What does it mean to invest fossil fuel free? And how do you begin to divest? This post will attempt to clarify the definition of fossil fuel free investing, and to distinguish between fossil fuel free and low carbon strategies.
What does it mean to invest fossil fuel free?
For Green Century, and for many other leaders in the fossil fuel free investing movement, investing fossil fuel free has a very clear definition:
- No investing in companies whose only, core, or majority business is the exploration, extraction, refining, processing, or distribution of fossil fuels.
How do I know if my mutual fund is fossil fuel free?
- It is important that the exclusion be included in a Fund company’s prospectus, as that is the only way to guarantee a fund follows this or any specific investment strategy.
Are “low carbon” funds the same as fossil fuel free?
- Maybe, but probably not. “Low carbon” is a marketing term and not interchangeable with “fossil fuel free.”
- Only portfolios with zero or “0.00%” in the energy sector would be consistent with fossil fuel free investments.
- A mutual fund might even have investments in coal, oil and gas companies and still call itself “low carbon”.
What about changing the definition of ‘fossil fuel free’ to include companies that use fossil fuels?
We don’t think that this is useful from the campaign point of view since it would eliminate the vast majority of companies in which to invest. It would be a nearly impossible feat for ordinary investors to achieve.
But, aren’t the carbon emissions of a company important?
Of course! By reducing their energy use and/or by sourcing more renewable energy, companies can contribute to reducing greenhouse gas emissions. Companies can also reduce carbon emissions in their supply chains by choosing materials and products that have a lower carbon footprint, such as palm oil or soy grown without burning rainforests.
Asking your fund company know its greenhouse gas emissions is a good step that we’ve supported for a long time. In fact, the Green Century Balanced Fund was the first U.S. mutual fund to do a carbon footprint.
What about investing in clean and renewable energy – how does that fit into fossil fuel free?
A fund that avoids coal oil and gas companies does not necessarily invest in companies that provide clean energy or companies that provide energy efficiency products. But some – including Green Century – do. Check the specific companies that are part of that fund. You can also ask how a fund supports clean energy policy or advocates for companies to reduce their greenhouse gas emissions.
So how do I get started investing fossil fuel free?
Just take the first step. These resources and the Green Century team (1-800-934-7336) can help:
- Green Century’s Updated Personal Guide to Fossil Fuel Free Investing
- How to Add Fossil Fuel Free Options to Your 401(k)
- Frequently Asked Questions about the Divestment Campaign
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 or 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. 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.
This information has been prepared from sources believed to be reliable. The views expressed are as of the date of this writing and are those of the Advisor to the Funds.
The Green Century Funds are distributed by UMB Distribution Services, LLC. 235 W Galena Street, Milwaukee, WI 53212. 9/18