Hidden inside almost every American’s retirement plan are fossil fuel companies that emit huge amounts of carbon. Now, for the first time, individuals and employers have an easy way to find out exactly where their money is going and how many of their funds have holdings in fossil fuels.
A new investment web tool called Fossil Free Funds, launched Tuesday, is giving people accessibility and power over their mutual funds and retirement plans. It is a project through As You Sow, a shareholder advocacy non-profit group founded by Andrew Behar.
“Ninety-one million Americans have a mutual fund account in some way, and nobody actually knows what they own. We didn’t know what we owned either,” Behar told ThinkProgress. After a lot of time spent digging through databases, Behar said he and his team found that a lot of As You Sow’s shares had holdings in Exxon, Chevron, other fossil fuel based companies.
“We decided to redo our own 401(k) plan, and thought we needed to make this tool more robust when people started to notice and ask us questions about their own funds,” he said. That’s when he decided it was time for this type of tool to be open and free for public use.
To begin the quest for fossil-fuel-free funds, a person can search for mutual funds by name or ticker symbol, or browse through the database using different filters. The data can be broken down into categories such as diversified funds and socially responsible funds, or funds that are fully free of fossil fuels. Searches can be further filtered to include shares listed in the Carbon Underground 200, the “Filthy 15” coal and mining companies, all coal, all oil/gas, all fossil-fuel-fired utilities, or all flagged holdings.
“This is a way for people to actually express themselves and feel empowered,” said Behar. “We hope to make people empowered with what they own.”
After analyzing the data, the final step of the process for a person who wants to divest from fossil fuels would be to talk to a financial adviser or manager about moving holdings to a plan free of fossil fuel holdings.
Odds are you or someone you know owns shares in fossil fuels. The five major fund families that control 75 percent of all employer-sponsored retirement plans — valued at $5.6 trillion — do not offer any socially-responsible diversified mutual funds that are free of the 200 largest fossil fuel companies.
“The two largest funds in America have already divested from coal, but before this tool nobody would know that,” said Behar. “You would have to go and check one by one through the data, so that’s what we are doing on the back-end to save everyone time.” Without this tool, it would also be almost impossible to know the Alerian MLP ETF fund is made up entirely of oil/gas shares. With the ability to know what they’re invested in, people can align their investment plans with their own moral values.
According to Fossil Free Funds’ website, the modern fossil fuel divestment movement stems from a simple realization: “If it’s wrong to destroy the planet through human-driven climate change, it’s also wrong to profit from that destruction.” Divesting — being the opposite investing — is to get rid of stocks, bonds, or investment funds that are unethical or morally ambiguous. Divesting from the companies that contribute most to climate change is a key way to break the hold the fossil fuel industry has on the economy and the world. And doing that, as Behar said, starts with taking ownership of what you own.
Not only are investments in fossil fuels damaging to the planet, but they come with personal financial risks. “What’s really happening is, these guys are spending more money exploring than the revenue they’re making. It’s not sustainable, this is a very risky industry,” said Behar. “What happened with the coal industry is happening with oil, and is a massive financial risk.”
The divestment movement started as a small concept on college campuses about four years ago and has rapidly gained more mainstream traction within the last year. With the Vatican announcing its consideration to divest this past July and the University of California removing $200 million worth of holdings in coal and tar sands from its investment fund just a few days ago, the movement has been heating up in recent months.
And the fight to combat climate change, through divestment and other strategies, is only becoming more urgent. A new study found that if temperatures rise 11°C (20°F) the earth would lose all of the Antarctic ice sheet– which is enough to raise sea level over 200 feet. If the world goes past a 2°C warming, these changes could likely cause irreversible damage. Scientists have repeatedly said that the primary cause of global warming is burning fossil fuels.
“We have the technology to completely replace to fossil fuel industry,” said Behar. “Change is here, it’s a matter of getting it implemented.”