Supporting the future of conservation: How we manage our investments
At WWF-US, we’ve been on a journey shared by many other non-profits, religious organizations, universities, cities and states to better align our investments with our mission. We are very proud of the progress we have made and believe our results are among the best out there.
WWF-US does not invest directly in any single company. We invest in funds, like most people do in their own retirement accounts. The returns from our portfolio and scheduled distributions contribute to funding our core operations and investments in conservation across the world. We look for managers with a great track record and try to balance our portfolio to weather economic ups and downs.
How is WWF aligning our investments with our mission?
WWF is committed to targeting investments that are directly aligned with our mission, including investments in funds with strategies that are focused on sustainability and the shift to renewable energy sources. And as part of our periodic investments reviews, we are aggressively exiting our exposure to oil and gas, coal and tar sands in our portfolio.
WWF does not accept funding from the fossil fuel industry and has never had a direct investment in coal, oil and gas, or tar sands. We seek to eliminate exposure to fossil fuels while also identifying investments that actively advance our mission.
To accomplish this, we:
- seek funds with managers whose strategies can drive sustainable business and energy transformation;
- avoid investments in funds where managers targeted oil and gas, coal or tar sands, and wind down any legacy exposure to such funds;
- eliminate even incidental gains from oil and gas from funds through an innovative financial instrument – a “derivative for good”, the WWF Stranded Assets Swap.
We are excited about our progress to date. As of March 2020, more than 99% of our investments are mission aligned or neutral, with approximately one-third of our portfolio invested in funds specifically organized around sustainability themes. We are winding down our legacy exposure to fossil fuels, and these now total less than one half of one percent of our portfolio. This residual sum is covered by our stranded assets targeted swap, described below.
The WWF Stranded Assets Swap
The WWF Stranded Assets Swap is designed to offset potential financial benefit derived from exposure to fossil fuel investments when that exposure increases in value.
The intellectual framework for the swap was developed by Bob Litterman, WWF Investment Committee Chair and former head of Goldman Sachs' risk-management division, who is one of the most vocal advocates for addressing climate risks through financial markets, by pricing carbon. We are particularly proud of the message that our swap has created in financial circles. Through Bob, we’ve shared the cautionary tale of stranded assets with some of the world’s leading economists, alerting them to the financial perils of long-term investments in fossil fuels. Experts have called the swap “an elegant solution” to hedging the risks of fossil fuels and driving conversations in influential publications like Bloomberg News. The Bloomberg article includes a good outline of how the swap works.
Investing for the future
WWF’s investment portfolio provides us the financial certainty that we can continue our conservation work far into the future. It’s funded by returns on our investments and through planned giving and endowments.
100% of annual contributions to WWF are spent within 18 months and none are included in our investment portfolio. Our mission is an urgent one and we utilize those funds immediately for our work.
Investments are just the start
Investments strategies do not equal conservation gains or climate action, however. We recognize our most important work includes partnering with governments, businesses, universities, NGOs and local leaders to bring conservation to a new level and accelerate the global transition to a clean energy economy. Together, we can catalyze the large-scale changes needed to protect the future of nature.