Tag Archives: fossil fuel divestment

Stanford Faculty Demand: Divest from Fossil Fuels to Avoid Cataclysm 

Stanford University, one of the most prestigious educational institutions in the world, took a courageous stand in May 2014. The board of trustees announced that they were divesting their $21 billion endowment from 100 coal companies.

Hundreds of faculty signed Stanford divestment appeal

Hundreds of faculty signed Stanford divestment appeal

“Stanford has a responsibility as a global citizen to promote sustainability for our planet,” said Stanford President John Hennessy at the time. “The university’s review has concluded that coal is one of the most carbon-intensive methods of energy generation and that other sources can be readily substituted for it.”

The Stanford community celebrated this important step. But many weren’t satisfied that the university had stopped with only coal, since virtually every fossil-fuel company investment decision must assume catastrophic levels of global carbon emissions. And so, on January 11, 2014, 447 members of the Stanford faculty signed a letter asking their institution to come completely clean. It’s concise, well-reasoned, and civil. We think it’s worth a moment to read.

Stanford Faculty Fossil-Fuel Divestment Letter

Dear President Hennessy and the Stanford Board of Trustees,

We the undersigned, faculty of Stanford University, acknowledge the urgency of the scientific community’s warning that the burning of fossil fuels puts our world at risk. To prevent wide-spread ecological and ice sheet collapse we must limit global warming to 2 degrees. Scientific consensus indicates that to stay within this 2-degree margin, we must cap carbon dioxide emissions at 565 gigatons. Because companies currently own fossil-fuel holdings sufficient to produce 2,795 gigatons of carbon dioxide, the risk is clear: 2,795 gigatons is five times the scientifically designated limit. In short, for companies to exploit these holdings – as they must, to turn a profit – would mean raising atmospheric carbon dioxide to cataclysmic levels.

Many of these fossil-fuel companies are publicly traded and investor-owned, supported in large part by institutional investors like Stanford. Professor James Engell of Harvard writes: “The fossil fuel companies are decent investments only under two assumptions: first, the oil and gas and coal they own in the ground shall be sold and burned; second, they shall continue to find more oil and gas and coal and shall sell that to be burned, too. Any investor in them must want this to happen, and any investor is putting up money to make this happen with all deliberate speed.”

We honor the May 2014 decision of the Stanford Board of Trustees to divest from coal, setting a precedent of responsibility and integrity commensurate with the University’s role in the world. Sixty-five percent of all carbon holdings are in coal reserves, and this significant act of divestment is proof of the university’s resolve to act to counter climate disruption. This resolve must now encompass the reality that, once coal is taken out of the equation, the remaining 35% reserves in oil and gas holdings still represent 978 gigatons of carbon, or nearly double the 565-gigaton cap. The urgency and magnitude of climate change call not for partial solutions, however admirable; they demand the more profound and thorough commitment embodied in divestment from all fossil fuel companies.

The alternative—for Stanford to remain invested in oil and gas companies—presents us with a paradox: If a university seeks to educate extraordinary youth so they may achieve the brightest possible future, what does it mean for that university simultaneously to invest in the destruction of that future? Given that the university has signaled its awareness of the dangers posed by fossil fuels, what are the implications of Stanford’s making only a partial confrontation with this danger?  In working with our students we encourage the clarity necessary to confront complex realities and the drive to carry projects through to completion. For Stanford’s investment policies to be congruent with the clarity and drive in its classrooms, the university must divest from all fossil fuel companies. To this end we respectfully ask President Hennessy and the Board of Trustees to recognize the need for comprehensive divestment from fossil fuels. When it comes to the future our students will live to see, there is a scientifically documented, morally clear, technologically innovative right thing to do: divest from fossil fuels and reinvest in a sustainable future.

Sincerely yours…

Signed by 447 members of the Stanford University faculty, including the President emeritus of the university, winners of the Nobel Prize in chemistry and physics, and the (Nobel-equivalent) Fields Medal for mathematics.

