Financial reporting seldom affords an opportunity to use the word “irony,” but the business pages were filled with it this week. On Monday, the Rockefeller Brothers Fund committed to divesting from fossil fuels. That’s right—an organization founded by the world’s most famous oil family is renouncing black gold. Not since Baskin-Robbins heir John Robbins went vegan have a tycoon’s progeny so publicly turned their backs on what made them rich.
The Rockefeller move is just the latest victory for the carbon-divestment campaign, which has been gathering steam in recent years. According to an Arabella Advisors report released last week, 181 institutions and governments have publicly announced plans to get their money out of fossil fuels, including such notables as Stanford University, the city of Seattle, the Wallace Global Fund, and the Natural Resources Defense Council (which publishes OnEarth and—further disclosure—receives donations from the Rockefeller Brothers Fund).
Consulting with BlackRock and the FTSE Group, NRDC recently helped launch a stock index series for institutional investors that seeks to exclude companies that produce oil, coal, and natural gas. Hundreds of individuals have made similar commitments, and the total value of divested funds now tops $50 billion.
Although the usefulness of divestment as a lever for direct political change is in dispute—scholars still argue about divestment’s role in ending South African apartheid in 1994—it is an undeniably effective tool for bringing attention to injustice. A basic moral case can also be made: It’s wrong to financially support businesses that show no concern for the future of the planet and our children.
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So, are you interested in rolling like the Rockefellers and joining the divestment movement? First, you have to choose between hiring a professional or going it alone.
“More and more investment houses are developing funds where socially-conscious investors can put their resources,” notes Ryan Strode, an associate director at Arabella Advisors.
The advantages of hiring professional help are fairly obvious. Divestment shouldn’t be a financial risk, and a financial consultant can make sure that your portfolio remains appropriately diversified after you eliminate an entire sector from your investments. You also get a team of researchers to thoroughly investigate the environmental credentials of each company.
“Even if a company is a major emitter, we ask whether they have public emissions reduction targets,” says Paul Bugala, a senior sustainability analyst at Calvert Investments. “We also consider whether they are contributing constructively to the climate change debate.”
That would be a significant amount of work for any regular Joe or Joanna to do. In addition, Bugala emphasizes the importance of differentiating hard-core environmental baddies (think BP and Exxon) from companies that might be brought back from the brink of environmental villainy. For instance, by keeping open the possibility of buying lots of shares, mutual funds can influence companies to improve their environmental decisions.
There are, however, advantages to making your own investment choices. Most importantly, you can make sure that your stock purchases reflect your own personal values, rather than those of your broker. Or maybe you’re just one of those DIY types. Some people like to make their own candles, others pick their own stocks. To each their own.
Still, buying your fossil-fuel-free stocks a la carte doesn’t mean you have to go it entirely alone—there are plenty of resources out there to guide your decisions. Green America lists the 10 largest oil and gas companies based on the amount of unburned fossil fuel reserves they hold. The simplest approach is to avoid those stocks. If you want to go a little further, you could eliminate a wider swath of fossil fuel companies. Fossil Free Indexes names and shames the 200 companies with the largest reserves of oil, natural gas, and coal.
Another option is to base your divestment decisions on pollution rather than fossil fuel reserves. If that’s your preferred route, try perusing the Environmental Investment Organisation’s ET Global 800, which ranks the world’s 800 largest companies by greenhouse gas emissions and transparency. You could avoid the bottom 100 companies, and potentially consider investing in companies at the top of the list. (Well done, BASF!)
No matter which strategy you choose, you should view divestment as a process rather than a one-off. Companies change their policies, for better and for worse, and you should be prepared to respond. Above all else, stay positive. Even if all you are prepared to do right now is call your current investment house and express an interest in fossil-fuel-free investments, that’s a move in the right direction.
“The one thing we can’t do,” says Bugala, “is sit on the sidelines while our energy future is decided in boardrooms.”
Unless, of course, the boardrooms are filled with Rockefellers.
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