[Nick Depsky, ERG graduate student]

Welcome back for the second in a three part series about divestment from fossil fuels. To learn about divestiture in personal banking, check out the first installment here.

Besides personal banking, one of the most common ways in which people are invested in fossil fuels is via funds in retirement savings accounts (e.g. IRAs, 401k, 403b). I currently have a 403b account with Vanguard to which I accrued a small sum in my three years working in the non-profit sector following undergrad. I was disappointed to learn that many of the funds tied to my account were heavily invested in fossil fuel companies.  Large mutual funds and index funds are invested in everything, from big tobacco to Monsanto to fossil fuels. Their objective is to encapsulate and track the entire economy, using benchmarks like the S&P 500. However, recent research shows that performance of such fossil fuel-invested portfolios do not outperform those that are fully divested (Trinks et al 2018).

So, how does one find out where their money is invested?

1. Find out which financial asset company manages your retirement account and the name of your plan
2. Determine which funds comprise your plan. Mine was a blend of four different Vanguard index funds
3. Review the fossil fuel holdings associated with each of these funds. You can look through huge, cluttered annual reports online or check out this beautiful tool built by the Oakland non-profit, As You Sow: Fossil Free Funds

Here’s a snapshot from FossilFreeFunds.org of one of the Vanguard funds from my retirement account:

We can see that 10.51% ($33bn) of the portfolio is in shares of companies in the global top 200 carbon-emitters, coal-fired utilities, the coal industry, fossil-fired utilities, or the oil/gas industry. You can filter by these categories individually to see the more detailed breakdown.

Alternative Mutual and Index Funds for Retirement

While many funds are tied up in fossil fuel holdings, there is an increasing number of companies that are offering sustainable funds as an option to investors and some that offer exclusively fossil-fuel free funds. One such example is Green Century Funds.

Green Century Funds has three funds it operates, totaling roughly $500m in holdings. Compare this to over $300bn in the single Vanguard fund above.  Another popular socially responsible fund is the Portfolio 21 Global Equity Fund (also ~$500m in holdings), which you can invest in via Trillium Mutual Funds.


A potential concern with these smaller index funds is greater volatility and slower growth compared to traditional index funds. However, both the Portfolio 21 Fund and Green Century Equity Fund have generally tracked their economy-wide benchmarks well.  Another consideration is that many of these funds do tend to have higher operating fees, known as ‘expense ratios.’ In the case of Green Century, this is due to their concerted efforts to be active shareholder advocates. Their non-profit structure also means that any accrued profit is distributed to the consortium of non-profit groups by which they were funded back in 1991.  Most of these groups are Public Interest Research Groups, including our state chapter, CALPIRG.

Here are five-year snapshots of growth for both the Vanguard Total International Stock Index Fund shown above and the Green Century Equity Fund:

Vanguard Total International Stock Index Fund

Green Century Equity Fund

How to Switch to these Alternatives

Transferring funds from an existing 401k or 403b account into a traditional or Roth Individual Retirement Account (IRA) is called a “rollover.” For tax and income reasons, the Roth IRA may be a better retirement investment option for younger, early-career individuals.

Here’s how you would initiate a rollover:

1. Identify your IRA of choice
2. Contact* the financial institution that currently manages your retirement account about their rollover policies and get the appropriate forms. Here's an example from Green Century.
3. Go down the rabbit hole of the transfer process…

*code for calling and being put on hold for 5-300 minutes

In all seriousness, the transfer process can be completed in an afternoon. I hope this post shows that there are good long-term investment options available that don’t sacrifice your financial future nor the health of the planet by supporting fossil fuels. For a big breakdown of socially responsible funds across metrics than beyond fossil fuels, check out the Wikipedia page on Socially Responsible Investing. Remember to supplement these tips with your own research or conversations with a financial advisor.

Stay tuned for the third and final installment in this series where Nick will discuss stocks, institutional divestment and community activism.

