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Valerie Rockefeller is a divisive, transformative figure, as she’s shifting from the fossil fuels that made her family rich to renewables. But, is it a move to secure the environment, or the next income stream?
Granted, this week’s visionary is more or less symbolic. Success and good ideas have many fathers, as we know, and I realise that Valerie Rockefeller is not the person who came up with divestment. She is, though, its poster girl, so deserves a spot in our pantheon of leaders, men and women who are not afraid to say “yes” and “bring it on” to notions that have the rest of us scratching our heads. In the case of Valerie Rockefeller, that also meant putting her money where her mouth was. 300 million American dollars so far, to be precise. That is what the Rockefeller Brothers Fund has so far invested in sustainable projects, social governance, public equity funds and research into climate issues. At the same time, the fund has pulled out of its investments in coal and tar sands and is in the business of getting rid of its shares in oil and gas. Valerie Rockefeller, Chair of the fund, has been instrumental in this change of direction. For her it was a “moral obligation”, a way of making amends, you could say. But still: action is action, and maybe even more courageous if you’ve got a tainted history.
Divestment is the new black at the moment. Persuading big corporations and foundations to pull out of fossil fuel investments was nothing more than a pipedream when it started on American university campuses in 2011. It didn’t really fly in the beginning, either. In 2013, the president of one of the biggest and richest universities in the US, Harvard, ridiculed the idea by saying that her institution was involved in academia, not politics. The money was not, she said, “an instrument to impel social or political change” and could outsiders please keep their hands out of the 35.7 billion dollar trough? Then, in September 2014, the Rockefeller Brothers Fund called the world’s media to its offices in New York. It was, the BBC wrote, “more revivalist meeting than press conference. There was whooping, cheering, hollering and stamping of feet.” There were actors who spoke, and Bishop Desmond Tutu in a live feed from Johannesburg. The timing was carefully chosen: only days from the Climate Summit in Paris. That year, 181 institutions and 656 individuals pledged 50 billion dollars’ worth of divested assets. In September 2015, there were 436 institutions, 2,040 individuals and the amount had risen to 2.6 trillion. Last year, in December 2016, 688 institutions, almost 58,000 individuals, from 73 countries were responsible for 5.5 trillion dollars in assets. City councils, pension funds, governments, colleges and universities, foundations and charitable endowments, religious organisations: more and more people had taken article 2 in the 2015 Paris Agreement (“making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”) seriously. And Valerie Rockefeller had helped to keep the momentum going.
Of course, there was a lovely irony there. John D Rockefeller, Valerie’s great-great grandfather, made his enormous fortune from oil, founding Standard Oil in 1870. According to Fortune, there was a time when he controlled 90% of all the oil in the US. John D Sr, as he is called in the family, is regarded the richest man in modern history, the US’s first billionaire, with a wallet worth nearly 2% of the national economy. He was also a great philanthropist, giving away 540 million dollars over his lifetime. His son, John D Jr wasn’t bad at that either, with 537 million, while his grandson David, who died earlier this year, wrote cheques to the tune of almost 900 million. Twenty American national parks owe their existence to the Rockefellers, quite a number of universities and schools, and without the family, the United Nations would have had to pay for the land it built its headquarters on.
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David was one of the brothers who gave their name to the fund that Valerie now chairs. It has an endowment of about 870 million dollars and since its inception in 1940, it has tried to not just make money and give out grants, but also to use those grants to “advance social change that contributes to a more just, sustainable and peaceful world”, as its mission statement reads. The Rockefellers are no strangers to politics, of course. Nelson, one of David’s brothers, was the American Vice-President under Gerald Ford from 1974 to 1977. Valerie’s father Jay (or John D IV) was the governor of West Virginia from 1976 to 1984 and a Senator from 1985 to 2015. The girl herself worked as a confidential assistant to Secretary Richard Riley at the US Department of Education during the first Clinton Administration.
The RBF engages in “philanthropy for an interdependent world”, as it says on its website, and these days that apparently means divestment. In fact, quite a while before divestment became even a word, the fund already invested 75 million dollars into climate research, under its 1984 Sustainable Development Program. In 2004, the family members, who are the fund’s trustees, also tried to use their proxy voting privileges as shareholders in ExxonMobil (one of the successors of Standard Oil) to “encourage it to confront and acknowledge the dangers of climate change”. When that didn’t work, its President, Stephen Heintz, persuaded the board “to commit to investing 10% of the endowment into ‘sustainable investments’ that would create ‘long-term social, environmental and financial value’.” Valerie and her colleagues agreed, but in the years between 2010 and 2013, progress was slow. Only when the fund engaged new managers in 2014, just before the divestment announcement, did the idea gain momentum. Now the goal is 20% and people like Valerie Rockefeller openly describe themselves as “activists”.
