In game 6 of the NBA championships, Lebron James led the Miami Heat past the San Antonio Spurs, winning 103-100–the same day the Miami heat index reportedly reached 103. If Lebron James is the face of the NBA champion Miami Heat, environmental activist Bill McKibben is the face of the national fossil fuel divestment movement led by 350.org.
McKibben’s campaign to mobilize investors to divest from the companies that hold the world’s 200 largest fossil fuel reserves has an important relationship to temperature, in Miami and globally. The International Energy Agency has stated that to keep temperatures within 2 degrees Celsius of pre-industrial levels, we cannot burn more than one-third of the world’s known fossil fuel reserves before 2050. Experts suggest that above 2 degrees Celsius, human habitability and earth ecosystems become fatally compromised. This temperature target was the catalyst for McKibben’s call to divest, a call that has been answered by five colleges and eleven cities nationally to date.
At the heart of the movement are student leaders at campuses across the country, calling for college endowments to divest for ethical and symbolic reasons. The fossil fuel divestment movement seeks to create dialogue and motivate university trustees, who are decision makers on over $400 billion in endowment assets, to consider the responsibility in addressing global challenges such as climate change.
The Role of Sustainable Investing
Sustainable investors, like Veris, have long promoted re-allocating investment capital away from carbon intensive companies towards climate change solutions. This includes investments in alternative energy, energy efficiency, natural resources (e.g. water, farmland, and forestry), green building and green infrastructure developments.
While global fossil fuel reserves are a critical data point to consider when investing in the energy sector, as pointed out by McKibben’s movement, there are many other key considerations–hydrofracking, pipeline development and rapidly changing technology–for sustainable investors. Furthermore, sustainable investors use Environmental, Social and Governance (ESG) investment criteria to consider factors beyond a company’s fossil fuel reserve size. These criteria include specific data points, such as a company’s decision-making process from a governance perspective, impact on the community and treatment of workers.
At Veris, we practice a holistic portfolio approach to mitigate climate change. We enable our clients to divest as appropriate, invest proactively in climate change solutions, support shareholder engagement to shift corporate behavior of the worst environmental offenders across all asset classes. We are not alone in this approach. Many leaders, including those at the center of the divestment movement, agree. The fossil fuel divestment movement, mentioned by President Obama in a recent speech, is a catalyst for transformational dialogue across mainstream board rooms around risk and responsibility.
At Veris, we advance connections between our clients, their investment portfolios, and the world they want to create. We all live in a world where we cannot escape fossil fuels–from the clothes we wear, the food we eat, to the cars and planes we travel in. We can, however, use our assets–as individuals, municipalities and endowments–to increase investment in climate solutions that transform our lives and economy.