As the effects of climate change worsen and more governments move to tax and limit carbon emissions, fossil fuel companies now count as assets that will lose their value. Eliminating carbon from your portfolio now will help you avoid future risk from devalued carbon assets. A recent economic analysis from investment consulting firm Mercer has shown that climate change will have a significant effect on pensions and other fund returns. The analysis also concludes that trustees' failure to respond to climate change risks could result in a breach of fiduciary duty.
Notably, the Rockefeller Brothers Fund (RBF), which announced in 2014 that it would align its investments with its mission and therefore divest from fossil fuels, has experienced positive results from divesting. Its performance record is detailed in a five-year case study titled Investing in Our Mission. Published in 2020, the case study found that the foundation’s portfolio significantly surpassed the market benchmark during this period as fossil fuel holdings were slashed to less than 1% of the portfolio.
The RBF media release stated:
“When we joined the divestment movement, we were convinced that a more profitable and less risky investment portfolio could be constructed without exposure to fossil fuels,” said Valerie Rockefeller, great-great-granddaughter of John D. Rockefeller and chair of the RBF board of trustees. “Now we have five years of financial data to back it up.”
“Oil is obviously a definitional part of my family’s past,” said Rockefeller. “But it has no place in our future.”
"The logic of divestment couldn’t be simpler: if it’s wrong to wreck the climate, it’s wrong to profit from that wreckage."
Bill McKibben, climate activist, author, founder of 350.org