WASHINGTON (REUTERS) - More than a dozen foundations representing more than US$2 billion (S$2.5 billion) in assets said Thursday they will stop investing in fossil fuel companies as both the World Bank and United Nations chiefs strengthen calls for divestment from "high carbon" assets.
The Divest-Invest Philanthropy coalition includes foundations, such as the Park Foundation, the John Merck Fund and the Schmidt Family Foundation - co-founded by Google Inc Executive Chairman Eric Schmidt - in the United States, as well as the Joseph Rowntree Charitable Trust abroad.
Its members said continued investment in fossil fuels presents financial and ethical risks and that it urges other foundations to follow their lead.
"Starting today, we pledge to use all our assets - not just the usual 5 per cent yearly payment of grants - to advance our goals, values and beliefs," said Ellen Dorsey, executive director of the Wallace Global Fund and the originator of the Divest-Invest initiative.
The foundations said they will follow in the footsteps of a few successful historical divestments, including movements that targeted apartheid South Africa starting in the 1960s.
The announcement comes amid growing calls made at the recent Davos World Economic Forum and by UN climate chief Christiana Figueres urging companies to back away from investing in carbon-intensive fuels.
Meanwhile, student movements in the United States have put pressure on their universities to divest from fossil fuels.
"And we are relying on a growing list of financial analyses that refute the conventional wisdom that divesting from fossil fuel stocks leads to greater risk or lower returns," said Ruth Hennig, executive director of the John Merck Fund.
The International Energy Agency said last year that if governments were really committed to limiting the rise in global temperatures, two-thirds of the currently known oil, coal and gas reserves would have to be left in the ground.
However, the non-profit Carbon Tracker Initiative estimated that the top 200 oil, gas and mining companies have planned US$674 billion (S$860 billion) to finding and developing even more fossil fuel reserves.
The divestment group said that continuing to invest in fossil fuels is a financial risk, as it exposes companies to a"carbon bubble" when cleaner energy sources are a more attractive investment.