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New guidance from the Union for Reform Judaism on fossil fuels

The US-based Union for Reform Judaism (URJ), representing one of the largest Jewish denominations in the US, recently released a resolution providing investment guidance to Jewish organizations ‘Addressing the Climate Crisis Through Investment Strategies’.  It is a fascinating read, bringing together a thorough theological context with scientific findings and an overview of how the capital markets and companies / investments operate to set the stage for a series of resolutions urging different actions with Jewish financial investments in the fossil fuel sector.


The document contains an interesting examination of two issues we hear from you, and which we have written on in the past: the impact of restricting investments in certain stocks / industries on subsequent investment performance, and the relative effectiveness of divestment versus engagement.


On performance, the URJ notes they adopted a ‘double bottom line’ approach in a 1997 resolution, stating that ‘investment should look at both the rate of return and the alignment of the investment with our values’.  And partly as a result, the URJ-related Reform Pension Board offers a ‘Jewish Values Stock Fund' where 'filters include exclusion of companies involved in production and mining of coal, related products, and other consumable fuels related to energy generation’.  However, while the URJ notes that their double bottom line resolution ‘…deems it appropriate to invest in a manner consistent with Jewish values even if the result is a lower rate of investment return…’, they find no evidence that filtering / divesting from fossil fuels ‘will necessarily lead to lower investment returns’.  They further state that some studies show higher returns from such fossil fuel screens, while others show ‘minimal impact’ from ‘…filtering out any single industrial sector…’ On performance impact, they’ve taken a clear stance.


On the value of engagement versus divestment, they’ve also taken a position: ‘practical limitations to a shareholder engagement strategy support divestment from fossil fuel companies’.  Further implying that engagement with fossil fuel companies may not be effective for two structural issues: government support, as most governments subsidize their fossil fuel companies, and ‘the extensive network of institutional investment from banks and insurance funders…’  Essentially, you can engage all you want, but the effects of such actions may be limited as long as governments and large financial institutions support the industry. In the resolution, URJ recommends other avenues for your engagement resources and energy that get at these two root challenges.


In the end, the resolution summarizes their work and urges all Reform Jewish organizations to develop strategies for divestment, engagement – and selection of commingled funds consistent with Jewish values, and to report and monitor their portfolios going forward.


The Resolution has a helpful history of URJ actions related to climate, and extensive references to Jewish parables, traditions, directives, the Torah and other sources.  It’s an efficient read, though a good summary can be found here.

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