Posts Tagged ‘sustainable investment’

divest from fossil fuelsThis year, thousands of people around the world made Mother Earth their Valentine by celebrating the first annual Global Divestment Day. On February 13 and 14, people banded together to ask their schools, institutions, and local governments to break up with Big Oil, sending a clear message throughout the globe that it is no longer morally, politically, nor financially acceptable to support companies that profit from the destruction of our home sweet home called Earth.

The argument for divestment is pretty simple. About  two-thirds of the reserves in the ground must stay there to keep climate change at bay, but the oil, mining, and coal companies base their financial projections on burning it all up. This is just not feasible, as burning all existing reserves has the potential to ruin the planet as we know it, at which point the economy would fall apart.

But can divestment really work, and is it a sound financial move?

dinosaur divest imageindex

Keep it in the ground!

Most academics and analysts agree that divestment of schools and public institutions will not itself weaken the capital of fossil fuels. If by divesting you sell your stock to the next investor, capital is just changing hands. However, divestment is not just about the money — it starts climate conversations where there were none before, and sets the tone for what is morally and socially acceptable in our communities. Historically, divestment from Big Tobacco and divestment from companies during the South African Apartheid were extremely successful in shaping public discourse and making big changes.

It’s abundantly clear that burning the fossil fuel reserves in the ground will totally devastate the planet upon which the economy is based. There is no cost for fossil fuels that can make up for the future loss of natural capital: the price of losing our agricultural land, the damage to ecosystems worldwide, or the health of the population. By divesting now, we stand a chance to diminish the costs that future generations will have to pay, and can fuel the movement towards a cleaner planet today.

In every era, we know that industry and progress follow the money, and the case for divestment has recently gotten stronger with the sharp decline in worldwide oil prices. To top it off, the environmental and human costs of new modes of fossil fuel extraction like fracking are making fossil fuels a less promising investment than in decades past. And the nail in the coffin of fossil fuel investment? The cost of renewables like solar is decreasing each year, and the job market for renewables is seeing a steady increase. In a study done by the banking firm Lazard, solar energy is roughly 5.6 cents a kilowatt-hour and wind is as low as 1.4, whereas natural gas and coal come in around is 6.1 and 6.6 respectively. Any smart investor can see where the future fortune lies.

But perhaps the best argument to convince our cities, schools and communities to divest is that it makes great financial sense. Reports show that in the past five years, funds divested from fossil fuels have outperformed the conventional funds. In fact, Business Spectator says that a divestment strategy “can make perfect financial sense. The fossil fuel free index also showed less volatility than the conventional [funds].” So, better returns on investment, less risk of climate disasters, and a healthier world for future generations? It seems like divestment is the sweetest Valentine of them all.

Here’s how you can break up with fossil fuels:

  1. Join millions at GoFossilFree.org. Add your name to one (or several) of the 450 different petitions across 60 countries. The more your public institution(s) see that climate change is an issue of concern for the community, the sooner we can start a discussion about the long-term consequences of climate action. If there’s no divestment organization in your community, start your own!
  2. Divest yourself. A recent study done by the Sierra Club and Rainforest Action Network found that major banks and credit card companies, like Wells Fargo, Bank of America, Chase, and Morgan Stanley, give hefty contributions to fossil fuels. If you pay annual fees, transfer fees, or interest to these banks, your funds are supporting coal and oil investment. Consider moving your money to a credit union or a community development bank in your area. To find out how your bank rates, check out Green America’s scorecard.
  3. Learn more and support the movement. Below are a few great resources to help you learn more about divestment and help us build a greener future for all! Learn more about divestment from the following resources:
  • Bill McKibben of 350.org discusses why student-led divestment movements are changing the landscape of fossil fuels. Read more on Rolling Stone.
  • The Financial Case for Divestment of Fossil Fuel Companies by Endowment Fiduciaries by  The Huffington Post.
  • The country of Norway divests from fossil fuels: learn how and why here on Clean Technica.
  • Why the discussion is now Peak Carbon instead of Peak Oil by GoFossilFree.
  • Learn what happened on Global Divestment Day in February 2015: watch the video from GoFossilFree.