Fossil-Fuel Divestment: I Did it for My Soul

“For where your treasure is, there your heart will be also.” Matthew 6:21

Some years ago, I was assigned the task of cleaning up a struggling company burdened with millions in unpaid debts. Along with numerous business contracts and operations, I was handed a portfolio of life insurance policies on former executives of the company. If any of them should happen to die, I would have my hands on millions in insurance proceeds that could be used to address pressing company problems.

Well, it happened that one day, word came that one of those executives had fallen seriously ill, perhaps near death.  This man was struggling for his life. But for me, those tantalizing insurance proceeds blinded me to the unfolding mortal drama. I had money at stake, and a job to do. His death – shockingly, in retrospect – would be my gain. I had money invested in a man’s death.

As I look back on this sordid episode, the teaching of Jesus becomes clearer to me than ever: “Where your treasure is, there your heart will be also.” Stated another way, what we invest in will shape the deepest core of our identity, what the Bible calls our souls. They shape what we love, and what we fear; and what we believe. They get us up in the morning, and keep us awake in the wee hours.

Investments shape souls. Jesus tells us so.

After coming to my senses, I swore that I would never invest in death again. I am too morally fragile to tether my fortunes to the harm of others. My soul cannot bear the danger.

Over the years, this commitment has kept me away from the “merchants of death” and conflict minerals, and steered me toward ethical products of many sorts. In recent years, however, a more sinister and pervasive threat has come into focus. Climate scientists in 2014 warned that energy companies like Exxon, Shell, PetroChina and Chevron – which derive their value from enormous reserves of recoverable fossil fuels – will have to leave about 80% of those precious reserves in the ground, if the world is to have a chance of avoiding global climate mayhem.

The divestment campaign is gaining strength. 350.org

The fossil-fuel divestment campaign gaining strength globally. 350.org

That means that four out of every five barrels of oil, or tons of coal, or cubic feet of natural gas that these companies have discovered and developed must eventually be written off.

The market value of fossil fuel reserves today – including the 80% that can’t be burned – is valued at around $27 trillion, a sum which dwarfs the famous U.S. national debt. This means that there is a very, very bad day of reckoning ahead for someone. Either all of humanity will endure unspeakable suffering or worse, or those who invest in the fossil-fuel companies will suffer huge losses.

It became clear to me that investing in fossil fuels is no longer a retirement strategy, or a way of mitigating market risks. It is a decision whether or not to align my soul with unfathomable harm to virtually all of humanity and to all of God’s beloved creation. If I’ve got my own personal slice of those carbon reserves (whether by buying a share of ExxonMobil or by investing in a mutual fund that does), I make money, or avoid losses, only if the entire creation groans and suffers under the weight of climate calamity.

The Bible tells us, in Romans 8, that the whole creation “waits with eager longing” and has been “groaning together in the pains of childbirth,” waiting for a day when something really special begins to happen. And what, specifically is the world is waiting for? You don’t have to look hard: It’s waiting for “the revealing of the sons of God.” You know, women and men like us, who have been adopted as “sons,” who have been given “the spirit of sonship,” who come into the Creator’s presence and boldly call him “Father,” and follow him with the allegiance of family.

Now, Christians have many views about how and when the redemption of the Creation will ultimately unfold. But all of us can agree on this: What God promises to do ultimately, he requires his children to work for in their own time. Yes, God is reconciling all things to himself in a broken world, but he’s appointed his children as “agents of reconciliation.” It’s no good telling ourselves that we can abuse the creation now, since God will renew it at some future “restoration of all things.” Of course, it’s possible that this may be true, but a dreadful surprise almost certainly awaits those of us who knowingly flout God’s purposes in reliance upon divine intervention at a later time

And that brings me back to my promise not to invest in death.  If my Father’s suffering creation really is waiting for the intervention of someone like me, what if I show up with a heart molded by treasures invested in the creation’s harm? In a world on a strict carbon budget, what if I’ve made a bet with my life-savings that we’ll blow through that budget – not once, but five times over? What if my retirement or my prosperity depends on catastrophe for everything that waits for my help?

“God can still save his world,” perhaps you say? Well, certainly. But what about me? What about my soul?

There are lots of good reasons why Christians are choosing to get out of the fossil-fuel business. I did it for myself. For my truest self. I did it for my soul.

