This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Why It Makes More Sense to Dump Your Fossil Fuel Stocks

Conspicuously missing from the lineup of current and potential divestors are those large green groups that are sounding some of the loudest warning cries about climate change.

An article by Naomi Klein in The Nation last spring revealed that a majority of large environmental nonprofits are suspected or known to have large investments in the fossil fuel industry. The Nature Conservancy, for instance, has at least $22.8 million invested in the energy sector. Other groups with large endowments include Conservation International, the Wildlife Conservation Society and the Ocean Conservancy. None of these groups have been forthright about what percentage of their endowments are derived from or invested in fossil fuels.

On the other end of the spectrum, green groups such as Greenpeace, Friends of the Earth and the Rainforest Action Network do not have endowments and do not invest in the stock market. And other groups are taking steps to make sure their actions are more consistent with their mission. The Natural Resources Defense Council has stated that it specifically screens out the extractive and fossil fuel industry for direct investments, as does the Sierra Club.

The executive director of the Responsible Endowments Coalition, David Apfel, told The Nation that unless an institution specifically screens out investments in fossil fuels, it is virtually certain to hold some stock in the industry.

"All investors are basically invested in fossil fuels," Apfel says. "You can't be an investor that is not invested in fossil fuels unless you've actually worked very hard to ensure that you're not."

The collective effort to divest has been aided by a flurry of reports outlining an appropriate and financially beneficial way to go about divestment. These include The Aperio Group's report, Building A Carbon Free Portfolio, Joshua Humphrey's article, Institutional Pathways to Fossil-Free Investing: Endowment Management in a Warming World and Resilient Portfolios and Fossil-Free Pensions, a joint effort of HIP Investor and 350.org.

All three not only outline methods for long-term divestment, but also offer suggestions for reinvestment in renewable energy and other solutions for coping with climate change, which they all conclude is a necessary component of any successful divestment strategy.

The Aperio Group reported in January that carbon divestment carries very little risk -- much less than 1% (from 0.01 to 0.0006). At the same time, the World Economic Forum found that about $700 billion would be needed annually to address and limit the global impacts of climate change.

Divestments in fossil fuel stocks owned by university, nonprofit and corporate endowments -- as well as those in pension funds -- would free up hundreds of billions to tens of trillions of dollars that could be redirected to sustainable development and climate adaptation projects. This could help prevent or alleviate many of the worst impacts of climate change while also benefitting the economy.

"A carbon-neutral, and eventually carbon-free, economy is not only possible," Yonavjak writes, "it has become imperative."

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CVX $107.35 0.27%
RDS.A $64.82 0.00%
XOM $88.89 0.27%
AAPL $130.08 -0.26%
FB $80.41 0.00%

Markets

DOW 18,214.42 -10.15 -0.06%
S&P 500 2,110.74 -3.12 -0.15%
NASDAQ 4,987.89 +20.7530 0.42%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs