“Burning fossil fuels is not necessary to sustain our economy and long-term economic growth, and is detrimental to our climate future,” Rajiv Shah, president of the Rockefeller Foundation, told CNN Business in an interview exclusive.
By deviating from fossil fuels and instead investing money in clean energy like solar energy, the foundation strives to accelerate the energy transition.
“It helps place the thumb collectively toward a more sustainable future. That’s our hope. That’s our aspiration,” said Shah, who previously headed the U.S. Agency for International Development. (USAID) during the Obama administration.
Famous family cuts ties with oil
The Rockefeller Foundation is the largest philanthropic organization out of fossil fuels, but it is not the first in the famous family to do so.
Over the past six years, the Rockefeller Foundation’s fossil fuel footprint has halved to just 2% of total assets, reflecting the industry’s deep decline. This relatively small exposure makes divorce less messy today.
“It’s absolutely easier now than it was five, 10, 20 years ago, no doubt,” Shah said, adding that the foundation’s exposure to fossil fuels will reach zero “fairly quickly”. He added: “We are doing it now and we would love for our similar institutions to join us.”
A record year of divestments
The divestment movement is gaining momentum, along with increased ESG (environmental, social and governance) investment.
Other estimates are even higher. According to Raymond James, the funds that controlled a total of about $ 18 trillion had a fossil fuel divestment policy as of August 2020, surprising growth from just $ 2 billion in 2014 and $ 3 trillion. dollars in 2015.
There is a long history of divestment moves, including previous efforts to take money away from the defense, alcohol and tobacco industry. Fossil fuels have been set on fire in recent years due to growing attention to climate change.
“We know the climate crisis is absolutely urgent,” Shah said.
The consequences for oil and gas
Although fossil fuel divestments initially focused on coal and the dirtiest forms of oil drilling, it has expanded into oil and gas companies generally creating a new headache for a messy industry. .
According to Raymond James, the energy sector of the S&P 500 (largely oil and gas companies) has performed lower than the broader market in nine of the last 11 years.
“A lot of funds don’t want to invest in these companies simply because they’ve been terrible investments over the last decade,” said Pavel Molchanov, Raymond James ’energy analyst.
The risk is that the divestment move will amplify pressure on the oil and gas industry by increasing the cost of capital through higher debt costs and depressing capital valuations.
By retiring from fossil fuels, the Rockefeller Foundation is pledging $ 1 billion to support the global green recovery from the pandemic, the largest investment in the foundation’s history.
The biggest project of this commitment is striving to bring solar energy to rural households in India cut off from the electricity grid.
“You just can’t raise your living conditions or go up the ladder of economic opportunities if you don’t have access to electricity,” Shah said. “This Covid-19 crisis has worsened [and] it removed the covers of the extraordinary inequity of our society and of the whole world. “
Countless jobs at stake
“To make these transitions effectively, we can’t leave community after community behind community and leave their future behind,” Shah said. “We need to reinvest in his sense of dignity and his enthusiasm for the future.”
“We can build an economy of innovation,” Shah said, “even in places like the industrial Midwest, the Appalachian states, and other places where the oil, natural gas, and coal industries have been dominant sources of both employment and culture “.
Shah said history will not kindly look at Trump’s climate trajectory: “Dismissing reality does not make it disappear.”