Resources for Individual Divestment

Here are some resources to help you navigate your individual divestment and reinvestment decisions.

Performance of Fossil-Free Portfolios

Fossil Free Indexes - US

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. 1) FossilFreeFunds.org

FFF_website_10_assets_home_laptopUntil recently, individual investors had to check out each individual holding in their mutual funds to find out which funds might contain fossil fuel investments.

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 Decarbonizer Tool 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:

Questions? Send an email to individualdivest@fossilfreeca.org.

Performance chart: Fossil Free Indexes US: http://fossilfreeindexes.com/fossil-free-indexes-us/