- First US broad market fossil free index
- Supports a surging divestment movement
- Demonstrates that fossil free investing need not sacrifice returns
- Shields investors from risks associated with fossil fuel investments
NEW YORK, June 26, 2014 – Fossil Free Indexes LLC (FFI), an environmental, social, and governance (ESG) index and research company, today released its first index covering the US equity markets, Fossil Free Indexes US (FFIUS). Based on the S&P 500 and screened to exclude the largest oil, gas, and coal companies as identified by the firm’s proprietary list, The Carbon Underground 200, FFIUS is the first index to leverage the long-term growth of US large cap indices while protecting investors from the risk of a carbon bubble. Over the ten years ending 5/30/14 the correlation between returns on FFIUS and the S&P 500 has been very high, suggesting that index investors need not sacrifice returns when choosing not to invest in the biggest carbon resource companies.
“Fossil Free Indexes US is a giant leap toward making fossil fuel divestment a practical choice,“ remarked Chuck Collins, co-founder of Wealth for the Common Good and the Divest-Invest Individual campaign.
FFIUS uses Standard and Poor’s Dow Jones Indices as its calculation agent. The index can be used as a benchmark, and an investable product based on the index will be available in the coming months.
Divestment advocacy leader 350.org adopted The Carbon Underground 200 as the official list of the divestment movement.
“FFIUS is the first of its kind in the US. We’re primed to give investors a unique opportunity to invest in the broad market while avoiding the increasing risk of long-term investment in fossil fuels,” said Stuart Braman, founder/CEO. “The science and effects of climate change are clear. Our products will be common-sense, accessible, low-risk options for institutions and individuals to help protect the planet along with their investments.”
Experienced investors increasingly seek to direct their assets to fight climate change. Seattle-based venture capitalist Mike Slade of Second Avenue Partners commented, “Having the proven power of a broad index coupled with the removal of the risk associated with fossil reserves-based companies is a great investment strategy going forward. I plan to invest in the FFIUS index as soon as the investable product is available.”
A steady stream of political actions, regulatory announcements, scientific reports, and market events, including President Obama’s recent 2030 deadline for 30% reduction in carbon emissions by US power plants, highlights the risk of fossil fuel investments. The latest such action is this week’s release of “Risky Business,” by the Bloomberg-Paulson-Steyer-led group outlining the impact of climate risk on the US.
Fossil Free Indexes provides benchmarks and tools for ethical investing with an initial focus on broad market indexes ex-fossil fuels defined exactly in line with the divestment movement.