Green Divestment Movement Still in Its Infancy Despite Rockefeller Coup

In announcing last week that it would purge its portfolio of fossil fuel investments, the Rockefeller Brothers Fund did more than make a financial decision; it joined a movement.

The fund became the latest and largest grant maker to sign on with Divest-Invest Philanthropy, an alliance of foundations that are, in their words, “divesting their assets in fossil fuels and investing in climate solutions and the new energy economy.”

Rockefeller Brothers Fund’s announcement signals a move toward the philanthropic upper crust for a movement often associated with campus activism.

But for all its growth and momentum, Divest-Invest has yet to recruit the country’s largest foundations. The headlines about Rockefeller Brothers Fund’s decision belie the fact that it ranks 48th in total assets on The Chronicle’s annual list of America’s biggest foundations.

Divest-Invest started in late January with 17 foundations representing about $1.8-billion in assets. Ellen Dorsey, executive director of the Wallace Global Fund and the woman credited with creating Divest-Invest, told The New York Times that more foundations would follow—and they have.

In less than a year, the number of participating foundations has more than tripled to almost 75, surpassing the group’s original goal of 50, says director Jenna Nicholas. The asset base of the current coalition eclipses $4.2 billion.

Ms. Nicholas, co-founder of the boutique consulting firm Phoenix Global Impact, says the entire effort has cost about $200,000. The bulk of the money comes from the Wallace Global Fund, which gave Ms. Nicholas a one-year grant to set up Divest-Invest’s governing structure. That structure includes an Organizing Working Group responsible for recruiting new foundations like Rockefeller Brothers Fund to the cause.

Symbolic Victory

With $860-million in assets, Rockefeller Brothers Fund is the wealthiest foundation to join Divest-Invest. That and the symbolic heft of persuading a foundation run by the descendants of America’s most famous oil tycoon to join the movement also make it the buzziest addition yet.

Compared to the divestment movement percolating on college campuses, however, Divest-Invest has yet to land an ally on par with Stanford University, which divested from coal companies earlier this year, or Yale University, which declined to divest but this month instructed its money managers to avoid companies that aren’t working to limit greenhouse-gas emissions.

A scan of the 25 largest foundations on The Chronicle’s annual survey of assets reveals few have changed their investing protocol in a targeted effort to curb climate change.

The William and Flora Hewlett Foundation (assets: $8.3-billion), for example, has a formal “social investment policy” in which it says it has explored using its influence as a proxy shareholder to influence corporate behavior on reducing global warming and encouraging sustainable forestry.

At a White House round table in June, the Minneapolis-based McKnight Foundation (assets: $2.2 billion) announced its own $200-million impact investing effort aimed at accelerating the transition to a “low-carbon economy.”

The Rockefeller Foundation, meanwhile, has social investing guidelines that reference proxy voting and socially targeted investing as methods of ensuring that its “investments remain consonant with our work.” The foundation focuses, among other things, on environmental work.

Harder Line

There are, however, industries on which the foundation world’s elite take a harder line.

The Rockefeller Foundation, the Hewlett Foundation and the Bill and Melinda Gates Foundation all eschew tobacco investments. The Robert Wood Johnson Foundation also abstains from investing in tobacco, as well as alcohol and firearms.

McKnight spokesman Tim Hanrahan says the foundation’s board is “looking at and thinking about” divesting from fossil fuels but that there is no timetable for a decision. He and Kate Wolford, McKnight’s president, say Divest-Invest’s emergence over the past year has inspired the foundation to scrutinize its investment portfolio anew.

Monday’s announcement by the Rockefeller Brothers Fund figures only to inspire them further.

“We weren’t ready to make a similar verbal commitment at this point, but I think it really provides momentum and encourages the rest of us to look at how we can play our part,” Ms. Wolford says.

She believes foundations will begin to invent and adopt tools as the divestment movement gains steam.

“I expect to see a real quick ramp toward a lot more activity in this space,” she says. “It certainly feels that way as I talk to my colleagues.”