Okay, let’s go carbon-free. But how?

It’s one thing for an individual saver to decide to get out of harmful energy investing. But, I’ve found, doing it is another matter entirely. First of all, before selling your existing investments, you’ll have to consider the tax effects. Some will have unrealized taxable gains in their existing holdings, which will be triggered upon sale. So in April a year from now, you may be faced with taxes you weren’t expecting, unless you have offsetting losses.

And then, for small investors like most of us, we can’t just call our investment department like the Rockefellers do (yes, they’re divesting!), and give the order. Most of us will look for sustainable mutual funds, whether we do them on our own or with the company selected by our employer for our 401(k) or 403(b). And here’s the problem: They can be expensive, they can lack diversification, and some aren’t that well-rated. But there are a number you can choose from, and the Forum for Sustainable and Responsible Investment has compiled lists of sustainable mutual funds and account managers with fossil-free indexes that you can use to start your own research. I narrowed down my list based on my own needs and long talks with my advisor, and settled on three:

  • Parnassus Endeavour Fund (PARWX): Large-cap US equities; growth stocks; no energy shares; 1.07% gross expense ratio (GER); Morningstar 4x; 5-yr. return 16.29%
  • DFA Sustainability Core 1 (DFSIX): Mid-cap US equities; growth & value stocks; selections based on proprietary environmental assessment; 0.33% GER; Morningstar 4x; 5-yr. return 15.94%
  • DFA International Sustainability Core 1 (DFSPX): Large-cap non-US equities; growth & value stocks; selections based on proprietary environmental assessment; 0.52% GER; Morningstar 3x; 5-yr. return 6.66%

For me, the process took several months. I had to overcome my own misgivings, and a degree of skepticism from advisers. I had to prayerfully consider the potential impacts on savings I had cultivated over decades. But in the end, I made the changes.

My choices were sensible by financial metrics. But as a follower of Jesus Christ, I realized that there were far more important issues in play than risks and returns. I think that’s what Jesus had in mind when he asked: “For what does it profit a man to gain the whole world and forfeit his soul?” (Mark 8:36)

Yes, gain and loss may well hang in the balance. But for me, so does my truest self. And I’m not going to forfeit that for anything – least of all, for harmful oil profits.

Note: Some other sustainable funds:

  • Green Century Balanced (GCBLX)
  • Green Century Equity (GCEQX)
  • Pax World Growth A (PXGAX)
  • Portfolio 21 Global Equity R (PORTX)

What Would Jesus Invest In?

“The kingdom of heaven is like treasure hidden in a field, which a man found and hid; and for joy over it he goes and sells all that he has and buys that field.” Jesus of Nazareth (Matthew 13:44)

Twelve years ago, Rev. Jim Ball and Evangelical Environmental Network launched a campaign with a clever catch-phrase: “What would Jesus drive?” A few months later, he climbed into his blue Prius hybrid for a tour of the Bible-belt, speaking to churches in 14 cities, and winding up on Diane Sawyer’s Good Morning America.

“We wanted to have people start to think of their transportation choices as moral choices,” said Ball, “and to a certain extent we succeeded.”

Rev. Ball and his hybrid. NY Times photo

Rev. Ball and his hybrid. NY Times photo

Today, efficient vehicles are widely seen as a component of ethical living, and the U.S. is on the way toward implementing a 54.5 mpg vehicle efficiency standard.

And additionally, people all over the country are also beginning to ask a related question: “What moral choices are reflected by the investment of our savings?” For Christians, perhaps, “What would Jesus invest in?”

Of course, the Bible provides abundant guidance on matters of money. But for a moment let’s focus on Jesus’ one-sentence parable often called “The Hidden Treasure,” about gold discovered buried in a field. Yes, the treasure is hidden, but not hidden from you. You know it’s there, and you’re willing to sell your heirlooms, real estate, livestock or anything else of recognized value in order to capture the hidden riches.