[Nick Depsky, ERG graduate student]

Do you feel powerless in the face of climate change? Do you have money in a major bank? Do you own any stocks? What about that retirement account you forgot about from a previous employer? Are you confused by the massive, opaque financial world but acknowledge the need to save for boba tea and multiple pairs of socks? Maybe you want to know how your money can be used to take a tiny bit of power away from the fossil fuel industry and reinvested in better alternatives.

If you answered “YES” to any of the above questions, I encourage you to read this post. You may become inspired, as I have, to personally divest from fossil fuels and reinvest in better alternatives.

Why Divest?

It’s true that the most impactful acts of divestment would be from large institutions and corporations, rather than from starving grad students paying a million dollars a month for a leaky little apartment room in the Bay Area. But this doesn’t mean that you can’t still wield what money you have to cast a real financial vote of indignation against the fossil fuel industry, symbolic though it may feel.

Maybe you’ve had the same thought that I’ve had in the past: “I don’t have enough money to make any kind of a difference to Chase Bank or Wells Fargo.” But I think it helps to think of your money as a form of voting. Those of us who are compelled to vote for people and policies we support should be equally compelled to align our financial assets with those ideals, regardless of how insignificant a single vote may feel in a culture that under-values voting.

Collective divestment really can make a difference. The campaign to divest from South Africa in the 80s contributed to dismantling formal apartheid, and we are starting to see a similar swell organize around fossil fuels. Besides taking money out of the hands of industry players whose actions we oppose, divestment also erodes the political and social capital upon which these industries rely to lobby and continue operating.

Major Banks

Beyond being complicit in long-standing predatory lending and discriminatory lending practices, major banks and financial institutions have also invested billions in fossil fuel industries, financing tar sands, pipelines, and arctic and deep-water drilling.  JP Morgan Chase (Chase Bank) sinks roughly seven billion dollars a year into such endeavors, with Bank of America and Citibank each investing between four and five billion annually.  Wells Fargo’s annual investments come in around one to two billion dollars.  The full rankings of banks’ contributions to fossil fuels by industry type can be seen via this tool maintained by the Rainforest Action Network.

Total financing of fossil fuels by year (source: Rainforest Action Network)

Previously, I had my entire savings in Wells Fargo, and while they contribute comparatively smaller amounts to fossil fuels than some other banks, they have also shown a tendency to disregard the law in terms of both predatory lending and opening of fraudulent accounts in the years following the 2008 crash, a practice for which they were eventually fined $185 million last year (a whopping 0.2% of their 2016 revenue).

Alternatives to Major Banks

Credit Unions:

Switching over to a credit union is a good bet, since they are not-for-profit institutions by their nature.  However, some credit unions are intertwined with large banks and the fossil fuel industry in obvious ways, and in some ways that I still don’t totally understand. Credit unions are not all equal. Make sure their practices align with your values. Generally speaking, going with a local credit union that is community-focused is a solid choice, though it might still be worth chatting with a representative about what varieties of loans they issue.  Here are some local credit unions I’ve been recommended:

• Patelco Credit Union (Bay Area local) 

• Provident Credit Union (Bay Area local) 

• Pacific Service Credit Union (Bay Area local) 

• Golden 1 Credit Union (CA) 

• Self-Help Federal Credit Union (CA, Chicago/Milwaukee, FL) 

This list is non-exhaustive and there are many more.  All of the institutions above are equal housing opportunity lenders. 

Values-Oriented Banks:
I switched over to a mission-oriented bank rather than a credit union. I like the fact that they are an example of a successful triple bottom line banking institution (B-corps certified) that actively funds a wide array of socially-conscious sectors.  I found two candidates in the Bay Area and chatted with representatives from each to find out more information.  Here’s what I learned:

	Beneficial State Bank	New Resource Bank
0% fossil fuel investment	✓	✓
Branches	California, Pacific Northwest Closest: Downtown Oakland	San Francisco only
Non-profit foundation	All profits dispersed in forms of grants or loans to communities	All profits dispersed in forms of grants or loans to communities
Housing lending	Directly lends to affordable multi-family housing	No direct housing lending, but invests in construction of affordable units
ATM Networks	MoneyPass (US Bank, Mechanics Bank, Atlantic Credit Union) & All Point Network (inside big retailers like Walgreens, CVS)	STAR & MoneyPass
Credit cards	In-house Visa credit cards starting 2018 Currently partners with various non-profits (i.e. Sierra Club) to offer cards to clients	Does not offer credit cards, but partners with a credit-union credit card agency
Targeted lending sectors	Affordable Housing Multi-Family Sustainable Food and Agriculture Green Energy Rural Communities Minority-Owned Businesses	Sustainable Business Green Real Estate Nonprofits Organic & Natural Products Clean Energy