During the 2014 press conference, Heintz and Rockefeller said that they had felt “increasing discomfort about the disconnect between their money and their mission” and that had been “morally hypocritical and unacceptable”. With the bulk of the grants going to sustainability projects, “it felt like we were compromising ourselves” by still investing in fossil fuels, Heintz said. To Valerie, “it just made sense”. To a website called “LeftExposed” – a project of the Heartland Institute, a free market think tank in Illinois’ that thinks climate change is bull and anybody left of Hitler a dangerous communist – this has put the fund into the category of “donors to anti-technology and left-leaning activists in the United States. The RBF funds or has funded virtually all the radical environmental groups in the US. It is responsible for the Left’s takeover of the environmental movement since the 1990s” and “is a major example of prescriptive grant-making used to drive their ideological agenda.”
Poor right-wing conspiracy theorists. In March 2016 it would get worse, with the Rockefeller Family Fund, that gives away part of the fortune of the 4th generation, also deciding to divest. It has a 130 million dollar endowment and vowed to get rid of the 6% of its portfolio that was invested in fossil-fuel companies. Also: “any proceeds from the liquidation of fossil-fuel investments will be rerouted into ‘suitable alternatives’ in the socially responsible investing space”, Director Less Wasserman said. “While the global community works to eliminate to use of fossil fuels, it makes little sense – financially or ethically – to continue holding investments in these companies. There is no sane rationale for companies either to continue to explore for new sources of hydrocarbons… We must keep most of the already discovered reserves in the ground if there is any hope for human and natural ecosystems to survive and thrive in the decades ahead… Indeed, it is past time for all people of good will to do everything in their collective power to make our new path one that recognises the deep interdependence between humanity’s future and the health of our natural systems.”
More and more it is becoming increasingly legally dangerous to invest in fossil fuels. Oil, coal, gas and iron ore are at best problematic, and once the international community starts taking the Paris Agreement seriously, that could wipe out half the market value of many of the companies in those markets.
In the statement, the family representatives in the fund also took a swipe at ExxonMobil, at the time under investigation for hiding the risks of climate change from investors and the public. “We would be remiss if we failed to focus on what we believe to be the morally reprehensible conduct on the part of ExxonMobil… As a matter of good governance, we cannot be associated with a company exhibiting such apparent contempt for the public interest”, they said. ExxonMobil struck back immediately, accusing both Rockefeller Funds of “funding a conspiracy against us”, by providing financial support to an investigative journalism project that asked questions about the “company’s record of disclosures about its climate-change research”.
More and more, it seems that companies like ExxonMobil are rearguard fighters, trying to defend themselves with pikes while the world has already switched to nuclear bombs. The reason for that is not that capitalism has suddenly turned ethical. What does seem to matter is that it is becoming increasingly legally dangerous to invest in fossil fuels. In October 2016, our own Centre for Policy Development and the Future Business Council published a legal opinion that said that climate change risks may be relevant to a director’s duty of care and diligence, and that “it is conceivable that directors who fail to consider ‘climate change risks’ now could be liable for breaching their duty of care and diligence in the future.” One of those climate change risks is that with new regulations, new technologies and new alternatives, fossil fuel investments are economically risky. The markets in oil, coal, gas and iron ore are at best problematic, and once the international community starts taking the Paris Agreement seriously, that could wipe out half the market value of many of the companies in those markets.
As the chairman of the Rockefeller Family Fund, Bevis Longstreth, wrote: “fiduciaries have a compelling reason, on financial grounds alone, to divest these holdings before the inevitable correction occurs.” Or, as Valerie Rockefeller herself said: divestment is not just a matter of ethics, but of good economic sense. “If John D Rockefeller were alive today, as an astute businessman looking out to the future he would be moving out of fossil fuels and into investing in clean, renewable energy,” as Heintz has stated. “The tipping point,” Valerie argues, “will come when mounting losses awaken investors to the false security of fossil-fuel investments. ‘If you look back, when John D Sr got into the business, we got our oil from whales. Preposterous, right? His big breakthrough was to get oil out of the ground. The breakthrough now is going to be in clean energy. You should be there at the forefront. Those are the investors who are going to make the most money’.”
Great-great granddad would be proud. And so are we. Go Valerie!