Resources for Individual Divestment
Here are some resources to help you navigate your individual divestment and reinvestment decisions.
Performance of Fossil-Free Portfolios
For several years, financial indexing and research services have studied how portfolios based on indexes such as the S&P500 would have performed if the top 200 largest fossil fuel companies had been removed. These "ex fossil fuel" indexes are intended to serve as a basis for investable products such as mutual funds and exchange traded funds (ETFs).
Fossil Free Indexes (fossilfreeindexes.com) details the performance of the Fossil Free Index-US (FFIUS) based on the S&P500. As the graph shows, recent results indicate that the FFIUS now out-performs the standard portfolio, given a 10-year track record.
FTSE (Financial Times Stock Exchange), best known for its index of the top 100 stocks on the London Stock Exchange, has developed a number of US and All-World Indexes that track the performance of portfolios stripped of investments in fossil fuels. Like Fossil Free Indexes, the FTSE All-World Ex Fossil Fuel indexes show fossil-free portfolios outperforming portfolios that contain fossil fuels.
Finally, Nathaniel Bullard's 2014 white paper (http://about.bnef.com/press-releases/fossil-fuel-divestment-5-trillion-challenge-2/) from Bloomberg New Energy Finance—"Fossil Fuel Divestment: a $5 trillion challenge"—covers a wide range of divestment topics and presents a great deal of detailed research. [Note that in 2016 this has become a "$3.5 trillion challenge" due to the decline in market valuations of oil and gas companies].
Tools for Analyzing Your Mutual Funds
- 1) FossilFreeFunds.org
Now, a simple tool for investors and financial managers is available at fossilfreefunds.org. This tool was created by As You Sow, a nonprofit organization that has been "promoting environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies" for more than 20 years.
The Fossil Free Funds tool enables investors to find out exactly what they own, so that they can follow through on a pledge to divest.
2) The Decarbonizer
The Portfolio Decarbonizer tool from Corporate Knights shows the financial implications of divesting high carbon companies in favor of those that derive at least 20% of their revenues from environmental markets or new energy. The tool shows what would happen to a portfolio that divested from fossil fuels companies beginning in October, 2012 and invested in clean energy companies instead.
Test results on various high-profile portfolios are instructive: the New York State pension fund, for example, would have been $5.3 billion dollars richer today if it had divested fossil fuels holdings and reinvested in clean energy.
Learn more at http://www.corporateknights.com/reports/decarbonization-tools/. The Corporate Knights website also has many useful reports and opinion pieces.
Getting Advice on Reinvestment
Figuring out what to reinvest in, once you've divested, is as hard or even harder than getting rid of your fossil fuel investments. As with any investment decision, consulting with a qualified financial advisor is a good idea. Here are a few pointers to reinvestment resources:
- DivestInvest.org offers the Pledge; plus a link to fossilfreefunds.org, and an up-to-date, comprehensive "Fossil-Fuel Free Invest Brief".
- GoFossilFree.org (the 350 group that originated the fossil fuel divestment movement) provides a "Roadmap to Divestment" with a number of resources, including a 28-page guide, "Extracting Fossil Fuels from Your Portfolio". [Note that this guide was updated before the fossilfreefunds.org search tool became available to simplify the process of finding out what you own].
- Fossil Free Indexes offers some options on its "Invest" page for institutional investors, financial managers, and individuals.
- Green America offers an in-depth review of various divestment and investment options. The 9-page Guide to Fossil Fuel Divestment also touches on reinvestment possibilities.
- The Carbon Clean 200 initiative (co-developed by Corporate Knights and As You Sow) maintains a list of 200 companies (from 26 countries, with China accounting for 26% of the list) that are fossil-fuel-free and meet a number of additional ESG criteria.
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