Dignity Health has sold off investments in thermal coal companies and will no longer invest in that industry. It's one of the boldest moves to date by a U.S. health system to align clinical and financial interests with the need to solve climate change.
The policy move from Dignity, a large San Francisco-based system of hospitals and doctors with $12.4 billion of annual revenue, comes as world leaders meet in Paris to hammer out a global climate change pact. Dignity is one of a handful of U.S. health systems attending the United Nations climate summit and is educating others in the industry on how they can make tangible progress to mitigate global warming.
Eric Lerner, climate change director for advocacy group Health Care Without Harm, told Modern Healthcare last month that many health systems were discussing divestment in advance of the Paris talks. Dignity is the first to go public with a new fossil-fuel investment strategy during the meeting and only the second provider group to make such a commitment. Last fall, Gundersen Health System in La Crosse, Wis., an organization that produces all the energy it needs on its own, froze all funds tied to companies that extract coal, oil and gas.
Dignity decided to screen out coal from its portfolio because the not-for-profit system's mission required executives “to recognize the impact of climate change as a prominent public health issue” and “to limit our relationships with the worst environmental offenders,” Shelly Schlenker, Dignity's vice president of public policy, said in a statement. Dignity has screened other company stocks out of its investments, including those involved in tobacco and weapons. The recent decision won't affect investments in gas and oil companies. Thermal coal, also known as stream coal, is used in power generation.
Coal is one of the dirtiest fossil fuels and has direct effects on human health. Scientists and doctors have linked the burning of coal to high rates of air pollution and asthma. There also are environmental health risks associated with extracting coal, which is also true of other fossil fuels. But climate change and fossil fuel use have been politically isolating topics in Washington.
“Being here in Paris, I have to say I'm so struck by the sense that it's a political issue in the United States Congress, but there's a worldwide consensus that this is an issue we can no longer afford to ignore,” said Sister Susan Vickers, Dignity's vice president of corporate responsibility.
Dignity previously had formal ties to the Roman Catholic Church when it was known as Catholic Healthcare West. The system severed that tie in 2012, but Dignity has retained many of the church's philosophies, including the view recently promoted by Pope Francis that healthcare providers should play a larger role in promoting environmental stewardship.
“Our socially responsible investment program is founded on Catholic social teachings, and certainly Pope Francis' encyclical only causes us to read more boldly into climate change,” Vickers said. “He has opened up the discussion, I think, to engage far more sectors.”
It's unclear how much investment money Dignity's decision will affect. Dignity had $6.56 billion of cash and investment assets (PDF) in the fiscal year that ended June 30. The health system did not break down how much of its securities are tied to energy companies or the coal industry. Vickers said it will affect “a relatively small percentage of our investments” but will have a bigger message.
“Will our divesting of thermal coal solve the climate crisis? No,” Vickers said. “But it's a decision we feel compelled to make at this time.”
In addition to avoiding coal assets, Dignity has pledged to increase its use of and investment in renewable energy and plans to reduce its carbon emissions by 40% by 2020.