar move for their state pension funds. Coal stocks fell on a recent committee vote in favour of divestment.
Top finance groups have previously said they would hold onto their assets, claiming they could exert more influence on fossil fuel companies from within.
Economic case
But Mark Lewis, senior analyst at the pan European fund manager Kepler Cheuvreux said there are signs divestment is starting to go “mainstream” in the wider financial sector.
He predicted tougher climate laws and disruption caused by renewable energy systems will see investors increasingly question the wisdom of holding fossil fuel stocks.
“Two years ago it was college campus and ethically driven, but its progression has been extraordinary, almost unique in my experience in financial markets,” he said.
“Investors are now more than anything being driven by economics – and what is becoming clear is that the economic risk of holding fossil fuel risks is increasing day by day.”
The fossil fuel industry could stand to lose upwards of $28 billion by the 2030s if climate legislation designed to limit warming to below 2C was enforced, he added, citing International Energy Agency analysis.