Rockefeller fund chief expands on planned shift from fossil fuels to ‘mission-aligned’ investments

Rockefeller Brothers Fund’s Stephen Heintz addresses German forum

The Rockefeller Brothers Fund (RBF), the $866m (€768m) charitable foundation created by descendants of Standard Oil founder John D. Rockefeller, says it wants to be completely divested from fossil fuels by 2018 and have at least 10% of the portfolio re-allocated to “mission-aligned” funds, including those that target renewable and energy efficiency projects.

RBF President Stephen Heintz said that since its groundbreaking announcement last September that it was exiting fossil fuels, the foundation had whittled its exposure down to just above 4% of assets.

This was achieved by selling off companies involved in coal production or oil extraction from tar sands. “Looking forward, our goal is to get as close to zero exposure to fossil fuels as we possibly can over the three years,” said Heintz, who spoke via video link at a Berlin Investment Forum organised by German newspaper Der Tagesspiegel.

Heintz’s remarks differ slightly from those made to Responsible Investor during an interview last November. Back then he said that while the RBF would exit coal and tar sands, it was not sure whether it would pull out of the gas sector. This was because some on the RBF’s board believed that natural gas could serve as a “bridge fuel” while renewable energy became a bigger part of the energy mix, he said.

The RBF is one of 70 US-based foundations and other investors that have signed the so-called “Divest-Invest” pledge. Under it, signatories promise to divest from fossil fuels and re-allocate the proceeds to renewable or energy efficiency projects.

As to the invest side of the pledge, Heintz said the RBF had already allocated $35m to two “mission-aligned” funds. Such funds, according to the foundation, target renewable and energy efficiency projects as well as other impact investments like social housing and microfinance.

Heintz told the forum from New York: “Our goal is to achieve 10%, or $86m, in mission-aligned investments over the short-term and then increase the percentage as we go forward.”To handle these investments and indeed manage the foundation’s entire portfolio, the RPF has hired Perella Weinberg Partners, an asset manager also based in New York.

Delegates at the Berlin forum also heard from climate change experts, including Hans Joachim Schellnhuber, Director of the Potsdam Institute for Climate (PIK) and Klaus Töpfer, a former German Environment Minister and ex-Executive Director of the United Nations Environment Programme (UNEP).

“Our goal is to get as close to zero exposure to fossil fuels.”

Schellnhuber began the event with a grim presentation, pointing out that last year, carbon dioxide (CO2) emissions rose to 400 parts per million (ppm) – or 45% above natural levels. He said if nothing were done to curtail CO2 emissions, sea levels could rise to as much as 50 meters hundreds of years from now, putting the German capital effectively under water. The considerably warmer and drier planet would be also be inhospitable for most developing countries. “Climate change is also extremely unfair, as it would hit those in the developing world hardest,” Schellnhuber said.

With respect to policy, the German scientist added that in order for world leaders to keep global temperature from rising more than two degrees by 2100, fossil fuel reserves that cause 11,000 tonnes of CO2 had to be left in the ground.

Töpfer told the forum he was confident that at the upcoming climate summit in Paris this December, world leaders would come to some sort of agreement with respect to limiting global temperature rise to two degrees. “If that happens, it will send a very strong signal to investors. And that is: Investing in fossil fuels will be a disaster because the industry faces a bubble.”