My retirement savings just went fossil free

I just turned 30 a few months ago, and last I checked, climate change is still happening–so I haven’t exactly been thinking a lot about retirement, which I put in the category of far-off things like having kids, buying a house, and those kinds of things.

A couple years ago, when our crew at 350.org decided to lean into the fossil fuel divestment campaign that some visionary students kicked off on a few campuses across the country, I didn’t really have much of a retirement account to speak of. As an organizer, you don’t usually have a lot of extra cash to save, but I managed to squirrel away a few dollars here and there into a 401k, the deferred-tax account that most Americans use to save money for their latter years of life.

I didn’t think much about where that money was invested at first, but as the Fossil Free campaign spread like wildfire to more than 500 campuses and communities across the country, and jumped the Atlantic and Pacific to Australia, the UK and Europe, I started to wonder: Where exactly is my money invested? I looked into the funds I was invested in, and most were already fossil free, screening out the top 200 publicly-traded coal, oil and gas companies that own the majority of fossil fuel reserves underground. But one of the “socially responsible” funds that I was invested in didn’t have a policy against investing in those companies. How could a socially responsible fund be investing my retirement savings in the very companies that have been funding climate denial and blocking progress on federal carbon regulation?

I decided to send an email to the firm to ask a few questions and share my concerns. Here’s the letter I sent:

Hello,

My name is Phil Aroneanu, and I’m a long time Pax World customer.

I am very concerned about climate change, and when I purchased the PAX funds, I was under the impression that PAX shared this view. But recently, as the crisis has gotten worse — with droughts, fires, floods and storms like Hurricane Sandy — it seems like PAX isn’t taking strong enough measures to counter fossil fuel companies.

As evidenced in CEO Joe Keefe’s talk at UNH, PAX seems to be more interested in engaging with “best in class” companies rather than heeding the call to make these “socially responsible” by divesting from fossil fuel companies completely. So, here’ are a few questions I’d like answered as I consider what I’d like to do with my investments moving forward:

1. What fossil fuel companies does PAX invest in currently?

2. What are the criteria that PAX uses to assess whether a fossil fuel company is actively engaging on climate change?

3. Is introducing shareholder resolutions calling on companies like Exxon and Chevron to release sustainability reports an effective strategy to avoid 2 degrees, or even 4 degrees of warming?

4. What are the benchmarks and metrics to assess whether a shareholder engagement strategy is making meaningful progress on a meaningful timeline? 

I’m glad that Joe Keefe made such a clearheaded argument in favor of sustainable investing in the speech–clearly, doing the right thing on guns, tobacco and fossil fuels need not endanger returns, and PAX has proved that. However, in light of the recent extreme weather and current science that points to rapidly approaching tipping points in the climate system, is PAX willing to reassess whether fossil fuels belong in a socially responsible portfolio at all?

Sincerely,

Phil Aroneanu

The good folks at PAX took a couple weeks to get back to me, and reiterated their “measured” approach to fossil fuel investment. Rather than pro-actively screening out all 200 top fossil fuel companies, Joe Keefe wrote that after applying sophisticated ESG criteria to their portfolios, they were still invested in 15 oil and gas companies on the list–not a lot, but definitely not fossil free. Indeed, PAX had already divested from coal and tar sands companies:

We are always reassessing our sustainability policies — on climate as well as other issues — in this rapidly changing global environment. We want our investment approach to be relevant, responsive and effective.

Even though it was a thoughtful response (thanks, Joe!), I was disappointed that PAX didn’t take the steps necessary to move beyond the “it’s complicated, so we can’t divest” approach. I considered shifting my money away from PAX for my retirement fund, but in the end, decided that considering the quote above, there was an open door to advocate for PAX to move towards a fossil free portfolio.

Lo and behold, on May 1, nearly a year after I sent the letter, PAX announced it had shifted its World Growth Fund investment strategy to be fossil free. That means my retirement savings went fossil free, too. I’m proud of PAX for taking these steps. They won’t be the first mutual fund to make the leap into fossil free investing (that would be Green Century Funds) but they will join the scores of institutions like the City of Seattle, Stanford University, Pitzer College and the United Church of Christ who are betting on a clean energy future instead of fossil fuels.

Now that I’ve been working at 350.org for more than a few years, my retirement savings accounts are beginning to get a little less meager than they used to be. If I retire when I’m 65, the year will be 2050. In a business-as-usual scenario, the world will be 3-5 degrees warmer, on average, than it is now. That means more storms, droughts, extreme weather events, ocean acidification, rising sea levels and massive species extinction.

I don’t want to retire in a world headed towards catastrophe, and I’m glad to know that my (now fossil free) retirement funds recognize that they can’t do business as usual, and are pro-actively trying to change the financial and political contexts. We have a lot more work to do to prevent runaway climate change, but divesting our retirement funds is an important step.

You can learn how to divest your own retirement funds and savings at gofossilfree.org/mymoney.

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