Many of us are concerned about Climate Change. We replace incandescent light bulbs, drive less, buy carbon offsets when traveling and above all else we DO NOT BUY BOTTLED WATER. However since most of us are not institutional investors, pension managers or Richie Rich types with huge stock portfolios, we feel a little left out when it comes to Fossil Fuel Divestment.
An online survey by First Affirmative Financial Network found the following:
Over half of sustainable, responsible, impact (SRI) investment industry professionals say that retail investors (65 percent) and institutional investors (53 percent) are currently expressing interest in fossil fuel-free portfolios in the face of growing signs of climate change, according to First Affirmative Financial Network’s Fossil Fuels Divestment Survey.
Released in anticipation of the 24th annual SRI Conference (http://www.SRIconference.com) October 28-30, 2013 at The Broadmoor in Colorado Springs, Colorado, the online survey was conducted by First Affirmative Financial Network between April 22 and May 8, 2013. More than 2,000 SRI industry professionals were asked to weigh-in on 12 questions regarding fossil fuel-free portfolios and related investor concerns. The survey was completed by 466 licensed investment professionals, asset managers, investors, and representatives of SRI investment companies, community development financial institutions, and social research/proxy voting organizations.
Other key survey findings include:
77 percent see growing risks for investors associated with fossil fuel company holdings in their investment portfolios.
30 percent of those surveyed either already do – or are getting ready to – offer fossil-fuel free portfolios to investors.
63 percent believe that investors will in the next 10 years start divesting in meaningful numbers from fossil-fuel companies due to climate change implications of such energy sources.
As Steve highlighted, it’s fossil fuels that are the number one producer of carbon in the atmosphere, which is in turn the top human cause of global warming. Fossil fuel divestment is thus the prime issue facing investors concerned about the environment. So you ask, “How can I participate in divesting of fossil fuel companies?” My answer: Talk to your employer about the company retirement plan.
Many mutual funds own companies active in extraction, production, transportation and use of fossil fuel. These companies have business models that rely on extracting all the fossil fuel they can, by any means necessary, and burning it. If they do what is right for the world and slow—and eventually stop—the burning of their reserves, the way things are now means they will suffer huge balance sheet losses. Two factors are going to push them toward burning less fossil fuel, and therefore losing value to shareholders: First, governments will place more and more regulations on them and second, investors and consumers will steer away from fossil fuels because of increasing awareness, and the profits that can be made will decrease.
At the end of the day, I don’t need to make anything more than a financial argument here. Awareness of global warming is not going away, and alternatives to fossil fuels are only becoming more developed and prominent. These companies’ oil and coal holdings are no longer the safe long term investments they were in the 20th century. If just 10% of your retirement plan money is investing in these companies you could be in for more than bad weather. When you look for 6% annual returns and see a drop in value from 10% of a portfolio’s holdings, you’ll find yourself setback. To avoid this, speak to your employer or retirement plan provider about divestment from fossil fuels.
Your employer may or may not consider fossil fuel stocks as volatile as you do. They might even completely disagree with the science of climate change. Either way, if they are not be willing to move the company plan from Fidelity to Social(k). Instead ask your employer to consider adding one or two of the funds available today that are fossil fuel free, such as Portfolio 21, Green Century Balanced, Shelton Green Alpha, Pax World Global Enviromental Markets, and CRA Qualified Investment Fund.
These funds are leading the way with fossil fuel free portfolios. Nervous your portfolio will under-perform by not owning energy producers? This webinar slide-deck walks through how portfolios can avoid Carbon Risk and not sacrifice returns. Empower yourself and become active in divesting of fossil fuel stocks in your company 401(k), 403(b) or 457 plan. It’s no longer only the big guns who can vote with their dollars. Here is a guide to bringing fossil free portfolios to your employer’s attention.
About Rob Thomas: Rob saw a need for more than one or two Environmental, Social or Governance, ESG, screened funds in an organization’s retirement plan. In 2000 there were no viable options for smaller organizations to add a respectable set of screened funds to a plan. Rob created Social(k) as an option for responsible and sustainable organizations looking for a retirement plan that matched the organizations DNA. To date almost 300 companies have agreed with Rob and offer Social(k) at their place of work. Join MoveOn.org, Democracy Now, Honest Tea, 350.org, Social Venture Network, B lab, RSF Social Finance, Green America, Social Investment Forum and a few hundred others as Social(k) supporters.