In an exclusive interview, Rockefeller Brothers Fund chair, Valerie Rockefeller Wayne and president, Stephen Heintz, talk about the decision to cut ties to fossil fuels, what it meant for the divestment movement and the challenges involved

On a perfect summer day in June 2014, on the grounds of a stately home overlooking the Hudson river, a handful of the descendants of America’s most enduring business dynasty made a fateful decision: they would cut their ties to fossil fuels in order to fight climate change.

The ironies were inescapable. About half of those gathered for the board meeting were direct descendants of John D Rockefeller – founder of the oil empire that eventually became ExxonMobil – and here they were, gathered in the estate he built at Pocantico Hills, New York, surrounded by a collection of antique gas guzzlers and limousines, preparing to take a highly symbolic stand against fossil fuels.

As descendants, they had an extra burden to fight climate change, said Valerie Rockefeller Wayne, a former middle-school special education teacher and chair of the Rockefeller Brothers Fund (RBF).

“We all have a moral obligation,” she told the Guardian. “Our family in particular – the money that is for our grant-making, and what we are doing now, and that helps fund our lifestyles came from dirty fuel sources.”

On 22 September, a day after 400,000 protesters marched through the streets of Manhattan demanding action on climate change, Wayne and the RBF president, Stephen Heintz, announced the fund would immediately purge its holdings in coal and tar sands, gradually withdraw from oil and gas, and invest 10% of the endowment in clean energy.

On a day when more than 800 institutions and individual investors, controlling more than $50bn (£34bn) in assets, committed to divest, the Rockefellers were the marquee name – delivering a jolt of energy to the fossil fuel divestment movement that had been steadily expanding from college campuses to philanthropies and pension funds.

“I think it was one of the most important moments in the whole divestment campaign just because of the symbolism that is attached to the original fossil fuel fortune,” said Bill McKibben, the writer and activist who helped launch the divestment movement.

“It makes a very clear point that engaging with fossil fuel companies to somehow get them to change their ways is unlikely to work if the family of the founder can’t get Exxon to shift.”

Six months later, the fund is proceeding cautiously to avoid losing money. RBF at the time had 5.2% of its endowment, or about $45m , in fossil fuels – still lower than the Standard and Poor’s index S&P.

The fund has pulled out of coal and tar sands, but remains invested in oil and gas. Overall, exposure to fossil fuels has dropped less than 1% since that September announcement.

RBF faces an even bigger struggle to make good on the investment part of its pledge. Only about 1% of the RBF endowment is now invested in alternative energy, and it could take three to five years to reach its goal of 10%, Heintz said.

To hear Wayne and Heintz tell it, the fund’s efforts to quit fossil fuels were a natural. There has always been a green streak among the 230 or so living descendants of that original Rockefeller.

Earlier generations protected America’s wide open spaces. RBF tried to support alternative energy in the 1980s, without much success. By the 1990s, RBF’s environmental focus shifted decisively to climate change. By the early 2000s, members of the Rockefeller family were demanding ExxonMobil respond to the threat of climate change.

Facebook Twitter Pinterest Valerie Rockefeller Wayne: ‘Conservation is how it really started’

Within RBF meanwhile, there was increasing discomfort about the disconnect between their money and their mission. “For a fund that is so devoted to fighting climate change and helping to prevent climate catastrophe, to continue to be invested in fossil fuels that are actually causing climate change just was morally hypocritical and unacceptable,” said Heintz. “It felt hypocritical. It felt like we were compromising ourselves.”

By that point, half of RBF grants were going to fight climate change. RBF supported efforts to stop the development of the Alberta tar sands and shut down coal-fired power plants. It also funded Carbon Tracker, which produced the data showing the majority of fossil fuels must stay in the ground to avoid a climate catastrophe, and350.org, the campaign group founded by Bill McKibben, which has championed the divestment cause.

Some of those grantees – including Carbon Tracker and 350.org – were already talking about divestment with Rockefeller trustees. A number of other foundations were also beginning to quit fossil fuels.

At RBF, trustees argued for bringing the bulk of their $800m-plus endowment in line with their grant-making priorities.

