What is Fossil Fuel-Free Investing?
Green Century° has a very clear definition of fossil fuel-free investing.
The Green Century Funds do not invest in companies that explore for, extract, process, refine, and transmit coal, oil, or gas; burn fossil fuels to make electricity; or possess carbon reserves.
Our fossil fuel investing exclusion is explicit in our prospectus. Any fund claiming to be fossil fuel free should explicitly exclude those investments in its prospects. Without it, the fossil fuel free claims may just be a marketing gimmick.
Avoiding fossil fuel investments may offer financial benefits. The fossil fuel sector has been one of the worst performing sectors for the last year and decade. Right now, the industry is in the midst of a number of bankruptcies, write offs, and layoffs. With this context, doDo you think fossil fuels are the energy source of the future?
Please keep in mind that a sustainable investment strategy that incorporates environmental, social, and governance (ESG) criteria may result in lower or higher returns than an investment strategy that does not include such criteria.
Distinctions between “low carbon” and fossil fuel free funds
- A so-called “low carbon” mutual fund may invest in coal, oil, and gas companies. Instead of simply excluding the companies most to blame for their climate crisis, they may evaluate carbon emissions, carbon reserves, or the overall carbon footprint of a company.
- Only portfolios with zero or “0.00%” in the energy sector would be consistent with fossil fuel free investments. Download our Sustainable Investing Guide: Investing Without Fossil Fuels for additional guidance.
Frequently Asked Questions about Fossil-Fuel Free Investing
Fossil fuel-free investing means avoiding investments in companies involved in coal, oil, and gas across all stages – including exploration, extraction, refining, processing, transportation, and fossil fuel-burning utilities. This strategy keeps your money out of the industries most responsible for climate change.
Fossil fuel-free investing can help shield investors from the volatility of oil prices, decreased dividends due to capital expenditures on high-cost projects like offshore and Arctic drilling, and devalued or stranded carbon reserve assets. It allows you to align your investments with your environmental values while potentially protecting your portfolio from climate-related financial risks.
No. “Low carbon” investments may still invest in coal, oil, or gas companies. These portfolios might evaluate carbon emissions or carbon footprint, but they can still hold companies responsible for climate change, such as fracking companies. Only portfolios with zero or “0.00%” in the energy sector would be consistent with fossil fuel-free investments.
A mutual fund that eschews investments in fossil fuel companies does not necessarily invest in companies that provide renewable energy or energy efficiency products – but some do! The Green Century Funds invest in environmental leaders and innovators, including renewable energy, energy and water efficiency, and healthy food companies.
If you are interested in investing in an environmentally -responsible mutual fund, be sure to check the specific companies held by the fund. You can also ask how a fund supports clean energy policy or advocates for companies to reduce their greenhouse gas emissions.
Look for binding exclusions spelled out in the fund’s prospectus. Check if the portfolio has zero or “0.00%” allocation in the energy sector. Be wary of vague marketing terms like “green” or “climate solutions” without specific exclusions documented in the prospectus.
Just take the first step. These resources and the Green Century team (1-800-934-7336) can help:
Green Century has comprehensive screens that exclude coal, oil, and gas exploration, extraction, refining, processing and transportation, and fossil fuel-burning utility companies. The Funds also screen out tobacco, producers of GMOs, and nuclear energy and nuclear weapons.
While Green Century frequently presses companies to expand their use of renewable energy, it would be virtually impossible to construct a diversified portfolio of publicly-traded companies that do not use fossil fuels in any way.
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°Green Century Capital Management, Inc. (Green Century) is the investment advisor to the Green Century Funds (the Funds).
The Green Century Funds are a family of fossil fuel-free, environmentally responsible mutual funds. Green Century Capital Management hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.
You should carefully consider the Fund’s investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please visit www.greencentury.com, 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 and political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to a variety of risks including interest rate, credit, and inflation risk. 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 reliable. The views expressed are as the date of this writing and are those of the Advisor to the Funds.
The Green Century Funds are distributed by Distribution Services, LLC. Distribution Services and Green Century are not affiliated.