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Interest Rates

I looked into interest rates on savings and checking accounts for Beneficial State Bank and New Resource Bank, and compared them to Wells Fargo.  Beneficial seems to have the best interest rates for small accounts out of all three; Wells Fargo comes in last.  Beneficial also had the lowest minimum ($1,000) requirement to open a certificate deposit (CD) account, compared to $2,500 for Wells Fargo and $25,000 for New Resource.

Here is a snapshot from an investment infographic from New Resource Bank:

New Resource’s index of “Real Economy Assets”  illustrates their departure from the policies of big banks that typically have their money tied up in the financial economy instead of community investments. Beneficial State Bank has a similar “Real Economy Assets” figure of roughly 80%.

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In the end, I decided to go with Beneficial because of geographic advantages.  Their nearest office is in Oakland rather than San Francisco. And they have locations in Los Angeles, so I can tell my friends down there to switch over.  Both New Resource and Beneficial seem like great options, and I would encourage you to get in touch with them yourself if you’re thinking of switching.


Stay tuned for the next installment of this three-part series, where Nick looks at retirement accounts mutual funds. 

Op-ed by Dan Kammen
Published in Daily Californian

Today, UC Berkeley and most institutions are financially invested in destroying our future.

This may sound a little bit surprising to some — even unfounded. Let me explain. When it comes to climate change, the scientific community has presented a clear, unambiguous message: Human burning of fossil fuels — coal, oil and natural gas — is putting our world at risk.

And this, in fact, is a needless risk. By immediately reducing greenhouse gas emissions, we can reduce the damages that we are currently on the path to creating. Typhoon Haiyan, Hurricane Sandy, Hurricane Katrina and many of the costly recent fires and droughts around the world have been exacerbated — caused, to one degree or another, by the changes in the climate that our reliance on fossil fuels has caused.

Credit: Graham Haught, Daily Californian.

Though UC Berkeley and the UC system are leaders in addressing the climate crisis through groundbreaking research and education, the companies they have invested in continue to leave a significant “carbon signature” on the environment. Many of these investments were made before the full impact of these choices on the climate was clear. Continuing the financial investment in companies like Exxon, Chevron and ConocoPhillips — even though some of these companies have made a start in greening their portfolio — sends the wrong message. These companies, and many more, have the capacity and the opportunity to evolve from stalwarts of the old energy order that must change, into supporters of a new clean-energy system that California and the world desperately need.

The 200 largest fossil fuel companies hold, in the form of projects and assets, about five times the amount of carbon in their reserves that the scientific community has deemed responsible to even consider burning in order to avert runaway climate change. The several thousand researchers on the Intergovernmental Panel for Climate Change have determined with greater than 95 percent certainty that human activity is currently causing climate change. Researchers from across the entire UC system and our state government are critical leaders in efforts to advance both climate science and climate solutions, as well as the adaptation side of the equation.

The overwhelming majority of major energy companies, however, has shown far too few signs of transitioning to low-carbon projects. The fossil fuel industry collectively spends more than $600 billion per year exploring for new hydrocarbons and, in some cases, very significant amounts of money on climate denial, lobbying Congress to maintain fossil fuel subsidies and other efforts that work against the needed and feasible clean-energy transition. These companies are publicly traded and investor-owned, supported in large part by institutional investors like UC Berkeley and the University of California.

Instead of funding the problem, we should be investing in solutions that at once aid the transition to a low-carbon economy and grow our university’s bottom line. There is no lack of financially and environmentally sustainable reinvestment opportunities; as of yet, there is only a lack of leadership.

