One hundred philanthropic trusts, foundations and family offices, with over $5 billion (£3.2bn) in assets under management, have now committed to divesting from fossil fuels and supporting the low carbon economy.
Eighteen philanthropic organisations have made their commitment public today, joining existing signatories, including the Rockefeller Brothers’ Fund and Ben & Jerry’s Foundation. Amongst the new signatories are the Ashden Trust and Joseph Rowntree Charitable Trust.
The fossil fuel divestment movement has rapidly gained momentum in recent years, with universities, religious institutions and pension funds among those committing to take money out of polluting energy sources. The Divest Invest Philanthropy pledge involves organisations pledging to divest portfolios of fossil fuel shares within five years and divert at least a portion of this to climate solutions, from renewable energy to clean technology.
One hundred philanthropic organisations have now signed up to the pledge. The goal is to have 200 charitable organisations sign up by September in order to send policymakers at the UN climate change meeting in Paris in December a “powerful signal”.
In a letter the new signatories note that financial benefits of divestment, stating, “Historically, investments in fossil fuel companies have provided good financial returns. The future of those returns is now far less certain due to falling costs of renewables and rising costs of explorations and extraction of fossil fuels. Add to this, the likely introduction of policies to limit emissions of greenhouse gases, and fossil fuel assets will probably become stranded.”
The trusts, foundations and family offices also make a case for divestment based on ethics, noting that climate change is already having “serious humanitarian and economic consequences”.
“In light of this, we believe it is not possible, in good conscience to continue to plan for a future dependent on fossil fuels,” the letter adds.
Despite the growing fossil fuel divestment movement, many organisations cite fiduciary duty as a reason not to act. However, a report from the Law Commission last year concluded that trustees can take environmental, social and governance (ESG) factors into account, noting such considerations are designed to reduce risk.
Speaking about the implications of fiduciary duty, Luke Fletcher, a partner at law firm Bates Wells Braithwaite, commented, ”Given the evidence of man-made contribution to climate change and the consequences of climate change on human populations, it would patently be reasonable for a charity with a purpose to protect the environment, with general charitable purpose or, for example, a relief of poverty or advancement of health purposes, which has concerns about the consequences of climate change for its beneficiaries, to divest from carbon-intensive investment, even if this was expected to causes significant financial detriment.”
Photo: sheffield star via Flickr
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