Investing in fossil fuels goes against health charities' aims, says Jonathon Porritt
Charities that work on solving problems connected to climate change should not invest in fossil fuel companies that are "out of kilter" with their charitable aims, according to top environmentalist Jonathon Porritt.
He spent years working on green energy projects with BP and Shell but now believes that engagement with fossil fuel companies is pointless.
Porritt, who is the founding director of the sustainability non-profit Forum for the Future (FFF), said fossil fuel companies had passed by “limitless opportunities to put their houses in order” and transition to a more sustainable economy.
“[They’re] all smart, are paid god knows how much money to steer through these complex areas, are betraying shareholders in terms of securing long-term value creation and risking the destruction of massive value inside the company. There comes a point when you say this isn’t going anywhere and we have to try something else.”
In March, the Guardian launched its Keep it in the Ground campaign calling on the world’s largest charitable foundations – the Bill and Melinda Gates Foundation and the Wellcome Trust – to divest their endowments from fossil fuels companies.
More than 220 institutions – including pension funds, universities and faith organisations – around the world have now made the commitment to divest from fossil fuels in a fast-growing campaign started by the environmental organisation 350.org.
According to a series of scientific analyses, between two-thirds and four-fifths of the world’s proven fossil fuels must be left in the ground if global warming is to avoid surpassing the 2C limit for dangerous climate change agreed at international negotiations.
The Wellcome Trust, which funds medical research including ground-breaking work on malaria and ebola, has refused to divest, arguing that their holdings allow them to actively engage with fossil fuel companies, which they say is a more effective strategy for environmental progress.
Writing in the Guardian, director Jeremy Farrar said: “We understand the attraction of the grand gesture for which the Guardian is calling, but such a gesture can be made only once. By maintaining our positions, we meet boards again and again, supporting their best environmental initiatives and challenging their worst.”
He added: “when we are not satisfied that a company is engaging with our concerns, we are perfectly prepared to sell.”
Porritt described the medical charity’s position as “probably tosh”, arguing: “both [the Wellcome Trust and the Gates Foundation] are in a seriously hard place: both pursue public good objectives and have been extremely outspoken about the impact of climate change. You cannot persist with a set of investment principles that are totally out of kilter with the mission of your charity.”
He continued: “if you’re sitting in Wellcome you’ve got a choice – you either go along with the [fossil fuel] company’s reassurances or you say ‘that’s not good enough: give us some evidence that you’ve done the hard work – show us what your company is going to do in a 2C world. Show us how you’re going to diversify your portfolio and protect shareholder value over the next 15 years, not over the next two years. Do all of that work in the public domain and maybe then we will think about maintaining our holding in your company.’”
The foundations should pursue a “progressive” divestment strategy said Porritt, by first removing their endowments from exclusive to integrated coal companies, followed by gas then oil corporations.
Founded in 1996, FFF previously had sustainability partnerships working with four of the big six energy companies; one of their founding projects was working with BP Solar to investigate the upcoming solar market. However, Porritt said he ended the partnerships when it became clear that: “us and others had not succeeded in persuading enough people inside the company to begin to reduce the degree to which the extraction of fossil fuels contributes to their profits.”
Porritt was prominent in the early rise of the Green Party – then called the Ecology Party – in the 1970s and was its chair for several years. He went on to become director of Friends of the Earth in the UK. He has advised the Prince of Wales, Marks & Spencer and government, leading the Sustainable Development Commission.
Porritt said that fossil fuel companies had made “a genuine attempt” to work through the issues of climate change:
“We persevered working with Shell and BP for a long period of time. There was a genuine opportunity to reduce dependence on fossil fuels and ramp up the annual investments in everything else – efficiency, renewables, better understanding of how energy is used in society, and possibly even carbon capture and storage. They looked at it hard and moved away.”
Porritt said it is “difficult” to know if shareholders could make more of an impact by divesting from or engaging with fossil fuel companies but said he would be “hard put” to find an example of where shareholder engagement on its own had led to change.
He said: “It depends very much on the nature of the organisation looking to divest and the degree to which their investment strategy is judged to be compatible with their core mission.”