Fossil-free investments perform
FOSSIL-FREE INVESTMENTS OUTPERFORM CONVENTIONAL STOCKS
The case for fossil-free investment continues to gather strength, with new information showing that fossil-free indexes have outperformed conventional indexes over the last five years. The data, from the London-based FTSE Group, reveal that FTSE’s North American fossil fuel free index beat the conventional benchmark index while also demonstrating lower rates of volatility. This news comes on the heels of an announcement that a fossil-free version of the S&P 500 outperformed the original index by 1.5 per cent last year. While past performance is not a guaranteed predictor of future success, these trends coupled with the volatility of coal and oil markets show that divesting from fossil fuels makes financial sense. The Australian National University’s decision to divest from fossil fuels in 2014 is a prominent example of this, despite being relentlessly attacked by commentators and the government for its decision to dump shares in Santos among others, it was soon proven to be a savvy move as the company’s worth collapsed soon after. As the burgeoning divestment movement gains more traction, fossil fuel backers are trying their hardest to ridicule it as “feel-good folly.” But the truth is that the divestment movement is successfully challenging the polluting fossil fuel industry and protecting investors from risky investments. With nearly 200 cities, universities, and other institutions having sold off $50 billion of fossil fuel stock, the real impact of this type of divestment should not, and cannot, be ignored.
- Fossil free indexes are outperforming conventional ones, dispelling the last lingering doubts about divestment’s financial impact. Last year, a fossil free version of the S&P 500 handily outperformed the original by 1.5 per cent. Now, new data from the FTSE Group show that fossil-free indexes also have staying power. Over a five-year period from January 2010 to January 2015,FTSE’s North American fossil fuel free index beat the conventional benchmark index, demonstrating once again that a fossil-free strategy can make perfect financial sense.
- Fossil fuel investments are risky for investors and for the planet. Experts have championed divestment as an astute move that makes financial and environmental sense. Institutions moving away from dirty energies are heeding the warnings from the world’s leading scientists that largeswaths of known fossil fuels must stay in the ground to avoid the worst impacts of climate change. As oil prices precipitously drop and the coal industry continues its long decline, continued investment in such fuels poses a significant risk to people, planet, and profits.
- What started with a few US universities has grown to over 500 campaigns at universities, cities, churches, banks, pension funds and other institutions around the world. To date, more than 180 institutions with a combined asset size of more than $50 billion have divested, rattling the movement’s opponents in the coal and oil lobbies. In the most high profile announcement to date,Norway’s Sovereign wealth fund—the richest in the world—said it had ended investment in 40 coal companies.
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