Now maybe you’ve always thought of this parable in purely spiritual terms. If so, you were probably right. But the parables of Jesus make sense because they call upon tangible everyday realities to illustrate transcendent truths. And the tangible reality of investing is that most buyers and sellers don’t know how to properly value things. They miss the hidden value – or the hidden liability. They might know the value of a farm field, but they don’t know about the gold buried there. And sometimes what’s hidden is not treasure, but toxic liabilities.

It turns out that Jesus’ investment thesis has taken center stage in today’s very largest companies – the huge fossil fuel giants that dominate our stock markets these days – ExxonMobil, Shell, BP, Chevron and the like. And that’s because these companies derive their value mainly from their “proven reserves” of oil, gas and coal. The idea is this: An investor who buys shares in these companies is really buying a tiny slice of the value of the fossil fuels they’ve discovered and locked down under leases. The investor will make a profit if what he or she pays for the stock is reasonably in line with the income that the fuel reserves will generate when produced, refined and delivered to market over the next decade or two.

And these companies have huge reserves. The 200 largest fossil fuel companies control proven reserves containing 2,795 gigatons of CO2 locked inside them from millions of years of natural processes – and that’s not counting unconventional fuels like Canada’s tar sands or America’s shale oil. 2,795 gigatons. Now here’s the problem: climate scientists have concluded that we can’t afford to burn any more than 652 gigatons of CO2 between now and 2050, if we want to leave our children a fighting chance of having a world no more than 3.6 degrees Fahrenheit hotter than it was in the last century.

Now, 3.6 degrees hotter will be terrible, but if we want it to be no worse than that, then 652 gigatons of CO2 is all that the whole world can burn.

So whatever a gigaton of CO2 might look like, you do the math: The world’s oil companies have enough proven reserves on their balance sheets to burn 2,795 gigatons into the atmosphere. But the world can only afford to let them produce 652 gigatons’ worth, or we cook our children’s future. That means that 77 percent of proven, controlled, leased reserves of oil, gas and coal of these companies have to stay in the ground. The International Energy Agency puts the leave-it-in-the-ground percentage slightly lower, at two-thirds. The World Bank now calls these reserves “stranded assets,” and frets about pensions invested in those companies.

Bill McKibbon of 350.org "Do the Math." Photo grist.com

Bill McKibbon of 350.org “Do the Math.” Photo grist.com

And, oh by the way, it follows that all current exploration and development for new fossil-fuel reserves is nothing but wasted money. Unless, of course, the oil companies are willing and able to somehow fundamentally destabilize the world our children will inherit, and if we let them use their enormous wealth to purchase the support of politicians who will permit it.

But whatever you think of human nature, you probably don’t think that the world will actually condemn its children – and all the world’s other species – to a future of increasingly prevalent hunger, drought, ocean acidification, flooding and species extinction. With each passing year, rising CO2 concentrations accompanied by rising temperatures and increasingly extreme weather will surely make climate denial less and less tenable.

So just how much longer can we imagine that the world’s nations will permit fossil fuel companies to continue producing the thing that threatens the viability of life on our planet? Perhaps we will blow through the scientific carbon budget and make the world a terrifying 3.6 degrees hotter. But do we really think that we’ll do that three or four times over, by producing all the the proven reserves of these companies?

And that brings us to a very practical investment question: Since it simply must be that the people of the world will eventually fight back against fossil-fuel carbon pollution, who would invest in a company whose investment model calls for producing roughly three times more carbon pollutants than the world can possibly permit?

I think that Jesus’ parable of “The Hidden Treasure” is speaking more clearly than ever today. Investors are looking for hidden value; and are increasingly wary of hidden liabilities. In the case of oil, gas and coal companies, the hidden truth is becoming clearer day by day: Investors are being asked to pay for reserves that are indeed in the ground, but simply cannot be produced without dire consequences to the world and its creatures, including humans. And the more this reality sinks in, the further their values must plummet.

So if you’ve wondered about those people demanding divestment from fossil fuels in their portfolios, perhaps this is one instance where ethical investing and profitable investing line up nicely.

What would Jesus invest in? I can’t say I know for sure, but I don’t think it would be ExxonMobil.

Note: Bill McKibbon and 350.org have launched a nationwide campaign called Do the Math, which highlights in clear terms the necessity of leaving fossil fuels in the ground.