By WYNNE ARMAND and CHRISTIAN MEWALDT
It shouldn’t be controversial to say that promoting the well-being of patients and our community should be at the heart of our healthcare decisions, even when competing factors exist. Yet we are increasingly uncomfortable realizing that we are investing in companies whose products, including fossil fuels, are at the heart of the diseases we treat.
In 2018 alone, particulates produced by the combustion of fossil fuels were responsible for about 9 million deaths in the world, according to a recent publication by researchers at Harvard University and the Universities of Birmingham and Leicester in the UK. Other health effects are important, including an increase in cardiovascular disease and respiratory disease, especially in small children. Fossil fuels are also widely regarded as one of the main drivers of climate change, and their combustion contributes to the increase in the number of record heat waves and heat-related deaths, as many American communities are facing this summer.
Our hospitals, as tax-exempt non-profit organizations, provide us with retirement plans in the form of 403 (b), financial accounts similar to 401 (k) which are offered by for-profit companies . As employees eligible for benefits, we are usually automatically enrolled in the Retirement Savings Plan, with contribution limits determined by the Internal Revenue Service (IRS). Recently, we learned that at the end of 2020, of the $ 35 trillion in U.S. pension assets, $ 1.2 trillion has been invested in these 403 (b) plans, according to the Investment Company Institute, the trade association for investment companies.
With health representative largest employer sector in the United States, with nearly 7 million employees in hospitals only, our employers should offer us options for retirement funds that do not contain investments in fossil fuels that undermine our duty to patients. While retirement finances are not our priority during our workdays, the effects of our collective investment of $ 1.2 trillion are showing in clinical settings.
Our institution’s default choice, like many others, is a target date fund made up of “passive investments”, that is, stocks and indexed bonds that rebalance as the date begins. the employee’s retirement is approaching. Most also offer shortlisted mutual funds chosen by the employer’s investment committee, or allow participants to transfer retirement funds into a brokerage account to manage their investments on their own. Choosing an alternative investment strategy requires know-how and financial effort, so, not surprisingly, more from U.S invest in default. the the biggest, the most used are the Vanguard Target Retirement Index Funds, who have a estimated $ 292 billion invested in fossil fuel companies.
As the links between fossil fuels and accelerating global warming become increasingly evident, a growing number of institutional funds, including dozens of university endowments and large pensions, have disengaged from fossil fuel companies. Surprisingly, hospitals are lagging behind in this effort, accounting for just 1% of these institutions, according to 350.org, an organization dedicated to accelerating clean energy.
The effectiveness of divestment in promoting change is often debated. An example that advocates frequently cite is the US divestment in apartheid-era South Africa, although the real financial impact of divestment is uncertain. Either way, as more institutions participate, the campaign becomes a staple social movement that can lead to cultural change, policy change, and industrial action.
There will always be people who believe that fiduciary responsibility means seeking the highest returns, to hell with social impact. However, Moody’s Investor Services, the rating company, recently warned that industries that produce significant amounts of carbon could be financially penalized as governments, banks and fund managers try to reduce the carbon intensity of their investments.
Electricity generation from coal has declined by around 50 percent over the past 5 years and a recent report by investment firm BlackRock found that portfolios have moved away from fossil fuels “has not suffered any negative financial impact from the divestment from fossil fuels. In fact, they found evidence of modest improvement in fund performance. “Financial considerations appeared to be at the forefront of the University of California (UC) 2019 decision to take both its An endowment of $ 13.4 billion and his pension of $ 70 billion “fossil-free“: “We [UC] have looked… to the future as we bet clean energy will power the future of the world… We have chosen to invest for a better planet and reap the financial rewards.
Creating socially responsible funds is complex; understand their implications, even more. Some might argue that a more effective strategy is to continue investing in fossil fuels, thereby retaining a voice in these companies. As a recent example, activist investors elected climate-conscious directors to the Exxon Board of Directors who can change the direction of the company. But what made this ad so revolutionary was its rarity. Until this practice becomes the norm, divestment remains a reasonable alternative.
Healthcare institutions and we, as their employees, have a mission to heal. To achieve this goal, we deserve to be offered investments that match our interests, including fossil fuel-free retirement investment options. We also deserve to be educated when default retirement funds include investments in companies that contribute to illness and death.
The Mass General Brigham (MGB), the hospital system in which we work, is the largest employer in our state with 80,000 employees. After three years of advocacy supported by our colleagues, MGB’s pension management committee has approved two employee pension fund options that meet environmental, social and governance (ESG) criteria, which will be available in January. It’s far from perfect, but it’s a start.
When registration opens in November, we hope that our colleagues will join us in taking this small first step to better align our investments with our human health priorities by affirmatively selecting an ESG fund option (or opting for self-management of a brokerage account), and that other hospitals will meet or exceed MGB’s actions.
Christian Mewaldt, MD is a hospital physician at Massachusetts General Hospital and Harvard Medical School, and Public Voices Fellow of The OpEd project.