New Tool Finds Fossil Fuels in Retirement Savings

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By Andrea Vittorio

Sept. 15 — Environmentally conscious investors can now see whether there are fossil fuel stocks in their investment portfolios or retirement savings with a new online search tool launched Sept. 15.

The tool, put together by sustainability advocate As You Sow using data from investment research provider Morningstar, tracks 1,500 mutual funds commonly found in retirement plans.

Andrew Behar, the sustainability group's chief executive officer, said he saw the need for such a tool, which he called the first of its kind, when As You Sow started looking at its own retirement plan.

“How can you own what you own if you don’t know what you own?” he said in a briefing.

Users can search for mutual funds by name or ticker symbol and apply different fossil fuel screens to see how much exposure they have to coal, oil and gas producers or fossil-fuel-fired utilities—which could then be used as a starting point to go fossil-fuel-free.

Question of Performance 

Fossil fuel divestment, which gained footing among colleges and universities in the U.S., has emerged as a largely symbolic tool to fight climate change. It has since spread elsewhere, including to local governments, philanthropies and, most recently, two of the nation's largest public employee pension plans.

Aside from divestment's moral appeal, As You Sow says there could also be a financial argument for dumping fossil fuel stocks, especially coal.

“Performance is always a question that comes up in the context of discussions about divestment,” Thomas Kuh, who manages MSCI's sustainability-focused indexes, said during the briefing.

MSCI research has shown that, looking back over a 10-year period, a fossil-fuel-free index would have underperformed an index that did contain fossil fuels. But “this is really a tale of two periods,” Kuh said, because more recent data indicate that going fossil-fuel-free can improve returns.

“So as we know from what’s been going on in the energy sector,” from falling oil prices to coal miner bankruptcies, “this has not been a good period to own those companies,” he said.

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com