Stanford Says No to Coal
By Michael Schweibinz
More and more individuals and institutions are making investment decisions based on their values—not merely expected returns. Yet, making money while making a difference is nothing new; First Affirmative Financial Network has been practicing a values-based investment approach for over twenty-five years.
Investors who embrace sustainable, responsible, impact (SRI) investing seek to enhance the common good, by owning the most responsible companies, those making positive contributions to the creation of a truly sustainable future. Responsible investors seek to make money and have a positive impact with their money, at the same time. Responsible investors are constantly looking for “companies of the future” while generally avoiding “companies of the past”—especially those that endanger the potential wellbeing of future generations.
This is why the idea of divesting from fossil fuel companies has gotten such traction within the SRI industry. Responsible investors understand the ethical issues associated with providing capital to a company that is contributing to climate change. Perhaps more importantly for fiduciaries, the risk of stranded carbon assets on the balance sheets of fossil fuel extraction companies is becoming more real every day. Unfortunately, the transition to more sustainable energy generating alternatives is inevitably prolonged as fossil fuel companies flourish.
Stanford University has acknowledged these inconvenient realities and has committed to stop making direct investments of endowment funds in coal-mining companies. “The university's review has concluded that coal is one of the most carbon-intensive methods of energy generation and that other sources can be readily substituted for it.” Stanford will avoid approximately 100 publicly traded companies that focus on coal extraction as a primary business practice.
First Affirmative works to create investment strategies that align with and reflect client values and priorities for society at large, including strategies that eschew owning fossil fuel extraction companies. First Affirmative believes that divestment can be consistent with fiduciary responsibility.
Leslie Samuelrich, the President of Green Century Capital Management, notes that “divesting frees up money to be reallocated to companies in energy efficiency or renewables.” The decision to divest can turn into a win-win-win as society, the planet, and profits are all stronger over the long-term. A simple transition today could have long lasting implications on future generations.
At First Affirmative, we understand that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?
Posted: May 19, 2014