Roadblocks ahead as activists push for Jewish fossil fuel divestment
Jewish protesters demonstrate outside of BlackRock, the world’s largest investment firm, on October 18, 2021. The group was calling on BlackRock CEO Larry Fink to divest the firm’s investments from fossil fuel companies. Photo by Erik McGregor
By Arno Rosenfeld January 12, 2022
When Beth Sirull took over the Jewish Community Foundation of San Diego five years ago, she moved quickly to offer its donors -– including local Jewish groups –- the option to put their money in a fund that “applies a Jewish lens” to its investments. That meant buying Israel bonds, bankrolling affordable housing and using shareholder advocacy to push companies on social and environmental causes.
San Diego’s approach –- versions of which are now available across the West Coast, Midwest and South -– wasn’t driven by outside activists. But it was introduced at the same time that college students, pension holders and others began stepping up calls for the institutions they are affiliated with to divest from fossil fuel companies as a way to head off catastrophic climate change.
That pressure is now slowly extending to the roughly $100 billion held in Jewish endowments and other investments, with this week’s Big Bold Jewish Climate Fest featuring a panel on how to divest from coal, oil and gas companies.
“I don’t think it is going to make or break the fossil fuel industry,” said Phil Aroneanu, chief strategy officer for Dayenu, a Jewish group focused on climate activism. “But it will have a cultural impact and help tell the story that we’re aligning our spiritual and moral compass with our investments.”
Aroneanu hopes that if fossil fuel investments become anathema in the Jewish community, that will add to the pressure on Wall Street firms that have the power to make or break energy companies. He pointed to a protest in October outside the headquarters of BlackRock, the world’s largest asset manager, where three rabbis and six teenagers were arrested while calling on the company’s Jewish chief Larry Fink to divest from fossil fuels.
But convincing investment managers in the Jewish community to sell off their stakes in companies that contribute to climate change won’t be easy.
“The money that is entrusted to the federation, and to Jewish community foundations across this country, is all money that has to be managed in a way that is good for the community now,” said Tony Abrams, the community foundation director at the Seattle federation, which is in the process of creating a sustainable investment option for donors. “But we’re also holding that money in trust for future generations.”
Long road ahead
The two largest sources of wealth in the Jewish philanthropic world are endowments and funds managed by community foundations on behalf of individual Jewish donors. Jewish Federations of North America said federations and community foundations around the country hold roughly $21 billion in endowments and donor funds, and that 2,800 other Jewish foundations control an additional $80 billion.
Not only do donors to these funds expect their money to be managed in a way that limits risk –- some of them have made their livings in the very industries that are now under fire from activists.
Fred Zeidman, a Jewish philanthropist based in Houston, called the move toward socially-responsible investment funds in the Jewish community “that California left-wing whatever” and said he would not donate to foundations that offered them.
“My theory has always been we only have one way to vote –- and it’s with our dollars,” said Zeidman, who is co-chair of Council for a Secure America, which promotes the relationship between American oil and gas companies and Israel. “I would not invest in anything that was going to curtail activity in the fossil fuel industry.”
So far, Zeidman and other skeptics don’t have much to worry about. Only a handful of Jewish nonprofits, including American Jewish World Service, the Nathan Cummings Foundation and the Leichtag Foundation have explicitly moved toward divesting from all fossil fuels. The federations and foundations that are offering sustainable investment funds — including San Diego, San Francisco, Minneapolis and Atlanta –- aren’t refusing to buy shares of stocks in energy companies.
Instead, many put donor dollars into a fund managed by JLens Investor Network, which aims to track the entire stock market while barring investments in coal, tobacco and for-profit prisons, and attempts to use its holdings to influence corporations to improve their position on environmental issues. Even with that limited approach, only a fraction of Jewish philanthropic dollars end up in funds that consider anything other than how to earn the most money in the safest way.
Beth Sirull
In San Diego, which has one of the most established sustainable investing strategies, Sirull said only about 10% of the $750 million that her foundation manages is allocated to one of the several socially-conscious options they offer.
“It’s little,” Sirull said. “But it used to be zero percent.”
One of the challenges, she said, is that while younger philanthropists are eager to hold their funds in investments that promote various social goods, older investors are used to compartmentalizing the way they earn and manage their money from how they donate it: “You make your money over here and you give it away over there and the two don’t meet,” Sirull said. “So this is a big education challenge.”
Pressure may mount
Sirull and other proponents of impact investing in the Jewish community say that the early evidence suggests it is not riskier to invest in sustainable options, and that those funds earn similar returns as traditional ones. A pair of Norwegian economists released a paper in the journal Climate Policy last year that found divesting from fossil fuels does not harm investors.
The move toward sustainable investing options in the Jewish community has also taken place in the absence of any concerted pressure from activists like Aroneanu, who spearheaded successful calls for major universities to divest from fossil fuels during a previous role at 350.org, a secular climate group.
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Instead, foundations have started offering these options partly at the behest of their communities. In Seattle, Abrams said Congregation Beth Sholom, a Conservative synagogue with a reputation for social justice work, asked whether they could move the funds they had invested at the local federation into socially-conscious causes. And federations are increasingly competing with green options offered by financial services firms like Charles Schwab and Fidelity, two of the nation’s largest providers of donor-advised funds.
But Aroneanu said that external pressure on investment managers in the Jewish community is likely to increase. Jewish voters listed climate change as their top priority in a Jewish Electoral Institute poll last year, well ahead of issues including Israel, Iran and antisemitism, and they may demand that their synagogues and local institutions go beyond the proactive focus on installing solar panels and holding educational workshops that Aroneanu said has made up much of the community’s environmental activism up to now.
“Leaders in the Jewish world –- Jewish activists at the grassroots level -– understand it’s not just ‘all of our responsibility,’ but that there are actually vested interests causing delay and denial,” Aroneanu said. “If we act collectively through our investments and through our political action then we can actually get something done.”
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