In defiance of market predictions, the US$1.1-billion Rockefeller Brothers Fund has surpassed its benchmarks since an almost complete divestment from fossil fuels five years ago—proving that what was once dismissed as a “symbolic gesture” was in fact an act of significant financial acuity.
In 2014, grasping the perils of anthropogenic climate change, the Rockefeller family chose to jettison all but “less than 1%” of its fossil holdings, writes the Washington Post. Since then, the mostly fossil-free fund has grown “at an annual average rate of 7.76%” as of December 2019. By comparison, the previous benchmark investment portfolio “would have returned only 6.71% annually over the same time frame.”
Such performance has sparked a “movement” and bodes well for fossil divestment campaigns around the world, said Rockefeller Fund President Stephen Heintz. It has also become a powerful economic driver, notes the Post, as “increasing attention to climate change has spread the idea that many of the assets or reserves on the books of big oil and coal companies might never be tapped, but rather would be left in the ground and ‘stranded’.”
Even CNBC Mad Money host Jim Cramer has declared he is “done with fossil fuels,” reports the Post. Cramer took his personal portfolio fossil-free this past January and has publicly equated fossil fuels with tobacco, saying they “may just be on the wrong side of history.”
Also getting cold feet is BlackRock, the world’s largest investment firm. Responsible for some US$7 trillion in investments, BlackRock began 2020 with the announcement that “it would exit some investments related to coal production and make sustainability a central part of its portfolio.”
Describing the cumulative impact of such exits and entrances as “underappreciated,” Pavel Molchanov, an analyst at investment firm Raymond James, told the Post that “26% of all U.S. professionally managed assets worth $12 trillion are covered by some kind of investing limitations, or screens, triple the amount in 2012.” Of that total, $3 trillion “is centred on climate”.
In highlighting its healthy returns since going fossil-free, the Rockefellers are trying to persuade large-fund managers who cite fiduciary responsibility as reason not to divest from fossil fuels to think again.
But more than dollars and cents come into play when trying to change people’s minds, notes the Post. Even when the Rockefellers’ move was being called empty symbolism, that in itself had power.
“Don’t underestimate the value of symbols to motivate people, inspire change, and tell a story that can be very compelling,” Heintz said.