Ford Foundation’s $16 billion fund accelerates shift to green

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The Ford Foundation, started by the son of Henry Ford and now one of the largest private family foundations in the world, will cease to invest in fossil fuels and emphasized its commitment to shift its focus to green assets. 

The $16 billion philanthropic behemoth, which owes its fortune to the Ford Motor Co., is looking for opportunities in “alternative and renewable energy funds that support the needed transition to a green economy,” according to a statement Monday from the New York-based organization. 

Just 0.3 per cent of the fund is currently invested in fossil-fuel companies and it hasn’t made a direct investment in such companies since 2013, the foundation said. It also has exposure from legacy investments it made as a limited partner in private equity funds. These are in runoff mode and will end as the “partnerships are liquidated,” according to the statement.

“We face profound challenges on an existential scale,” said president Darren Walker. “Fires and floods are worsening — and on top of it all, the distortion of our market system, and the inequality it’s produced, have overloaded the burden of these disasters onto the backs of the poor, the marginalized, and the vulnerable.”

University endowments and foundations are increasingly vowing to make zero investment in fossil-fuel companies, often at the behest of student activists. Harvard University said last month that it will instead use its endowment to support the green economy.

Robust Returns

Fossil-fuel producers have offered relatively robust returns to investors over the past 12 months. The MSCI World Integrated Oil & Gas Net Total Return Index, which includes companies such as Exxon Mobil Corporation and Royal Dutch Shell plc, has risen more than 80 per cent in the period, compared with about a 30 per cent increase in the broader S&P 500 Index. 

The oil companies’ recent gains, driven by a recovery in energy prices from a pandemic-induced slump, ran counter to the trend of the preceding five years. Their investors saw a net loss of 21 per cent over that period, compared with a total return of 62 per cent in the wider index. 

Harvard Management said in 2017 it would it take into consideration the environmental impact of some of its investments, but that move wasn’t seen as enough by the students. Harvard’s endowment was valued at a record $53 billion at the end of June, making it one of the largest among private U.S. universities.

The Ford Foundation, which focuses on fighting inequality, has increasingly turned its attention to climate change. It has sent $311 million to organizations working for environmental justice in the past five years, according to the statement.

Laurene Powell Jobs, widow of Apple Inc. co-founder Steve Jobs and president of the Emerson Collective, was appointed to the Ford Foundation’s board last week.

© 2021 Bloomberg L.P.

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