Investing in our future – Switzer Foundation takes stand on fossil fuels
Fellows:Jen Sokolove, Lissa Widoff
At the Switzer Foundation, we believe that climate change is the defining environmental issue of our time. The future of communities and ecosystems across the globe depends on how we respond to this moment. Whether our concerns are biodiversity, adaptation in drought-impacted agricultural systems, energy use and consumption, environmental education, forest management, or marine resource health, a changing climate with erratic and unpredictable outcomes for natural and human communities has one root: the increased contribution of carbon dioxide to the atmosphere from burning fossil fuels to drive our human economy.
As an environmental foundation with a mission focused on developing the leadership we need to face local and global environmental challenges, we have recently chosen to take an institutional leadership stance on the issue of climate. The Robert and Patricia Switzer Foundation just joined the “Divest/Invest Philanthropy” movement, pledging to divest from fossil fuels within five years and to reinvest in a just new economy fueled by clean energy and sustainable practices. Divest/Invest was inspired by other divestment campaigns throughout history (such as against apartheid in South Africa in the 1970s), and is much broader than just the philanthropic sector. It is a movement of investors of all kinds—universities, public pension funds, cities and counties, even individuals. It is aligned with the move towards impact and mission investing, which the Switzer Foundation has quietly been exploring, and in which it has been increasingly engaged, over the last 10 years.
Divest/Invest Philanthropy aligns its actions with recent reports indicating that to achieve the reductions in CO2 emissions necessary to counter current climate trends, most of the oil, gas, and coal reserves presently on the financial books of fossil fuel companies must remain in the ground, and are therefore unburnable “stranded assets.” Furthermore, if these reserves are included in the companies’ stock prices, then we may be looking at a “carbon bubble” that provides a false sense of security about the true value and economic return potential of these companies.
The Divest/Invest movement is mobilizing institutional and individual investors to commit to freezing all new investment in fossil fuel companies and to divesting from the 200 companies that are responsible for most emissions of fossil fuels as noted in the Carbon Tracker Initiative report: “Unburnable Carbon: Are the World’s Financial Markets Carrying a Carbon Bubble?” This is a smart economic decision for Switzer, but it is not just economic. For us, the values demonstrated in the operations of these companies do not reflect the ethical imperative of our current moment, which is to reduce carbon emissions and to prevent the extraction and burning of fossil fuels that will irreversibly alter the functioning of our atmosphere and the conditions for all life on the planet.
We are, frankly, proud to make this announcement. Taking this stand feels like an exciting leadership moment for the Switzer Foundation as we model our leadership philosophy. We believe that positive change requires action by all sectors and we know that, most often, action is necessary even in the face of uncertainty. While the data suggest that the returns on our endowment investments will most likely remain relatively similar with or without these particular companies in our portfolio, we recognize that excluding companies or sectors from our universe of possible investments may have financial ramifications. We are certain, however, that we cannot, in good conscience, profit from the industries that are most responsible for continuing the damage to our fragile earth and all its inhabitants. There are times when leadership means taking a stand for what you believe, even if the path forward isn’t clear.
We all have some responsibility, and one of the few levers we have as a foundation is how we invest our financial resources while still being prudent and responsible. By our very nature, foundations are invested in capital markets to achieve returns that benefit the issues and causes we care about. It is time that we use the tools available to us, and model the leadership we see in the Switzer Fellows and we know they expect from the Foundation.
Please write us with your comments and feedback. This is only the first step, and soon we will join the “march” to a fossil fuel free economy. We look forward to you joining us on this journey.
About the Authors
Lissa Widoff is a Switzer Fellow and Executive Director of the Switzer Foundation and a Switzer Fellow. Jen Sokolove is a Switzer Fellow, Switzer Foundation Board Chair and Program Director of the Compton Foundation, which has also signed on to the Philanthropy Commitment of Divest/Invest.