How to Invest Fossil-Fuel Free
The top 200 oil, gas, and coal companies around the world hold
the vast majority of the world’s
remaining fossil fuel reserves. Burn
these reserves, and the world is on track
to catapult past the two-degree rise in
world temperatures that scientists say
would result in the most catastrophic
effects of climate change.
The fossil-fuel divestment movement aims to change that trajectory, by encouraging
powerful institutions, as well as individuals, to remove those top 200 oil, gas, and coal companies from their portfolios. Instead, it’s time to invest in clean-energy and energy-efficiency solutions that can curb the climate crisis.
Consider these three examples of clean-energy progress:
The Cloverleaf School District near Cleveland, OH, is combatting climate change. Last August, all schools in the district installed energy-efficient lighting, occupancy-sensing light switches, super-efficient hot-water boilers, and other energy-efficiency upgrades, saving Ohio taxpayers $122,000 in annual energy costs.
In September, Delta Electronics Inc. announced a new project to install high-efficiency electric vehicle charging stations along major highways in Norway, one of the first countries widely to adopt electric vehicles as a climate-change solution. Simultaneously, Delta Electronics is working on a three-year contract with the US Department of Energy to research how the US might jump-start electric car adoption in this country.
And in October, in Quebec, the Innergex Renewable Energy Co. opened Stardale, its first operating solar farm in Canada. Featuring 144,000 solar photovoltaic modules, Stardale produces enough electricity to power more than 3,200 Ontario homes a year. Six future Innergex solar projects totaling 59 megawatts of power generation await approval for construction in 2013.
What do these three examples have in common? Each of the projects described above was implemented by a company held by mutual funds in which you could invest. As of this writing, mutual funds managed
by Portfolio 21, the New Alternatives Fund, and Pax World Funds hold shares in Ameresco, Delta Electronics, and Innergex respectively. When you invest in companies that make it their mission to support clean energy, your responsible saving and retirement planning could be paying dividends not only for you, but for us all—in reduced climate emissions.
|The Solana Generating Station under construction in Gila Bend, Arizona is a project of the Spanish company Abengoa Solar, a holding of the New
Alternatives Fund portfolio. Expected to be completed in 2013, the solar
farm will have a total capacity of 280 MW, enough electricity to power
70,000 homes and eliminate 475,000 tons of carbon dioxide.
“Investing in fossil fuel today seems like investing in the whaling industry in the mid 1800s—old technology, still dominant but clearly not the future,” says John Streur, president of Portfolio 21. “Our ability to power the global economy beyond the current age of fossil fuels will be the most important and difficult transformation ever made by our industrial society,”
Streur points out that global investors like Portfolio 21 are able to search the planet for the most stable and forward-thinking
companies possible to fill out a responsible portfolio, while excluding US companies that are “emphasizing hydro-fracturing [fracking] and other forms of oil, gas, and coal production.”
To put your investments to work for a clean-energy future, consider the following:
1. Choose a fossil-free mutual fund: Three socially responsible mutual funds
exclude all companies involved in the extraction
or production of fossil fuels—oil,
coal, or gas.
The Green Century Balanced Fund, in addition to investing fossil-free, in 2009 became the first
mutual fund publicly to release a carbon-footprint report of its holdings—which was 66 percent smaller than that of the companies making up the S&P 500.
Pax World Global Environmental Markets Fund invests pollution control, waste management, and water infrastructure, in addition to its investments
in clean-energy and energy efficiency.
And Portfolio 21 maintains a company-wide policy of avoiding fossil-fuel investing.
In addition, responsible mutual funds also work for increased clean-energy development in this country. For example, last October, the Green Century Funds sent representatives to Washington, DC, to encourage Congress to renew the nation’s
Production Tax Credit (PTC) for wind energy generation, which eventually passed as part of the “fiscal cliff” negotiations.
2. Choose a clean-energy mutual fund: A mutual fund may focus overwhelmingly on clean-energy companies while not guaranteeing all of its holdings to be 100-percent fossil-free. For example, The New Alternatives Fund invests in some natural gas distribution, though the list of public holdings on its Web site reveals overwhelming investment in solar, wind, hydro-power, and geothermal.
And Calvert’s Global Alternative Energy Fund requires 80 percent of its holdings to be invested in clean energy. According to Calvert’s Melinda Lovins, the remaining 20 percent of the fund currently excludes fossil-fuel companies, though this can change, according to the fund manager’s preferences.
3. Invest in communities: Invest in local sustainable businesses, some focused on clean energy and energy efficiency, by investing in community development mutual funds or loan funds—or by opening accounts in a community development bank or credit union. Click “find options” at Green
America’s breakupwithyourmegabank.org to find investments.
4. Build your own fossil-free portfolio: Find an asset manager or financial planner willing to follow your fossil-free guidelines and help you create an investment portfolio without the 200 worst fossil-fuel
companies. Find financial planners and asset management firms willing to help you build a fossil-free portfolio at greenamerica.org/fossilfree.
In fact, Natural Investments, a
socially responsible investment management firm, launched a Fossil-Fuel-Free
January 2013. It is available to investors who
want a conservative to a moderately aggressive
“There are both moral and financial
reasons for investors to reallocate their
assets from oil and gas and into clean
energy,” says Elizabeth Glenshaw, a portfolio manager for Clean Yield, a sustainable asset management firm. “While clean energy companies have
struggled in recent years as a result of low natural gas prices, the financial crisis, and Chinese solar oversupply, there remains a compelling investment opportunity from this long-term shift. Both the science and recent weather-related disasters make it clear that we must move our economy off of fossil fuels as fast as possible.”
|The Puna Geothermal Venture (PGV) on the Big Island in Hawaii was a holding of Portfolio 21 at the time of this writing. The PGV project sells its electrical output to Hawaii Electric Light Company under three long-term power purchase agreements, with a total generating capacity of 38 megawatts.
– Andrew Korfhage