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Guest opinion: Want to help the environment? Take a look at your stocks.

Until recently, I thought divesting fossil fuel stocks and mutual funds was the enterprise of the "big boys" — well-endowed universities, philanthropic foundations, and faith-based organizations. After all, those muscle clubs have been seriously divesting for at least a decade. Me? I dropped out of Girl Scouts before I finished my insider trading badge. But my millennial son shamed me into action. So, I plunged into research and quickly found out it is easier than ever to assess the damage done and discover what funds to buy to remedy this oily situation.

In October 2019, FossilFreeFunds.org initiated an online sustainability report card that grades 1,500 of the most-held mutual funds according to their investments, not just on fossil fuel exposure but on several other social and environmental issues. So I began with my IRAs, sitting in a brokerage account, and drilled down into my vanilla plain 500 Index fund, formerly considered a "good buy" due to the tiny expense of owning an index fund, right? Well, it was graded D in fossil fuel exposure. And that wasn't all. It received an F in deforestation, an F in military weapons, and an F in tobacco. A managed fund I thought had been such a smart buy was even worse! It was graded with four Fs, all in the same categories. My sense of urgency rose with my blood pressure. Clearly it was time to do something fast.

Once I identified the funds I needed to divest, I studied the top graded funds on the Fossil Free Funds site. I looked into the companies in which they invested and considered how diverse was their staff who managed the funds. I compared the fund performance over the years and was pleasantly surprised. Then I found another site to confirm my decisions. Naturalinvestments.com has provided a socially responsible heart-rating system for a long time but is now partnering with Green America to assess environmental sustainability, too.

This is the process I took; yes, this is Introduction to Investing 101. Starting with one IRA from my brokerage account in a large investment firm, I sold the entire fund online, transferring the money to a settlement fund. Once that was completed in a day or so, I bought the new fund simply by typing in the ticker number. Even though it wasn't a fund through my investment firm, I maintained all record keeping within it so I didn't have to open a new account, nor did I incur any fees or tax withholding as transferring money within an IRA isn't a taxable event. You can see this takes a very short time. Divesting from fossil fuels in non-IRA funds is a taxable event, so I will spread that process over the next few years to ease the tax burden.

Your mission, should you decide to accept it, will be to join the tens of thousands of individuals and institutions divesting now. The latest estimate of divestment is over $14 trillion involving 58,000 individuals and 1,183 institutions. Has it made a difference? Well, Peabody, the largest coal company in the world, filed for bankruptcy in 2016 claiming the divestment movement made it difficult to raise capital. As the fortune and reputation of oil and gas takes a nosedive, just know that the companies most responsible for the destruction of our global climate will dive more steeply — if we all divest.

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Donna Davies is a Mountain View resident.

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Guest opinion: Want to help the environment? Take a look at your stocks.

by / Contributor

Uploaded: Sat, Apr 17, 2021, 8:54 am

Until recently, I thought divesting fossil fuel stocks and mutual funds was the enterprise of the "big boys" — well-endowed universities, philanthropic foundations, and faith-based organizations. After all, those muscle clubs have been seriously divesting for at least a decade. Me? I dropped out of Girl Scouts before I finished my insider trading badge. But my millennial son shamed me into action. So, I plunged into research and quickly found out it is easier than ever to assess the damage done and discover what funds to buy to remedy this oily situation.

In October 2019, FossilFreeFunds.org initiated an online sustainability report card that grades 1,500 of the most-held mutual funds according to their investments, not just on fossil fuel exposure but on several other social and environmental issues. So I began with my IRAs, sitting in a brokerage account, and drilled down into my vanilla plain 500 Index fund, formerly considered a "good buy" due to the tiny expense of owning an index fund, right? Well, it was graded D in fossil fuel exposure. And that wasn't all. It received an F in deforestation, an F in military weapons, and an F in tobacco. A managed fund I thought had been such a smart buy was even worse! It was graded with four Fs, all in the same categories. My sense of urgency rose with my blood pressure. Clearly it was time to do something fast.

Once I identified the funds I needed to divest, I studied the top graded funds on the Fossil Free Funds site. I looked into the companies in which they invested and considered how diverse was their staff who managed the funds. I compared the fund performance over the years and was pleasantly surprised. Then I found another site to confirm my decisions. Naturalinvestments.com has provided a socially responsible heart-rating system for a long time but is now partnering with Green America to assess environmental sustainability, too.

This is the process I took; yes, this is Introduction to Investing 101. Starting with one IRA from my brokerage account in a large investment firm, I sold the entire fund online, transferring the money to a settlement fund. Once that was completed in a day or so, I bought the new fund simply by typing in the ticker number. Even though it wasn't a fund through my investment firm, I maintained all record keeping within it so I didn't have to open a new account, nor did I incur any fees or tax withholding as transferring money within an IRA isn't a taxable event. You can see this takes a very short time. Divesting from fossil fuels in non-IRA funds is a taxable event, so I will spread that process over the next few years to ease the tax burden.

Your mission, should you decide to accept it, will be to join the tens of thousands of individuals and institutions divesting now. The latest estimate of divestment is over $14 trillion involving 58,000 individuals and 1,183 institutions. Has it made a difference? Well, Peabody, the largest coal company in the world, filed for bankruptcy in 2016 claiming the divestment movement made it difficult to raise capital. As the fortune and reputation of oil and gas takes a nosedive, just know that the companies most responsible for the destruction of our global climate will dive more steeply — if we all divest.

Donna Davies is a Mountain View resident.

The Almanac accepts guest opinions of up to 600 words and letters to the editor of up to 300 words. Send signed op-eds and letters to [email protected] by 5 p.m. Monday and noon on Tuesday, respectively. No form letters, please.

Comments

Jason
Registered user
another community
on Apr 18, 2021 at 6:38 pm
Jason, another community
Registered user
on Apr 18, 2021 at 6:38 pm

Hi Donna, while I applaud your green investment strategy, before we all jump on the band wagon to demonize coal mining, its important to note that not all coal mined is destined for power stations. A significant portion of Peabody coal is of a type used to make steel. The vast majority of steel made in the world today is produced in blast furnaces that use coal. For every ton for steel made, it uses about 770kg of Metallurgical coal. Look around your room as you read this response and consider just how big a part steel has in your life.
Secondly, spare a thought for all the people who were collateral damage to Peabody going into chapter 11. There were thousands of Mum and Dad investors who lost money on their investment and hundreds of workers lost their jobs. Ethical investment without addressing the broader impacts of real change is just salve for your conscience.


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