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Fight Climate Change with Your Portfolio

| November 05, 2013
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Four Steps to Get Your Money Working for Clean Air, NOW!

A recent study from Oxford concluded that the current divestment campaign persuading investors to take their money out of the fossil fuel sector is growing faster than any previous divestment campaign and could cause significant damage to coal, oil and gas companies.

Meanwhile, several Blue Summit clients have been involved with 350.org’s efforts to encourage large institutional investors, like university endowments, to divest their portfolios from fossil fuels. For example, Greg Dennis in VT, has been actively working to get his alma mater, Middlebury College, to withdraw their investments from fossil fuel companies (read his blog post here), while Jean Costa in San Diego made local press opposing the Keystone pipeline at a Coronado petroleum conference (read the article here).

In addition to their work in the community, these investor-activists have also made it an important point to align their own personal portfolios with their values by working with Blue Summit to remove fossil fuel companies from their accounts. In this article, we explore the various ways that others, like them, are getting their money to work for them in the fight against climate change, including four steps that you can take now!

About the Issue

From their website, “SanDiego350.org, an all-volunteer organization, is concerned about climate change and its very real effects on our livelihoods, well-being, and the future for our children. We work to increase awareness of climate change and advocate for reducing greenhouse gas emissions.”

Masada Disenhouse, steering committee member at San Diego350.org, states that “the Scientists inform us that in order to avoid the worst impacts of climate change we must leave approximately 80% of all known fossil fuel reserves in the ground andreduce our greenhouse gas emissions dramatically over the next 20 years. In addition, failure to act on climate change is now a widely acknowledged and significant financial risk to businesses and funds as economists have identified a coming ‘carbon bubble’ that could have significant impacts on investments and the economy due to stranded assets and inflated stock prices once governments begin regulating the fossil fuel industry.”

Varying Approaches

Disenhouse noted that the San Diego group is loosely affiliated with 350.org, and that they both believe that divesting funds from fossil fuels will send a powerful message to the oil, coal and gas industry, that Americans demand that we begin transitioning now to a clean energy future because of the clear moral argument that it is wrong to be profiting from harming the planet and future generations. SanDiego350.org is working with partners across California to urge the nation’s largest and eighth largest pension funds, CalPERS and CalSTRS (which serve state, county and city workers, teachers, and other school workers in California) to divest from fossil fuels (website coming soon).

However, many sustainable institutional investors are taking a different approach. Rather than divesting their holdings in fossil fuel companies, they’re focusing on engagement.

“To divest is to relinquish those shares to another owner who may not be practicing active ownership,” the Interfaith Center on Corporate Responsibility (ICCR) points out. “This approach, in effect, serves to strengthen management control. ICCR members advocate for amplifying our collective voice by bringing more shareholder advocates to the table — that is, we support engagement.”

Whatever one’s position on divestment may be the campaign by 350.org — along with recent insights into the natural boundaries of the planet and stranded fossil fuel assets — apparently have raised awareness in the sustainable investment community about the need to act decisively on investing to help combat climate change. Not only has ICCR published four pages of insight from which the above quote is extracted; Ceres also has published “The 21st Century Investor” as well, which outlines 10 steps for investors to incorporate sustainability into their decision making.

The Forum for Sustainable and Responsible Investment (US SIF) has also weighed in on the issue, with a pair of brief guides designed to help both retail and institutional investors direct their investments to address climate change.

Four Steps You Can Take NOW!

Summarizing some of the main action steps that investors can take, the following list draws from these guides with the main purpose of making it as easy as possible for you, the investor, to choose at least one thing to do right NOW to get your money working against climate change.

  1. Choose Investments Fighting Climate Change: Depending on what investments you hold, there may exist similar investment vehicles that consider the Environmental, Social, and Governance (ESG) criteria of any portfolio holdings. Feel free to contact us to discuss investment options if you need assistance.
  2. Engage as a Shareholder: Check out this link to Green America’s guide on voting your proxies and, if you’ve owned $2,000 worth of a stock for more than a year, you’re eligible to file a resolution. If you’re interested in this option but have never filed a resolution before then we suggest you co-file along with a group of other shareholders who have experience. You can find the deadlines for filing resolutions for the company you’re interested in on the “Edgar” site of the SEC’s website.
  3. Get Active in the Community: Read this white paper from the Interfaith Center on Corporate Responsibility and discuss it with the leadership at your place of faith: Insights for Investors Working for Bolder Intervention on Climate Change. You could also discuss your college’s endowment policies, whether you’re an alumnus, student or current administrator, with help from the Responsible Endowments Coalition. In addition, consider getting involved with a local 350.org chapter and their efforts to pressure local public agencies to divest from major CO2 contributors.
  4. Pressure Fund Companies to Act: As a way to pitch into this effort, Blue Summit is not only sending out this article to thousands of people nation wide, but we’re also advocating for all of our clients and community of supporters to sign onto this 350.org, Fossil Fuel Free campaign. The petition calls for three of the country’s largest mutual fund companies, representing billions of dollars worth of shares owned by retail investors, to offer broad-based equity funds that minimize climate risk by excluding the 200 largest fossil fuel companies, and to make those funds widely available to ordinary investors.

Whether by aligning your portfolio with funds or money managers who offer responsible portfolios, getting engaged as a shareowner, or simply signing the Fossil Free campaign, please contact us if you are interested in supporting this effort.

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