UC Berkeley has played a vital role as a leader in financial and social accountability. When other institutions refused, the campus listened to its students and the international calls for divestment from companies tied to grave social harm and injustice. As was similarly expressed during the South Africa, Sudan and tobacco divestment campaigns, students at UC Berkeley believe that their campus’s investments should reflect its values of social responsibility and environmental sustainability.

In the case of fossil fuel investments, divesting is not only the moral thing to do but is also financially prudent. As fossil fuel companies continue expanding their search for more hydrocarbons, the world’s carbon budget is shrinking. From Canadian tar sands to shale oil, the ”bottom of the barrel” is proving to be increasingly dirty. When government regulation aligns with this reality — and it must — the vast majority of reserves will have to stay in the ground unburned, rendering them stranded assets. Remaining invested in fossil fuels is a bad bet all around.

With a new chancellor at UC Berkeley and a new UC president, both of whom are leaders in clean energy and climate protection, divestment at UC Berkeley and across the UC system will send a resounding message that the university takes all facets of its leadership position seriously. It will also encourage other institutions to do the same and build pressure for regional and global climate action.

As a faculty member who understands deeply the challenge climate change poses and the urgency with which action must be taken, I call on my fellow faculty to stand with the students of Fossil Free Cal and Fossil Free UC in calling on Chancellor Dirks, President Napolitano and the president of the Berkeley Foundation to be on the right side of history by moving our endowments away from fossil fuels and reinvesting in a sustainable future. Visit fossilfreecal.org and sign on if you are as concerned as I am.

The views expressed here belong solely to the author of this entry and are not representative of the position of the Energy and Resources Group, UC Berkeley.

By John Romankiewicz

“If it’s wrong to wreck the climate, then it’s wrong to profit from that wreckage,” Bill McKibben

Divestment Rally at UC Berkeley on Halloween 2013 (Photo: Zubair A. Dar)

Though I had been living in Berkeley for two years prior working at Lawrence Berkeley Lab, when I enrolled in the ERG Master’s program this fall, I looked for additional ways to get involved in the Berkeley community as a student, not as a scientist. Fossil Free Cal was one club that immediately caught my attention: a club rooted in climate change science but driven by student activists.

Sparked by Bill McKibben’s widely read expose on the fossil fuel industry “Global Warming’s Terrifying new Math” (which I had read a number of times), a campus-driven divestment campaign has taken root at over 300 colleges and universities across the country. These campuses are asking their institution’s endowment to divest from fossil fuels to show that our higher institutions of learning will not invest in the planet’s destruction. “If it’s wrong to wreck the climate, then it’s wrong to profit from that wreckage,” McKibben said on his latest “Do the Math” tour.

Building on the club’s success last semester in passing an ASUC referendum supporting UC Berkeley divestment (with 73% of student body voting in support), Fossil Free Cal has begun strategizing how to influence the decision makers for divestment, including Chancellor Dirks, Berkeley Foundation president Scott Biddy, and the UC Office of the President.

If you add up the total endowments for all of the UC universities, there is about $7 billion, of which we estimate 5-10% is invested in fossil fuel companies (we don’t know yet for sure, as there is no investment transparency). The UC Berkeley endowment is roughly $3 billion, with 1/3 of that managed by the Berkeley Foundation, and 2/3 managed by the UC Regents.

We have launched an online petition to continue building support on campus among students, faculty, and alumni. We have spoken at UC Regents stakeholder meetings, and had initial meetings with Chancellor Dirks and the UC Office of the President, in which we started these crucial conversations and gained useful feedback.

Please sign our petition if you stand with us. Sign here! We are also working on getting as much faculty support as possible, so please speak with your professors about our campaign.

Lastly, this campaign has given me an opportunity to continue to perform my eco-rap and spoken word in support of good causes. Here I am at our October 31 rally on Sproul Plaza, the “Fossil Fuel Haunting”, in which I perform as a conflicted oil rig and ghost of a fossil fuel future.

Also watch "Sustainable" John's Bike Shop / Climate Awesome eco-rap video.

The views expressed here belong solely to the author of this entry and are not representative of the position of the Energy and Resources Group, UC Berkeley.