Sustainable Investment Strategy
The Green Century Funds avoids fossil fuel companies and instead invests in companies leading their industries in environmental, social and governance (ESG) rankings. The Funds use the following strategies to pursue competitive returns and investments in sustainable companies.
Environmental, social, and governance (ESG) performance
Since 1991, Green Century° has used environmental, social, and governance (ESG) performance ratings to invest in companies leading their sector. A large and growing body of evidence demonstrates that choosing investments by incorporating ESG performance may reduce risk and offer financial advantages. Green Century believes that companies that protect the environment may be more profitable in the long run by avoiding risks, being prepared for changing regulations, and growing through competitive advantages.
A sustainable investment strategy which uses ESG ratings may result in lower or higher returns and may reduce risk than an investment strategy that does not include such criteria; as a result performance may be affected.
To offer investors a way to invest with their values, the Green Century Funds do not invest in producers of nuclear weapons or nuclear energy, guns or civilian weapons, military weapons, tobacco, or GMOs (genetically modified organisms). These screens are included in our prospectus (PDF).
Fossil fuel screens
Green Century Funds do not invest in corporations that explore for, extract, process, refine, and transmit coal, oil, or gas; burn fossil fuels to make electricity; or possess carbon reserves.
Green Century had the foresight to avoid coal and major oil companies from its inception, providing a long track record of helping investors avoid the potential risks with fossil fuel companies. Green Century became the first family of fossil fuel free, responsible, and diversified mutual funds in the U.S. in 2014 when we eliminated the last remaining gas companies. Our exclusions are not just verbal commitments or a tagline. Green Century details the screens in our prospectus. See our definition of fossil fuel investing here.
Performance of fossil fuel free investing
The fossil fuel sector has been the worst performing sector for the last year and decade.
Research from leading industry analysts suggests that investing fossil fuel free may protect investors from:
- Volatility of oil prices
- Decreased dividends due to capital expenditures on high-cost projects such as offshore and Arctic drilling
- Devalued or stranded carbon reserve assets
These concerns are just some of the reasons why Green Century has a long-standing investment strategy of avoiding the worst polluting companies and instead seeking to invest in companies that are helping to build a sustainable economy.
Recent studies on performance:
Fossil Fuel Divestment: Perspectives After the Oil Bust
Responding to the Call for Fossil-fuel Free Portfolios
MSCI ACWI ex Fossil Fuels Index (USD)
Important green investing distinctions
As more investments are marketed as “low carbon” or “climate change solutions,” keep these points in mind:
- “Low carbon” is not the same as fossil fuel free. Low carbon investments might invest in coal, oil, or gas companies; these portfolios might evaluate carbon emissions, carbon reserves, or the overall carbon footprint of an investment, but they may also still invest in the companies most responsible for climate change, like natural gas companies.
- Any binding exclusion, such as avoiding fossil fuel companies, should be spelled out in the prospectus. You can review the prospectus of the Green Century Funds here.
- Only portfolios with zero or “0.00%” in the energy sector would be consistent with fossil fuel free investments. Download our Fossil Free Investing Guide for additional guidance.
Additional Resources on Sustainable Investing
°Green Century Capital Management, Inc. (Green Century) is the investment advisor to the Green Century Funds (The Funds).
You should carefully consider the Funds' investment objectives, risks, charges and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds, please click here for more information, email firstname.lastname@example.org or call 1-800-934-7336. Please read the Prospectus carefully before investing.
Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic and political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to risks including interest rate, credit, and inflation. The Funds’ environmental criteria limit the investments available to the Funds compared to mutual funds that do not use environmental criteria. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria; as a result performance could be affected.
The Green Century Funds are distributed by UMB Distribution Services, LLC., 235 W Galena Street, Milwaukee, WI 53212.