Divesting from coal — or at least publicly discussing one’s willingness to do so, has been an emerging trend among endowments, foundations, and now the world’s largest sovereign wealth fund. Reports that a non-government majority in the Norwegian parliament was edging towards a vote on banning the fund from investing in coal had many a’twitter about the possibility, and possible impacts, of such a decision.
Today, Norway’s parliamentary standing committee on finance and economy announced it would not be divesting from coal in the foreseeable future. As a compromise, committee will appoint an expert group tasked with evaluating “whether excluding coal and petroleum companies appears to be a more effective strategy than corporate governance and influence to address climate change and contribute to future changes.” That group will submit its findings the following spring.
Opening up the issue for discussion was a good bit of eco PR, but some doubt Norway had any real interest in doing so—as the Financial Times points out:
On the very day last week when Norway’s parliament discussed banning its sovereign wealth fund from investing in coal miners, Store Norske, the country’s state-owned coal miner, opened a mine on the Arctic island of Svalbard.
So far, most of the actual divesting action is occurring among endowments, foundations, and city government agencies. On eexception is Norway pensions and insurance giant Storebrand, which has excluded 177 companies and 32 countries from its investment portfolio for failing to meet its minimum sustainability standards.
US colleges and endowments who’ve committed to divesting/have divested
- Unity College
- College of the Atlantic
- Hampshire College
- Green Mountain College
- Foothill-De Anzo Community College Foundation
- Peralta Community College Distric
- San Francisco State University Foundation
- Sterling College
US foundations who’ve committed to divesting
- Sierra Club Foundation
- Wallace Global Fund
- Jubitz Family Foundation
- The Educational Foundation of America
- Park Foundation
- The Russell Family Foundation
- Compton Foundation
- KL Felicitas Foundation
- The Chorus Foundation
- Singing Field Foundation
- Nia Community Foundation
- The John Merck Fund
- The Joseph Rowntree Charitable Trust
- Solidago Foundation
- Jessie Smith Noyes Foundation
- Granary Foundation
- The Schmidt Family Foundation
- Ben & Jerry’s Foundation
From whence the anti-fossil fuel sentiment?
The big push started with Middlebury Professor Bill McKibben, who published a galvanizing look at climate change in Rolling Stone in July of 2012. In the article, entitled “Global Warming’s Terrifying New Math,” McKibben explained that in order to have an 80% chance of keeping global warming below the Copenhagen Accord target of 2°C, the global population could only emit 565 gigatons of carbon dioxide between 2010 and 2050. By contrast, burning all the currently proven oil, gas and coal reserves of fossil fuel companies would release 2,795GtCO2 into the atmosphere—quintuple the allowed amount.
To keep that 80% chance, McKibben laid out a fossil fuel divestment campaign that aimed to turn fossil fuels into stranded assets. Atif Ansar, Ben Caldecott, and James Tilbury of Oxford University’s Smith School’s Stranded Assets Programme define stranded assets as assets which “suffer from unanticipated or premature write-offs, downward revaluations or are converted to liabilities.” McKibben’s campaign is comprised of anti-extraction legislation on the government side and carbon emission reduction makeovers on the corporation side. He coupled with 350.org in late 2012, and began targeting public funds, particularly university endowments and pension funds.
The Stranded Assets study examined previous divestment campaigns (South Africa and Tobacco) and came up with three phases:
The (tiny) wrench:
Cary Krosinsky, executive director of the Network for Sustainable Financial Markets, said college and university endowments and foundations represent only $1 trillion of $150 trillion total invested assets worldwide. “That dampens the potential effect that a divestment strategy can have,” he said.”
And the Stranded Assets Programme study found that “stigmatization, while likely to cost fossil fuel companies billions, is unlikely to threaten their survival.”
If Norway’s expert group does find an investment case for divesting from fossil fuels, we may see a “debate about the risks facing the fossil fuel sector," Craig MacKenzie, an investment director at Scottish Widows Investment Partnership, told the Financial Times.
We’ll aslo hear some yelps from Australia. The Sydney Morning Herald reports the country’s resource firms will be hard hit — the SWF is a major shareholder in companies including BHP Billiton, Woodside Petroleum, and Whitehaven Coal.
Trusted Insight Data says:
Interest in oil and gas is growing steadily. Currently there are 61 investors and 30 managers following the tag. The majority of investors come from family offices, corporations, and endowments.