Review Finds Impact Investing, Fossil Fuel Divestment Do Not Harm Returns

In 2014, the Rockefeller Brothers Fund, an $860 million foundation run by heirs to the fortune built by Standard Oil, announced that it would divest any assets in coal and fossil fuels.

In 2025, a consultant’s report found that the now-$1.3 billion foundation’s efforts, intended to “better align its endowed assets with its mission” have proved that investors can do so “without sacrificing the bottom line.”

The RBF, on its website, identifies several themes that have led the foundation’s work since it was founded in 1940. “These include a special interest in conservation and the environment; civic participation and democracy; international engagement; cultivating an experimental disposition; and embracing family tradition,” states the fund’s description of its philanthropic tradition.

A report published in August by boutique consultant The Investment Integration Project shared insights RBF has gleaned in the process of fully aligning portfolio and mission.

‘A Competitive Edge’

The report, “Returns, Risk and Responsibility: How the Rockefeller Brothers Fund Invests for Long-Term Value and the Public Good,” reviewed how the portfolio strategy, which now includes decarbonization and both gender and racial equity lenses, has worked and concluded that mission alignment is “not a concession. It’s a competitive edge.”

The portfolio was allocated, as of December 2024, 22.8% to impact investments, and “among the RBF’s investment managers, there is 25.5% equity ownership by women and/or people of color; and the portfolio is 99.7% fossil fuel-free,” the report states.

TIIP’s analysis found that, over the 10-year period ending December 31, 2024, the fund’s portfolio generated an annual return of 7.76%, beating its primary benchmark by more than 100 basis points per year, with 27% less risk.

“This outperformance demonstrates that mission-aligned investments can support both the organization’s mission and its fiduciary duty to preserve the endowment in perpetuity, effectively reframing mission alignment not as a concession but as a competitive edge,” the report stated.

The Long Road to Get There

RBF invests using an outsourced CIO, Cerity Partners OCIO, in a partnership begun in 2014, when the firm was known as Agility. Before working with the firm that is now Cerity, RBF began in 2007 using an OCIO model that invested via managed portfolios through commingled accounts. The model was not nimble enough for RBF, because it created obstacles to investment customization, such as proxy voting or sourcing impact investing vehicles, and because changes to tailor the lineup for RBF required buy-in from all pooled investors, TIIP’s review found. Moving to Cerity (then Agility) was more flexible and a better fit for the fund’s goals.

Also in 2014, RPF made a “modest yet important” change to the foundation’s investment policy statement, according to TIIP and Geraldine Watson, the fund’s executive vice president for finance. Aiming to balance preserving the endowment “in perpetuity” and also align investments with its mission, the return objectives in the policy statement were changed to maintaining “the real value of the endowment,” from maximizing “annualized returns net of all costs over rolling 10-year periods.”

Watson says the change provided the fund’s “managers and the investment committee more latitude to consider investment attributes beyond just the highest possible returns.”

The TIIP report noted that the change also allowed the fund to “support the required five percent annual spend mandated for U.S. philanthropies and cover inflation, management fees, and taxes, while allowing managers to make mission-aligned investments.”

Overall, “our goal was always to combat people saying that you have to be willing to lose money to do this good work,” Watson says. “We felt that proving otherwise was how we could contribute to the industry.”

Watson says the process was not without its hiccups and that changes to the organization, including the addition of term limits for its investment committee members, were necessary.

In addition, she says it is important to “be thoughtful about educating the board, the investment committee and staff” about the goals and, “first and foremost, educate yourself and know what you own. Take iterative steps.”

Aligning Investment With Mission

The report includes a timeline enumerating 17 steps that RBF took from its initial adoption of proxy voting guidelines in November 2005 to the portfolio being “99.7% fossil fuel-free; 22.8% [invested in] impact investments; [including] 12.6% ESG integration; [and] 25.5%” in gender and racial equity lens investments. That means the portfolio is invested with firms “in which women and/or people of color hold ownership,” according to a review of its mission-aligned investments through July 2025 on the fund’s web site.

The site describes the focus this way: “Advancing diversity in our asset management advances our fiduciary duty to preserve our endowment in perpetuity. Investment return performance, in general, is statistically indistinguishable between funds owned by women and people of color and funds owned by white men, but research suggests that investors underestimate the value of funds managed by people of color and women.”

It goes on to state, “in all of our efforts to align our endowment investments with our mission, we continue to adhere to the longstanding mandate of our board of trustees that our assets be invested with the goal of achieving financial returns that will enable the foundation to meet its annual philanthropic obligations while maintaining the purchasing power of the endowment so that future generations will also benefit from the foundation’s charitable giving. Therefore, mission-aligned investment efforts, including diversity of asset management, will be accomplished through a financially prudent process.”

Watson notes that the support of the foundation’s board, including from several Rockefeller family members, for decarbonizing and taking other steps toward mission alignment in the portfolio has gone beyond investments and includes the fund’s grantmaking, which is also focused on addressing climate change along with other investments to advance social change.

The transition to the fully mission-aligned investment portfolio “is a journey,” Watson says.

“Aligning investments with mission starts with honest observation and rigorous analysis, rather than immediate changes,” the TIIP report stated.

Looking forward, TIIP concluded that the growing backlash against environmental, social and governance factor-driven investment and against diversity, equity and inclusion mean that generally accepted industry standards are needed for measuring social and environmental impact.

“Collaboration is key,” because “a critical mass of investors and asset managers are needed to drive a shift from institution-level actions to industry-level change,” TIIP concluded.

Tags: Climate Change, ESG, Foundations, Gender Investing, investment performance, Rockefeller Brothers Fund