Institutional Pathways to Fossil Free Investing

Joshua Humphreys, a fellow at the Tellus Institute, put together a white paper on “Institutional Pathways to Fossil Fuel Free Investing.” The paper is aimed an institutional investors who are exploring fossil fuel divestment, but it is an invaluable resource for students who are active in divestment campaigns. I’ve embedded the paper below, but here are some important sentences and diagrams:

  • Even without a binding global climate regime or carbon taxes, regional and national climate- related policies and low-carbon incentives have already gradually begun to erode the comparative economic advantages of the traditional fossil-fuel energy sector, especially in comparison to increasingly affordable renewable energy sources. 
  • Whether managed internally or externally through separate accounts, selling directly owned securities of the Carbon Tracker 200 can be executed as expeditiously as possible. 
  • This creates a theoretical return penalty of less than half a basis point (0.0034 percent). Whatever impact fossil-fuel divestment may have on portfolio risk, it appears to be “far less significant than presumed” by many conventional analysts.

Screen Shot 2013-06-20 at 10.33.53 AM

 

  • Building upon divestment, the second pathway to fossil-free investment involves reinvesting at least five percent of a portfolio into proactive sustainable investments and climate solutions.

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