The divestment movement (liquidating/selling fossil fuel investments) has been catching on in recent years and could be an effective tool in climate change mitigation. If the value of an entrenched interest diminishes drastically, it will naturally not be defended with such vigor. Put in simple terms, if fossil fuel companies are no longer viable investments, fewer resources will be allocated towards defending their value with lobbying and denial. Fossil fuel subsidies would become increasingly unpopular on a political level and more widely opposed, the transition to renewable energy could continue unimpeded based on economics alone. As of December 2019, a total of 1,200 institutions and over 58,000 individuals representing $12 trillion in assets worldwide had been divested from fossil fuels.

As effective as divestment on a large scale may be, it is equally important at the individual level, however, the lack of transparency in common financial products can present challenges. Many retirement accounts and 401K’s only allow investment in a limited range of Mutual Funds, Index Funds or Exchange Traded Funds (“ETF’s”). Most of these consist of baskets of shares of various companies that share a common sector, size, performance goal or other characteristic. Most people allocate their hard-earned retirement funds into these funds based on these characteristics or performance projections, blissfully unaware of the underlying companies that comprise the fund. You could be heavily invested in fossil fuel companies while simultaneously concerned about climate change. You may be outraged that Exxon Mobil was aware of climate change half a century ago, while simultaneously supporting the company by owning shares of a fund that has Exxon as a major holding. Your investment portfolio may completely contradict your beliefs without you even knowing about it.

Its important to be aware of the underlying companies that you are investing in and ensure that your portfolio is aligned with your beliefs. Visit Go Fossil Free or contact us to see how you can join the divestment movement and ensure that your money is where your mouth is.