Category : FFI Perspectives Toggle

A Flawed Argument Against Fossil Fuel Divestment

Research Brief Series An often-stated misconception about fossil fuel divestment is that divestment must entail a sacrifice of returns and an increase in risk. This belief is not supported under examination of recent experience or the specifics of the stranded asset risk argument. The belief about the negative impact of divestment on risk and return is not a fact. It isn't even a generally shared belief. This belief does not objectively...

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Thoughts on the 2014 Performance of the FFIUS

Research Brief Series In the year just ended, the Fossil Free Indexes US (FFIUS) outperformed the S&P 500 by about 1.5%. This is a strikingly large number, when you consider that less than 10% of the market capitalization of the S&P 500 is in companies that are part of The Carbon Underground 200 (CU200) and, therefore, excluded from the FFIUS. This outperformance illustrates the value of an investment strategy that is carbon-aware....

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The Carbon Underground Tar Sands 20, or The Case of the Misplaced Emissions

Mysterious Missing CO2 My recent blog, Tale of Two Fossils: Why Separate Coal from Oil and Gas, explained the rationale for separating FFI’s Carbon Underground 200 rankings into the top 100 public oil and gas companies and the top 100 public coal companies based on the emissions potential of their unburned proven reserves. In this post I'll look at another group that warrants a separate category. The first pre-release calculation of the...

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Climate Change Pledges = Action?

September 2014 was an exciting month for climate change mitigation and adaptation. The People’s Climate March took New York and the globe by storm. The Divest-Invest coalition saw great momentum with the launch of the Individuals pledge, and the announcement that total pledges to divest from fossil fuels from over 181 institutions and local governments and 646 individuals represent over 50 billion in assets. And, there were numerous...

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In Response to ExxonMobil’s Anti-Divestment Statement

On October 10, 2014, ExxonMobil published a blog post that addressed the issue of fossil fuel divestment, i.e., the reduction or elimination of investments in fossil fuel companies. In the post, Exxon refers to divestment as “a movement that is out of step with reality”. While we at FFI disagree with Exxon’s anti-divestment stance, we were pleased to see that the company explicitly states at the beginning of the post: “We can all...

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FFI’s Divestment Strategies Now Available through Parametric Portfolio Associates

We are pleased to announce that we have just licensed our index, the FFIUS, as well as The Carbon Underground 200 (CU200), our list of the top 200 public fossil fuel companies based on the carbon content of reported reserves, to Parametric Portfolio Associates, a leading global asset management firm. Our agreement with Parametric allows them to offer investments in our index, as well as any investment strategy, active or passive, screened for...

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Fossil Free Indexes US – Inside the Numbers: Part III – Mathematical Illustration

Research Brief Series Before you read this mathematical illustration, make sure you've read part III in this series. Let’s suppose we have a portfolio that contains three stocks, one of which belongs to the Carbon Underground 200 (CU 200), 2014. The return on this portfolio is equal to an average of the returns on the three stocks, where the average reflects the percentage of each stock in the portfolio. Of course the proportion of each...

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Fossil Free Indexes US – Inside the Numbers: Part III

Research Brief Series I noted previously that many people, when they hear that FFIUS is based on a negative screen applied to the S&P 500 index, conclude this screen must entail a sacrifice in expected return relative to the index. Why people have adopted this view as true is an interesting topic, but one I reserve for another post. In this post my purpose is quite narrow, specifically to show, in a simple way, why it isn’t true that...

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Announcing Our Latest Report: A Tally of CO2 Emissions Financed by CalPERS Portfolio

We are pleased to announce the release of our latest report, “The CalPERS Portfolio and Fossil Fuel Reserve-related CO2 Emissions 2004-2013.” CalPERS (the California Public Employees' Retirement System) is the nation’s largest pension fund at $301 billion dollars. The report reviews CalPERS’ share of global fossil fuel reserves. Our findings show that the financed emissions supported by CalPERS’ oil and gas holdings would be equivalent...

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Fossil Free Indexes US — Inside the Numbers: Part II

Research Brief Series In a prior post I noted that comparisons between the performance of the FFIUS and the S&P 500 are inevitable. We conducted tests to provide comparative performance information. As I previously noted, our testing showed that the average daily returns of the two indexes were statistically indistinguishable when looking back over the last ten years. However, to understand relative performance fully, we need to consider...

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