Big Oil likely unfazed by divestments—for now


It's unlikely that energy companies will worry too much about more investors pledging to withdraw money tied to fossil fuels. But that doesn't mean a growing divestment campaign may not affect Big Oil.

Fifty foundations, including the $860 million Rockefeller Brothers Fund, said this week that they will sell off their fossil fuel assets, bringing the total of pledged divestments to $50 billion, according to research firm Arabella Advisors. The Rockefeller fund—managed by the heirs of John D. Rockefeller, who founded Standard Oil—is a symbolic boost for the movement, which started with a handful of colleges three years ago.

Far from a tipping point

Despite the leg up from Rockefeller and other institutions, however, $50 billion is a drop in the bucket for the energy industry.

The oil and gas industry's combined market capitalization of $4.65 trillion is 90 times the tally of pledged divestments. That figure doesn't include coal firms, which alone make up $233 billion, according to numbers from analysis firm Bloomberg New Energy Finance. The largest oil and gas company, Exxon Mobil, has a market cap of more than $400 billion.

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Even voices within the campaign do not expect wholesale changes in the way giants like Chevron and Exxon Mobil do business.

"It's like getting Starbucks to stop serving coffee," said Leslie Samuelrich, president of asset manager Green Century Capital Management. "The culture of exploration and drilling is too embedded in these companies."

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Jay Carmona, national divestment manager of activist organization, agreed. "Fossil fuel companies have been very clear that they plan to burn all of their fossil fuel and will continue to search for more," she said.

Chevron declined to comment. Exxon Mobil did not respond to an inquiry from CNBC.

In a statement, the American Petroleum Institute said the oil and natural gas industry is "one of the few bright spots in our economic recovery" and highlighted the sector's contributions to economic and job growth "at a time when we need it most."

Where change could happen

In the long run, however, activists hope that shareholders will convince oil companies that channeling capital into renewable energy—rather than searching for new oil reserves—is a sound investment, said Thomas Van Dyck, senior vice president of RBC's Socially Responsible Investing Wealth Management Group.

Combined capital expenditures for oil "majors" (BP, ConocoPhillips, Chevron, ENI, Royal Dutch Shell, Total and Exxon Mobil) as well as two international oil companies (Petrobras and Statoil) and two Independents (BG and Occidental Petroleum). Includes capex on nonproduction and downstream assets.

Shareholders, said Van Dyck, should place greater scrutiny on what he characterized as wasteful capex spending in order to pressure oil companies to redirect capital into clean energy.

"More people should ask questions on how companies are managing their capital," he said. "They need to look at other ways to be energy companies and not just fossil fuel companies."

Taking the fight to DC

However, instead of waiting for energy companies to act, activists may have more success chipping away at Big Oil's influence in Washington, said Samuelrich.

Lobbying from the oil and gas industry in 2013 topped $140 million, according to data from the Senate Office of Public Records that's researchable on The industry had spent $60 million as of July of this year.

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But social movements "can't be just measured in dollars," Carmona said. "It should be about people-power and concrete policy."

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As divestment grows, it will damage fossil fuel companies' reputation and image with the federal government, said Samuelrich.

"Divestment sends a strong signal to policymakers that there are not only moral or political reasons to consider divestment," she said, "but also financial reasons."