April 19, 2017
Not all fossil fuel free investment products are created equal. In a time when fossil fuel free investing has gained favor among mainstream investment firms trying to cater to a growing pool of investors interested in fossil fuel free investing, it can be difficult to determine which managers, funds, and other investment products are authentic in their fossil fuel free claims.
There is no regulated or universally accepted definition for fossil fuel free. At Green Century, fossil fuel free means:
- No investments in any company with proven carbon reserves.
- No investments in any company that explores for, extracts, processes, refines, or transmits coal, oil, and gas.
- No investments in any utilities that burn fossil fuels to produce electricity.
Most fossil fuel free and divestment campaigns suggest not investing in a list of the top 200 fossil fuel companies by reserves. At Green Century, we have found that when an investor decides to invest fossil fuel free, they typically want to eliminate coal, oil, and gas companies from their portfolio entirely.
“Low carbon” is not synonymous with fossil fuel free nor is there a standardized characterization of the term. For example, there has been extensive media coverage on new exchange-traded funds that have been marketed under a fossil fuel free umbrella. With a little investigation, however, it is clear that these offerings are not fossil fuel free. Depending on the product, the funds can hold companies that explore for, extract, process, or refine coal, oil, and gas as well as utilities that burn fossil fuels in order to produce electricity.
Other products that may be fossil fuel free could fail to review prospective investments based on additional factors important to values-based investors. For example, the product may include companies linked to factory farming techniques, use of genetically modified organisms, tobacco or civilian and military weapons – all of which are industries and companies the Green Century Funds seek to avoid.
When considering fossil fuel free investment options it is important to review the prospectus. The prospectus is a legal document that provides details about the funds’ objectives, investment strategies, risks, and performance, as well as other details. Without a clear statement addressing what fossil fuel free means, reference to “fossil fuel free” may simply be a marketing tactic to engage the growing pool of investors interested in fossil fuel free investing.
Given the current and regulatory environment pointing toward favorable policies for the fossil fuel industry, investors, now more than ever before, may be looking for ways to make a statement through their investments. If you are an environmentally and socially conscious investor exploring fossil fuel free investing, please download our new, free guide, Make a Clean Break: Your Guide to Fossil Fuel Free Investing, which can help you get started whether you invest on your own, through an employee-sponsored 401k, or financial intermediary, such as a Financial Advisor. You can also click here to learn more about our fossil fuel free and three-pronged investment approach, email firstname.lastname@example.org, or call 1-800-934-7336 to learn more.
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 visit click here, email email@example.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 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, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to risks including interest rate, credit, and inflation. The Funds’ environmental criteria limit the investments available to the Funds compared to mutual funds that do not use environmental criteria.
This information has been prepared from sources believed reliable. The views expressed are as the date of publication and are those of the Advisor to the Funds.
The Green Century Funds are distributed by UMB Distribution Services, LLC. 4/17