There’s a global climate/ecological emergency, and SA philanthropies must divest from fossil fuels
The climate crisis threatens every area of human development that philanthropies seek to build. Which is why philanthropies have been amongst the leaders of the multi-trillion dollar global divestment movement. In South Africa, warming twice as fast as the global average, our philanthropies should be divesting from fossil fuels, the biggest cause of human-induced climate change, for three key reasons:
- To protect your beneficiaries’ human rights, or rights to life,
- to ensure that your own reputations are not battered by continuing to profit from a global human rights crisis,
- and to protect your finances from the financial effects of climate change, declines in the value of carbon-intensive assets, stranded assets and a possible carbon bubble.
A responsible investment strategy that covers other environmental, social and governance (ESG) issues besides climate is very important, but we believe fossil fuel divestment should be the first step for philanthropies pursuing a responsible investment strategy, for two reasons:
- Climate is now so urgent an issue that responsible trustees cannot wait any longer to act. Every moment that capital is invested in carbon-intensive assets rather than renewable energy pushes Earth’s climate closer to irreversible tipping points.
- Establishing the fossil-free funds needed in South Africa to facilitate divestment can to some degree ‘automate’ other ESG decisions, as any credible fossil-free fund should screen for a range of ethical/ESG issues besides climate. (We sometimes call this ‘fossil-free ethical plus’.)
IEEFA: The financial case for fossil fuel divestment
This detailed 2018 report from the Institute for Energy Economics and Financial Analysis, co-authored by former New York state comptroller Tom Sanzillo, makes the financial case for divestment. It does not present a specific case for divestment in South Africa, but many of the arguments hold true for SA, and are of course directly relevant to any offshore investments held by SA philanthropies.
Fossil Free SA: Our presentation to philanthropies in Johannesburg
In February 2020, together with various partners including Just Share, we put the argument for fossil fuel divestment to a small group of representatives of four philanthropies and the Independent Philanthropies Association of South Africa. See our slides from that occasion.
Croatan Institute: Philanthropies that have divested are benefiting
The Croatan Institute recently published a report ‘Divest Invest Philanthropy: Five Years After Launch’ that summarised the experiences of 200 philanthropies that have chosen to divest. Most respondents (94%) indicated that their financial performance since taking the divest pledge has been positively or neutrally affected.
It's challenging for individual philanthropies to divest, but together we can create the resources we need to make this vital step easy
Need to know more?
Watch Wallace Global Fund director Ellen Dorsey make the case for divestment at the 2019 Mission-Aligned Investment seminar we co-hosted with Just Share and 350 Africa in Cape Town. (And here’s a 2-minute summary.)