Editor
The decision by the Rockefeller Brothers Fund to divest its oil investments is certainly symbolic, but is it significant?
There’s no doubt that the decision by the $860 million Rockefeller Brothers Fund to reinvest its fossil fuel money in clean energy represents a pretty symbolic moment.
John D Rockefeller – who founded Standard Oil in 1870 – is one of the towering figures; some would argue the father, of the international oil industry. So the news that a charitable fund bearing his name is turning its back on the stuff that made the family fortune was always going to raise a few eyebrows. The fact that the announcement was timed to coincide with the current UN Climate change summit gave it extra punch.

Before we get carried away it’s worth stressing that the announcement is perhaps not quite as dramatic as some have claimed.
Indeed, whilst the tone of some headlines might imply that the Rockefeller family’s entire oil wealth is being sunk into renewables, the reality is more low-key. The Rockefeller Brothers Fund is one of a number of charitable funds – such as the much larger $1bn Rockefeller Foundation – all of which have heavy investments in the oil industry. And as yet, there’s no indication that these other funds are likely to follow suit.
Nevertheless, the decision is significant as well as symbolic.
The Rockefeller Brothers Fund is now the most high profile convert to “divest-invest”, a global initiative which began life on US university campuses around a decade ago and claims to have persuaded over 181 institutions to redirect $50bn of oil investments into clean energy.
For many, the goals of the movement will no-doubt be seen as fluffy and idealistic. And some will undoubtedly argue that any investors following this path have been duped, and are putting misplaced ethical concerns ahead of economic common sense.
But whilst most of those signing up to “Divest-invest” will be motivated by ethical concerns, the appearance of the Rockefeller name reinforces a growing perception that hard-nosed economics is playing a role here too.
In his landmark 2006 report – Nicholas Stern, one of the most influential voices on climate change – argued that concern for the climate and economically sustainable energy policies were, far from being mutually exclusive, actually deeply entwined. Could the blossoming interest in initiatives such as divest-invest be evidence of this phenomenon in action?
What’s more, even if you disregard concerns over climate change it’s certainly arguable that thanks to a combination of geology, geography and geopolitics the economics of fossil fuel extraction are becoming less attractive.
Perhaps it’s no real surprise that one of oil’s oldest families should be looking elsewhere for a return on its investment.
This is great news for the environment and future generations!
Can we just get something clear in the minds of any who might be unaware of the actual situation vis-a-vis the Stock Exchange, so-called investments therein, the buying and selling of shares by large so-called institutional investors, and so on. Apart from the initial ‘capital’ subscription shares (and their purchase by the original investors) the subsequent buying and selling of shares has NO effect whatsoever on the day-to-day running of the companies whose shares are being bought and sold. Because there is no link!
Yes, share price is a measure of what ‘the City-whatever that is!- believes might be the worth of a firm -but only as a vehicle to sell (or buy) such to or from other so-called investors. And of course to ‘bump-up the share oprice at times of a bid: again from an outside party.
Think of Stock Exchanges as a horse-race in which only the jockeys move -and they only from side-to-side- as they switch horses to get a faster ride on a bigger horse.
Best
Mike B
Mike,
Strictly NOT true, if the “City” dumps your shares you will have greater difficulty in raising capital or loans to expand your business, because of the “perceived” impression of the failure of the business to satisfy the present holders of your shares.
Sensible move,
irrespective of present economic and environmental concerns; the world is moving politically away from oil and coal.
Why invest in a socially undesirable industry when there are pet activities of the political classes which are getting their patronage.
Even if your wares are superior, if no one wants them, or they are taxed into oblivion; your market is obviously doomed.