“We wanted to align our grant-making and our investing and this seems obvious now but it is actually a revolutionary idea in the non-profit world for organisations that have endowments,” Wayne said. “I think largely the feeling has been ‘make as much money as you can and then you give it away’. So the symbolism of saying actually we can have much more impact if we in fact align our investing and our grant-making, that’s an important symbol.”

The Rockefellers are a large and sprawling family, with about 230 living descendants of the original John D. But according to Wayne, virtually all of her cousins were on side with using the RBF endowment to fight climate change.

“There are people who think there should be a separation, or you should make the money first. Of course, there are some people like that. It is a really large family,” she said. “But I would say 99.9% of the family has been super supportive.”

In 2010, Heintz said he recommended to the board that RBF invest 10% of the total value of the endowment in alternative energy. Board members had one over-riding concern – would the endowment take a financial hit?

“The real fault line was people who would say: look, fossil fuels are still a very significant part of the global economy for some time to come,” said Heintz. “If you eliminate your investment options from that part of global economy you narrow down your investment choices. You increase risk and you may reduce return.”

For RBF, that was a non-starter. “We were not willing to lose any money. Our business is giving away money so we were not willing to take any reduction in returns,” Wayne said.

Over the next few years, RBF changed management of its endowment, taking on new external fund managers, who were willing to look beyond conventional investments.

The financial managers began gradually screening the fund’s holdings to determine exposure to fossil fuels. In an additional complication, it turned out much of the endowment was in pooled investments, mixed in with funds from other institutions, which put them beyond RBF control.

The Rockefellers also drew on the experience of the Wallace Global Fund, which began overhauling its investment structure in 2009. The Wallace fund, under its executive director Ellen Dorsey, has been a key organiser of the divestment campaign in the philanthropic world. It has withdrawn completely from fossil fuels and has invested 10% of its endowment in clean energy.

After a dinner in 2011. Dorsey said she remained in regular contact with RBF in 2012 and 2013, urging the fund to front the broader divestment coalition.

It took until February 2014 for the new financial managers to be in place – and for the RBF board to agree on the final step – that there was no turning back and the fund would quit fossil fuels.

“Shareholder engagement wasn’t enough,” Heintz said. “I think you need all three strategies. I think you need shareholder engagement, divestment, and proactive engagement.”

Facebook Twitter Pinterest Stephen Heintz: there is a moral as well as an economic argument to divest

The board began preparing to make an announcement, timed for the UN climate change summit in September.

By the time of the June board meeting at the Rockefeller estate, everything was in place. By that point, about 5.2% of RBF investments were in fossil fuels.

Getting out of coal and tar sands was easy.

Extracting RBF from oil and natural gas was slow and tedious work. Some of those holdings were in funds that will be tied up for years. Heintz said he hoped to whittle those holdings down to under 1% in three to five years.

But the biggest challenge was finding the right vehicles for clean energy investment, he said.

“I would really like to be at the 10% mark in another year but I don’t know if we are going to be able to get there,” he said. “Our goal here is to find investment grade opportunities to invest in the clean energy future. We want to say that you can be a good investor and get good returns and invest in the things are that are going to help create the clean energy economy.”

The Rockefellers were aware their divestment decision would have a big impact. They also knew some critics would dismiss the move as mere symbolism – a blip in a global economy that continues to run on oil and coal.

Facebook Twitter Pinterest Stephen Heintz: Divesting is more than symbolism

But 78 foundations have now signed up to the Divest-Invest movement – and campaigners hope to get the numbers up to 200 by the time of the UN climate conference in December. A number of other foundations have approached RBF asking for advice.

At least one other Rockefeller philanthropy, the Rockefeller Family Fund which is still closely connected to the family, is actively exploring divestment. However, the much wealthier Rockefeller Foundation, whose endowment tops $4bn, is understood to be opposed to divestment for now.

“It may start with a symbol, but for us there were years of conversation and study,” she said. “The symbol is important to start with. The moral impulse is what drives us. But it is how we execute it, and how much we can help others who are on this path.”

She went on: “It feels arrogant to say we had a big impact. But I feel we did.”