By Vanessa Green
It’s easy to feel powerless when our newsfeeds deliver story after depressing story about the accelerating impacts of climate change. It’s even easier to get angry at fossil fuel companies, which have known about and suppressed knowledge of the threat for decades, even funding climate denial and lobbying to make it harder for alternative energies to gain traction.
For investors of all sizes, there is some good news: It’s never been easier to take meaningful personal action by divesting from the companies banking on carbon reserves, and investing instead in local and scalable climate solutions.
By divesting, loudly and proudly, we collectively send a signal that removes the fossil fuel industries’ social license to continue business as usual. We make our voices heard and our dollars count. It’s replicable constructive action that couldn’t be more timely or prudent.
The moral imperative for divesting from fossil fuel industries is clear. Profit at the expense of a habitable planet for people alive today and for future generations is indefensible. It’s a bad business model that externalizes costs, extracts from communities and consolidates wealth beyond reason.
The financial case for divestment is equally compelling. According to the Carbon Tracker Initiative, fossil fuel companies risk wasting up to $2.2 trillion of investments in new projects that could turn out to be “uneconomic” over the next decade. In fact, if you’ve been in fossil fuels over the last few years, you have likely lost a significant amount of money – a concern for any fiduciary.
A movement takes hold
Making the decision to divest from fossil fuels may be straightforward, but actually doing it is a challenge for many people. A range of institutions have helped grow the global divestment movement -- with over $3 trillion in fossil-free assets under management, committed from icons like the Rockefeller Brothers Fund and Stanford University. But until recently, it hasn’t been clear how everyday individual investors can participate.
With more and better data, along with a growing list of helpful tools and attractive investment vehicles, the average investor and retirement fund holder can now be part of accelerating this historic movement – one based firmly in the new economy, where finance is democratized and demystified.
Sign the pledge
Recognizing this movement’s power and potential, Divest Invest is committed to helping individual and institutional investors, large and small, divest from fossil fuels and invest in better energy alternatives. It all starts with our pledge.
By signing the Individual Pledge, you are agreeing to make no new investments in the top 200 oil, gas, and coal companies that constitute The Carbon Underground 200 (CU200); to sell any current CU200 investments within 3 to 5 years; and to invest in a sustainable and equitable new energy economy.
Vote with your dollars
Once you’ve made the commitment, there are a number of ways to cast your vote:
- Take a closer look at your investment funds. If you’re invested in ETFs or mutual funds, make sure they’re the right ones. An increasing number of new funds remove CU200 companies. Some, like Etho Climate Leadership U.S. ETF (ETHO) from Etho Capital, are 100 Percent Fossil Free by going beyond the CU200 to also remove all fossil fuel extraction and services companies. There are also 100 percent Fossil Free mutual funds, including Green Century Equity Fund (GCEQX), Shelton Green Alpha Fund (NEXTX), Brown Advisory Sustainable Growth Fund (BAWAX) and Parnassus Endeavor Fund (PARWX). Many of these funds look beyond fossil fuels by only investing in efficient and sustainable companies in other industries, and some of these funds are also making more money than conventional investments.
You can find lists of fossil free funds and investment managers at 350.org and Green America, and you can learn the carbon intensity of your existing investment portfolio with CarbonScan.
- Go digital. Automated investment services are not new, but Macroclimate just introduced the first automated investment service for divestors. It’s a solid option for investors who prefer a hands-off approach, and who have at least $250,000 to invest. Macroclimate is committed to using funds that not only exceed standards of the fossil fuel divestment movement, but that have historically outperformed the market.
- Talk to your financial advisor. Tell your advisor that you want to clean up your portfolio, and be prepared with data to support your argument. You may hear that you’ll lose money by divesting from fossil fuels, but that’s not true. A number of funds, including Etho Capital, Trillium, Green Century, Parnassus and Calvert, frequently beat market benchmarks.
- Talk to your employer. Consider this: Approximately 8 to 12 percent of the over $4.4 trillion currently invested in 401(k)s is in fossil fuels. That’s $352 billion to $528 billion worth of influence in the hands of employees. If you have a 401(k), ask your HR representative about fossil free 401(k)s. Green Century's 401(k) toolkit and Fossil Free Funds and HIP Investor's 401(k) toolkit can help prepare you for this important discussion.
- Invest in sustainable solutions. The Green Century Funds webpage and Etho Capital’s Climate Efficiency page provide some descriptions of the climate solutions they invest in. These investments aren’t just excluding the bad; they also help bring the good to scale.
Our planet is calling us to action
We’re in a race against time when it comes to climate change, but new tools and technologies make taking action easier than ever before. Please, become a Divest Invest Ambassador today and invite your friends, colleagues and families to become part of the solution too.
Image credit: Flickr/Joe Brusky
Vanessa Green is Campaign Director of Divest Invest Individual.