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Funds That Can Put Your Investments on a Low-Carbon Diet

Now that President Biden’s Climate Ambition Summit is over, would you invest in investment funds that are free of fossil fuels? 

The group, Fossil Free Funds, analyzes the climate impacts of thousands of U.S. mutual funds and electronically traded funds (ETFs) and shares data on the companies’ fossil fuel investments and carbon footprints in easy-to-track formats. Individual investors can find out if their money is helping or hurting the climate.

To align your investments with your values, Fossil Free Funds advises the following:

  1. Search for mutual funds and exchange-traded funds (ETFs) on the Fossil Free Funds website by name, ticker, or asset manager.
  2. For each fund, check its fossil fuel investments, carbon footprints, and clean energy investments.
  3. Look for investment options in funds that fit your investing needs and values.
  4. Talk to your financial advisor or retirement plan manager about fossil-free investing.

This group started in 2012 tracking 10 companies, and in 2021 tracks over 3,000.  

As an example: Personally, I’d look at the bigger, older firms with longer track records on green funds first, e.g., Dimensional Fund Advisors, Parnassus Investments, Green Century Funds. The latter has been doing investing with planetary values for 30 years. All seem to have both U.S. and International funds. Each fund company defines its universe a bit differently, as to what it includes or excludes in its sustainable portfolios. These are, of course, personal decisions for potential investors.

Market capitalization, commonly called market cap, is the market value of a publicly traded company’s outstanding shares. Market capitalization is calculated by multiplying the number of outstanding shares by the share stock price of each share. “Large cap” refers to a company with a market capitalization value of more then $10 billion. “Mid cap” companies are capitalized between $2 billion and $10 billion, and “small cap” companies between $300 million and $2 billion.

An analyst from Morningstar hedges on green funds, saying investing in a large cap low-carbon fund instead of a “regular” large cap fund probably won’t have much monetary effect on a well-diversified portfolio. If oil prices surge, you’d see some relative losses without fossil fuel stocks; if the transition to renewables starts impacting oil stocks, as it probably will over the mid- to long-term, you’d probably gain.

For ClimateYou, it’s a no-brainer – Monitoring our investments for fossil fuel investments and carbon footprints is a good way to get involved in climate change action.


image: https://environmentamerica.org/blogs/environment-america-blog/ame/divestment-fossil-fuel-companies-investment-our-future

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