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December 29, 2014
Sustainable Investment Firms Offer Guide to Fossil Fuel Investing
    by Robert Kropp

Along with 350.org, Green Century Capital Management and Trillium Asset Management update a guide for investors who want to divest from fossil fuel companies and reallocate their assets to sustainability.


One of the most significant sustainable investment stories of this year has been the growth of the fossil fuel divestment movement. Inspired by a 2012 article in Rolling Stone authored by 350.org co-founder Bill McKibben, the movement gained such notable adherents as Stanford University, the Rockefeller Foundation, and the Unitarian Universalist Association in 2014. An estimated $50 billion in assets were divested from fossil fuel companies this year.

Late in 3013, 350.org joined with Green Century Capital Management and Trillium Asset Management to publish a divestment guide. Both Green Century and Trillium have offered fossil free investment opportunities for years. This month, the organizations updated their guide to reflect more recent developments in the investment landscape.

Entitled Extracting Fossil Fuels from Your Portfolio, the updated guide “helps individuals better understand fossil fuel divestment, provides clear steps to move money out of coal, oil, and gas companies, and gives tips on how to invest in sustainable companies and investment vehicles,” the organizations stated.

“There are four primary reasons to divest,” the guide states:
1. To align your investments with your values;
2. To shape public policy and limit influence by energy companies;
3. To potentially reduce your financial risk; and
4. To reallocate investment to companies leading the transition to a more sustainable economy.

The financial risks associated with investment is fossil fuel companies are associated with the concept of stranded assets, according to which the vast majority of reserves already on the books of fossil fuel companies will have to stay in the ground if the worst effects of climate change are to be avoided. The guide points out that studies undertaken during the past year, as well as the performance of fossil fuel free investment products such as Trillium's Fossil Fuel Free Core, indicate that financial returns should not suffer as a result of divestment.

As the guide further points out, an important aspect of the divestment choice is reinvestment in companies engaged in building a low-carbon economy. The seven pillars of reinvestment identified by the guide include energy efficiency, power generation, storage and distribution, transportation, sustainable agriculture, water, and sustainable design. “Companies that proactively address climate change through products and services offered, operations, and supply chain may be better positioned to succeed in the new economy,” the guide states.

“A holistic and diversified approach that looks across sectors for companies undertaking one or more of the Seven Pillars is a key to a potentially successful reinvestment strategy,” the guide continues. “Look for a wide variety of companies that are adapting quickly to consumer demand for new, resilient, and environmentally sustainable products and services that may provide a competitive advantage in the emerging sustainable economy.”

“Investors have an important role to play in the climate change movement,” McKibben said. “By naming the fossil fuel industry’s singularly destructive influence, we hope that the divestment movement can help break the hold that the industry has on our economy and governments.”

“Our firm believes that climate change is the defining of our generation,” Matthew Patsky of Trillium said. “We also believe that all investors who care about the planet have a responsibility to try to divest.”

 

 
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