NEW YORK – Fossil Free Indexes (FFI), an environmental, social, and governance (ESG) index and research company, has licensed the Fossil Free Indexes US (FFIUS) to Parametric Portfolio Associates, a leading global asset management firm. The asset manager will make the index available to institutional investors and advisors of high-net-worth individuals. With this offering, the FFIUS is available for the first time to investors interested in fossil fuel divestment.
FFI’s agreement with Parametric also enables the asset manager to offer any investment strategy, active or passive, screened for The Carbon Underground 200 (CU200) list of companies. The CU200 is FFI’s list of the top 200 public fossil fuel companies based on the carbon content of reported reserves. It is also the screen applied to the S&P 500 to create the FFIUS index.
The FFIUS was launched in June of this year. A historical ten-year performance analysis reveals that the FFIUS tracks almost identically to the S&P 500 and suggests that divesting does not necessarily imply sacrificing returns.
“As a leader in custom ESG and SRI index-based portfolios, we’re excited about offering divestment strategies based on the FFIUS and The Carbon Underground 200,” said Parametric’s Director of Investment Strategy, Rey Santodomingo. “FFI’s focus on index products and research highlighting the carbon emissions embedded in the portfolios of institutional and individual investors aligns with the values and concerns of many investors.”
This announcement follows the release of FFI’s latest research report, “The CalPERS Portfolio and Fossil Fuel Reserve-related CO2 Emissions,” which found that the California pension fund finances a significant share of global emissions through its fossil fuel holdings. According to many experts, these holdings carry under-recognized risks, which is one factor driving increased interest in divestment.
Stuart Braman, the company’s founder and CEO, commented: “Fossil Free Indexes was established to provide investors a simple way to invest in broad market indexes and divest from fossil fuel companies at the same time. We’re very pleased that with today’s announcement that opportunity is a reality for Parametric’s institutional and high net worth advisors and clients. This is an important step for FFI and one that brings us closer to being able to offer our index products to retail investors, as well.”
Fossil Free Indexes provides benchmarks, tools and research to support ethical investing. The company’s focus is on climate risk and the development of broad market indexes ex-fossil fuels, defined in line with the divestment movement.
Parametric, headquartered in Seattle, WA, is a leading global asset management firm, providing investment strategies and implementation services to institutions and individual investors around the world. Parametric offers a variety of rules-based, risk-controlled investment strategies, including alpha-seeking equity, alternative and options strategies, as well as implementation services, including customized equity, traditional overlay and centralized portfolio management. Parametric is a majority-owned subsidiary of Eaton Vance Corp. and currently offers these institutional strategies through investment centers in Seattle, WA, Minneapolis, MN and Westport, CT. As of August 31, 2014, Parametric and its wholly-owned subsidiary, Parametric Risk Advisors LLC, managed $132.6 billion in client assets.