Going Fossil Fuel Free with Green Century

There’s investing responsibly, and there’s investing with Green Century.

Green Century was a pioneer in environmentally-responsible investing – and remains a standard-bearer. We were founded in 1991 by a consortium of environmental and public health nonprofit organizations, so that people who cared about the environment could invest with their values. Nearly thirty years later, this remains our mission.

We help investors make an environmental impact by:

Hosting an award-winning and in-house shareholder advocacy program

Our team of shareholder advocates go far beyond the mere proxy voting that constitutes “shareholder advocacy” for many firms. Our shareholder advocates directly press more than 50 companies each year to improve their environmental practices.

They also file shareholder resolutions, lead and mobilize global investor groups, participate in global collaborations (like the Roundtable on Sustainable Palm Oil (RSPO) and the Cerrado Manifesto), and help negotiate regional no-deforestation agreements.

Already in 2019, we’ve secured agreements with Aramark, Amazon, Darden, Royal Caribbean, Kroger, and Vertex Pharmaceuticals.

Supporting the environmental and public health campaigns of our nonprofit owners

As the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofits, no other mutual fund company can match this level of impact. All of the profits we earn from managing our Funds can be used to support campaigns to protect the environment and public health.

Recently, we supported the Wildlife over Waste campaign, which aims to ban take-out plastic foam cups and containers to safeguard birds, fish and other wildlife from the harm caused by needless plastic pollution. To date, Maine, Maryland, Oregon, and Vermont have banned polystyrene.

We also backed the campaign that helped push California to adopt legislation that put the state on a path to generate 100% of its electricity from renewable and zero-carbon sources by 2045. The MIT Technology Review called it “the most important climate law in U.S. history.”

Investing in sustainable companies

We believe that companies that address the environmental, social, and governance risks within their operations and supply chains may perform better in long run.

We invest in companies that lead their industries in environmental, social, and governance (ESG) performance ratings.

We also employ exclusionary screens. We do not invest in companies that flout international norms and principles or face damaging reputational risks. We also do not invest in corporations that produce nuclear energy, nuclear weapons, civilian firearms, military weapons, GMOs (Genetically Modified Organisms), or tobacco.

Fossil Fuel Free

Green Century is proud to be the home of the first family of fossil fuel free, responsible, and diversified mutual funds in the United States.

All of Green Century’s mutual funds explicitly exclude any corporation that explores for, extracts, processes, refines, or transmits coal, oil, or gas; burns fossil fuels to make electricity; or possess carbon reserves.

While the environmental – and, frankly, moral – case for divestment is strong, there are also sound financial reasons, supported by years of data, to stop investing in fossil fuel companies.

Green Century recognized these rationales early and has championed fossil fuel free investing since even before the divestment movement’s founding in 2012.

Potential financial risks associated with the fossil fuel industry

Part of the economic case for divestment are the potential financial risks associated with the fossil fuel sector. These risks include price volatility, resource scarcity, stranded assets, potential for new regulations, and changing market demand.

The Institute for Energy Economics and Financial Analysis demonstrated that the “financial case for fossil fuel divestment is strong. Over the past three and five years, respectively, global stock indexes without fossil fuel holdings have outperformed otherwise identical indexes that include fossil fuel companies.”

The oil and gas sector placed dead last in performance returns in the S&P 500 last year, its lowest level in over 40 years.

Energy: S&P's Worst Sector in 2018

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Note: Past performance is not a guarantee of future results.

The opportunity costs associated with fossil fuel investments also may be high, since investments in fossil fuel companies could instead be used to support potentially more profitable (and environmentally responsible) sectors, such as renewable energy.

The fossil fuel industry’s outlook for growth also may be limited, due to potential price volatility and the scarcity of affordable resources. Already, the fossil fuel sector is shrinking, while more sustainable energy sources are surging.

A recent Bloomberg report identified the industry sectors that will be most affected by climate change. If global warming is restricted to two degrees Celsius at the least, fossil fuels, including oil, are expected to experience the greatest loss in market value.

Climate Winners and Losers

Fossil fuels, utilities stand to lose the most if global warming is kept to 2°C

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Bloomberg predicts that, in the next ten years, oil, gas and coal will become smaller investment sectors compared to renewables (such as solar, wind and ocean energies). In fact, economists at Bloomberg New Energy Finance predict that all growth in the fossil fuel industry will stop by 2030.

Meanwhile investment in new clean energy (any form of renewable energy created with clean, harmless, and non-polluting methods) may double by 2030. About 73% of that investment, or $630 billion annually, will be directed to renewable energy.

Historically, some investors have been reluctant to divest, fearing that it would impair their returns, but here is a comparison of the MSCI World Index, an index with large and mid-cap stocks across 23 Developed Markets (DM) countries, with and without Fossil Fuels for the last 9 years:

Source: MSCI, “MSCI World ex Fossil Fuels Index (USD)”
Note: Past performance is not a guarantee of future results.

Increased interest in divestment

As the potential financial and environmental risks associated with the fossil fuel industry increasingly come into focus, more and more individual and institutional investors are choosing to divest.

To date, more than 1,000 organizations, including the New York City pension fund and Norway’s Government Pension Fund Global, have committed to divesting.

As a leader in fossil fuel free investing, we co-authored the first comprehensive fossil fuel free investment guide for investors, which is a valuable resource for anyone interested in learning more about fossil fuel free investing.

If you’re ready to start investing fossil fuel free, we’re happy to help you get started!

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, email info@greencentury.com, 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. 7/19

 

 

Topics: Fossil Fuel Free

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