Seventeen large philanthropic foundations with assets totalling almost $2 billion have started an initiative, called Divest-Invest Philanthropy, aimed at divesting funds from fossil fuel investments and putting them into clean technology and other more sustainable sectors.
Some of the foundations involved in the initiative include the Ben & Jerry’s Foundation, The Educational Foundation of America, The John Merck Fund, The Russell Family Foundation, The Sierra Club Foundation, and the Wallace Global Fund. Foundations are largely founded “for the common good and have assets designed to achieve social purposes”, as Executive Director of The Russell Family Foundations has explained, so “foundations are acting now, moving quickly, and shifting our investments to companies, organizations, and initiatives that support a lower carbon economy.”
First, the Divest-Invest Philanthropy initiative seeks to assess existing investment exposure to climate risk within foundations’ investment activities, and aims to ascertain how much is invested in climate solutions versus fossil fuels. It then helps to work out alternative investment strategies and practices. A timeframe is set to eliminate fossil fuels from each investment portfolio. A commitment is made to swap those investments into clean technologies and sustainable businesses.
The move away from investing in fossil fuel assets is based on the growing realization that much of the world’s known fossil fuel reserves (let alone those not found yet) are likely to become stranded assets, as they will have to be left in the ground if we are to avoid runaway climate change. This situation has come to be known at the great financial Carbon Bubble.