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Dinosaur image from Go Fossil Free Campaign Solana Beach, divest image from Resilience.org

Rachel GoldbergAbout the Author: Rachel is a recent graduate of the University of Hawai’i at Mānoa, and is the RISE Intern for Oroeco. She is excited to pursue a career in environmental sustainability, and is thrilled to promote Oroeco’s vision of saving money and the planet simultaneously!

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oroeco climate impact fund

Oroeco is working to create the world’s greenest investment fund– but we need your help! We’ve partnered with Trucost, Confluence Capital, and various nonprofits to create a diversified portfolio of industry climate leaders, but we want to engage YOU in the process. We have created an awesome voting system that let’s you choose the companies that you think worthy, helping to build a fund for everyone. Together we can build the world’s first crowd-sourced investment product, a diversified portfolio that represents our passion for better business and a cleaner world.

Welcome to Oroeco’s Climate Impact Fund.

The Climate Impact Fund will be a diversified exchange-traded fund (ETF) that provides competitive financial returns while reducing climate pollution per dollar invested by over 80% (vs. the S&P 500). This first Climate Impact Fund (and we hope to build many!) will include only companies that have the best climate performance in their industries based on Trucost data for over 4,700 companies. All fossil fuel companies are already excluded from the list, so our fund will go above and beyond the requirements of the fossil free divestment movement. Sustainable investment advisers and our partners at leading environmental nonprofits have worked hard to help us screen our stocks for other environmental, social and governance (ESG) criteria, like labor conditions, biodiversity and toxics. So the list you see below includes companies already making progressive change… but we need you to make it better.

We’re asking you to take a few moments to vote to help us narrow our list into a diversified portfolio of 50 to 60 stocks that will form our first ETF. We will take all votes into consideration, but votes accompanied by logical and compelling evidence are more persuasive, so please explain your reasoning and add supporting links where you can. This process is a radical experiment in financial democracy and a departure from how Wall Street normally operates. Follow the steps below to join the movement, share this page with your friends, and help make history! For questions or suggestions, contact us here.

Here’s how to vote:

  1. Visit Oroeco’s Climate Impact Fund page here.
  2. Click thumbs up or thumbs down to vote companies in or out of our Climate Impact Fund based on your own social and environmental criteria.
  3. Tell us why you voted each company in or out, and ignore all companies you don’t have a strong opinion about.
  4. Click SUBMIT once you’re finished, and feel good knowing you’re encouraging companies and the financial world to invest in a cleaner future!

oroeco climate fund
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Socially Responsible Investing (SRI) is a growth industry.

Most of our 401(k)s and IRAs aren’t inspiring confidence we’ll be retiring to the Bahamas anytime soon. Are sustainability-focused investments an unaffordable luxury in these gloomy economic times? Turns out Socially Responsible Investing (SRI) is actually on the rise since the recession hit, growing about 12% annually since 2007, to $3.07 trillion in 2010. That’s because many (but not all) SRI funds have actually outperformed or done just as well as the rest of the market, according to not just green money managers but also award-winning academic publications.

So how can you hop aboard the SRI express? A great place to start is the Forum for Sustainable and Responsible Investment (formerly known as the Social Investment Forum, or SIF), which publishes Bloomberg  performance data for over 100 SRI funds and benchmarks, allowing you to screen investments based on 14 social and environmental criteria.

Of course you could also strike out on your own and buy stock in companies striving to grow a greener world. Though it’s a high-risk (and potentially higher reward) strategy, since your Tesla could turn into a Solyndra overnight, particularly in immature industries navigating rapid developments in both technology and supporting policies. Or you could just avoid investing in specific sectors (like coal and tobacco), an approach taken by many SRI funds. Here are a few more tips to ensure your portfolio yields net good for both you and your planet.

Stay tuned for more tools from Oroeco to help quantify the impacts of your investments. After all, what good is a giant nest egg if the tree is burning down?

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