The John D. and Catherine T. MacArthur Foundation has announced that, to better align its endowment investments and programmatic goals, mission, and values, it will divest from fossil fuels.

The foundation began taking steps toward divestment from fossil fuels in late 2019, when it halted new investments in private funds that invest in oil and gas exploration; those funds are winding down as the foundation continues to sell those assets. This fall, the MacArthur Foundation will begin shifting from holding derivatives based on broad indices to using an index that excludes companies with fossil fuel reserves — starting in the United States and, as those derivatives become practical to use globally, for global equity exposure as well.

While the foundation invests primarily through pooled funds, it also adopted a proxy policy several years ago to communicate to asset managers its preferences on climate change and other issues linked to its programs. The foundation has now told its externally managed funds that it wishes to be divested from fossil fuels, MacArthur Foundation president John Palfrey told Reuters.

In addition, the foundation noted that it has taken steps to increase the number of diverse money managers it retains and the amount of assets under their management, with a goal of having at least 20 percent of its assets with U.S.-based managers invested with firms that are led by managers of color and/or women by 2024.

"We believe that investing in climate-friendly solutions is as important as divesting from approaches that are harming the environment," Palfrey said in a statement. "Through our $500 million allocation to impact investments, we have been making important climate-related investments in funds such as Encourage Solar Finance, LP, which is accelerating the adoption of rooftop solar in India. As such, we are committed to investing a larger percentage of our endowment and our impact investments portfolio in funds that focus on transitioning to cleaner energy and addressing the climate crisis."

(Photo credit: John D. and Catherine T. MacArthur Foundation)John Palfrey. "Aligning our investments with our mission, values, and programs." John D. and Catherine T. MacArthur Foundation press release 09/22/2021."Our approach to achieving impact with investment assets." John D. and Catherine T. MacArthur Foundation press release 09/22/2021."MacArthur Foundation joins investment shift away fossil fuels." Reuters 09/22/2021.

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