There is a lot of information – and misinformation – out there about fossil fuel free investing. Let’s dig into a few common myths about this growing investment trend that Green Century Capital Management is proud to advance.
After just a few years, over 700 institutions already are in various stages of divesting more than $5 trillion dollars. As faith centers, universities, foundations and governments made this decision, an increasing number of individuals also started moving their money. Over 58,000 people have reported divesting over $5 billion in personal assets from fossil fuels, and we believe there are a lot more people investing this way who have not reported it yet (just visit wedivestinvest.org to record your commitment).
Like any trend that gains momentum quickly, fossil fuel free investing carries some lingering misconceptions about what it means, who can access it and how, and whether it helps or hurts financial returns. Let’s debunk the biggest myths around this socially responsible investing practice.
Myth 1: Fossil Fuel Free Investing Means Sacrificing Returns
Reality: Divesting from fossil fuels may benefit investors financially in both the long and short term. According to global index provider MSCI, sustainable strategies have often performed in line with or even better than their traditional counterparts over shorter and longer time periods. Other market research indicates that investing in companies that are sustainability leaders can correlate with better returns, as those companies are more likely to be better managed and to outperform competitors.
Myth 2: Fossil Fuel Free Investing is Hard to Do
Reality: Everyone can use a little help with managing their investments. If you are a do-it-yourself-er, download the new free guide, Make a Clean Break: Your Guide to Fossil Fuel Free Investing, that Green Century Capital Management, 350.org, and Trillium Asset Management put together.
If you already work with a financial advisor, they should help you meet your fossil free investing goals, even if they are not yet familiar with all the options. If they are unwilling or unable, you can find another advisor that is willing and able to help you align your investments with your values. Look for financial advisors who support fossil fuel free investing through Green America, US SIF, or First Affirmative Financial Network.
Myth 3: Fossil Fuel Free Options are Limited
Reality: As demand for fossil fuel free options has surged, so have the number of mutual funds and ETFs (Exchange Traded Funds). You can find a growing list at Fossil Free Funds. There are options that meet the core campaign ask to divest from the top 200 companies as ranked by the amount of carbon reserves, as well as options that exclude all coal, oil and gas companies.
Note that this online tool does not screen for ETFs or mutual funds that invest in other environmentally and/or socially dangerous industries, such as nuclear energy, genetically modified organisms (GMOs ) or weapons. So be sure to ask the mutual fund company and read the prospectus, the legal document about the mutual fund. All of Green Century’s funds are fossil fuel free, as detailed in the prospectus.
Myth 4: You Have to Be a Millionaire to Invest Fossil Fuel Free
Reality: All kinds of people save for their future through mutual funds, and many mutual funds have lower minimums than separately managed accounts. Green Century is among them, with a $2,500 minimum investment, or, if you arrange to put in $100/month (or more) with an Automatic Investment Plan, you can open a Fund account with $1,000. Certain account types, including Individual Retirement Accounts (IRAs), can be opened with just a $1,000 initial investment.
So, if you are interested in investing fossil fuel free, don’t let these myths or the people who believe them, including some Financial Advisors, slow you down. There is plenty of data and tools to help you take the first step.
About Green Century Capital Management: Green Century offers three environmentally and socially responsible mutual funds. Through fossil fuel free investing and our three-pronged approach of sustainable investing, active shareholder advocacy, and support of environmental and public health non-profits, we work to curb climate change, improve environmental policies, and limit environmental impacts of company supply chains.
**The MSCI ACWI ex Fossil Fuels Index is based on the MSCI ACWI Index, its parent index, and includes large and mid-cap stocks across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries. The index represents the performance of the broad market while excluding companies that own oil, gas and coal reserves. It is a benchmark for investors who aim to eliminate fossil fuel reserves exposure from their investments due to concerns about the contribution of these reserves to climate change. The Index is a member of the MSCI Global Fossil Fuels Exclusion Index family. The Index is unmanaged and it is not possible to invest in the MSCI ACWI ex Fossil Fuels Index.
**The MSCI ACWI Index captures large and mid cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries. With 2,484 constituents, the index covers approximately 85% of the global investable equity opportunity set. The Index is unmanaged and it is not possible to invest in the MSCI ACWI Index.
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 www.greencentury.com for more information, email [email protected] 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 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. 6/17