January 15, 2017
By Dustyn Lanz
Investors who are concerned about the long-term sustainability of the planet — and their portfolios — are asking increasingly, “Should I divest from fossil fuel companies?” It’s a fair question to ask, especially as New York City recently announced plans to sell off $5 billion in fossil fuel investments in an effort to fight climate change. Although this move has merit as a political statement, climate-proofing a portfolio and positioning it to help solve the climate crisis requires a more nuanced and proactive responsible investment (RI) strategy.
The idea of fossil fuel divestment gained traction a few years ago following a grassroots campaign led by 350.org, a New York-based non-profit organization, calling for investors to “take money out of the companies that are heating up the planet.” The goal of this campaign is to foster “a safe climate and a better future.” But will selling shares of fossil fuel companies actually safeguard the climate? A quick analysis reveals this is not so simple.