Latest news with #fossilfuels
Forbes
16 hours ago
- Business
- Forbes
Should You Add Fossil Fuels To Your Retirement Investment Portfolio?
Potential alternatives to having fossil fuel producers in your retirement investment portfolio Many investors believe that fossil fuels are essential for strong retirement investment returns. But is that actually true? In this article, we test that assumption—comparing the performance of portfolios with and without fossil fuel exposure. While we focus mainly on investment performance (also known as risk-adjusted return), we also explore considerations for those who care about aligning their portfolio with environmental values. We'll break down investment performance, explore fossil fuel-free indexes, and offer practical steps for values-minded investors. Whether you're saving through a Roth IRA, Roth 401(k), or taxable account, it's worth understanding your options. Retirement Investment: Discerning Fossil Fuels Role In Investing When people talk about investment selection, they often mention two styles of investing: passive and active. Passive investors believe markets are efficient enough that trying to 'beat the market' is a losing game. Instead, they invest in index funds that aim to match the performance of a broad market benchmark, such as the Standard and Poors (S&P) 500 or the MSCI All Country World Index (ACWI), while keeping fees low. But passive investing still involves making asset allocation choices—specifically, choosing which mutual index to track and finding a mutual fund or exchange traded fund that tracks that index. For example, the S&P 500 selects the largest 500 US companies. The MSCI All Country World Index (MSCI ACWI) captures Large and Mid-cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries. With 2,559 constituents, the index covers approximately 85% of the global investable equity opportunity set. If you're like many retirement savers, you may already be invested passively through a Vanguard Target Retirement Fund in your 401(k). While these are passive by design, the mix of index funds they include is determined by a portfolio manager. Once the allocation is set, the fund simply tracks its chosen indexes—regardless of what industries (fossil fuels or otherwise) those indexes contain. The following index funds represent the Vanguard Target Retirement 2050 Series portfolio: By contrast, active investing means trying to beat the market by choosing specific stocks, sectors, or timing. This might include increasing investments in fossil fuel stocks or technology stocks that vary from the index benchmark. Active investing involves choosing individual stocks or sectors—like fossil fuels—with the hope of outperforming a market index. But what if there was a way to invest in the same index, minus the fossil fuels? Retirement Investment and a Fossil Fuel-Free Index The MSCI ACWI is a common benchmark used in diversified global portfolios. MSCI also offers a fossil fuel-free version, called the MSCI ACWI ex Fossil Fuels Index. This index removes companies that own fossil fuel reserves or are involved in oil, coal, or gas production. According to MSCI's fact sheet, the fossil fuel-free version has consistently delivered similar or better performance over many periods. In fact, it has often done so with slightly less risk. As always, past performance isn't a guarantee of future results. But today's data offers something important: you don't have to sacrifice returns to align your investments with your values. Unfortunately, you cannot directly invest in an index. You will have to find investments that track the index or seeks to benchmark against it to invest in. A couple options will be included later. MSCI ACWI vs MSCI ACWI ex Fossil Fuels Comparison Let's put some dollars against the numbers in the fact sheet. Here are some detailed comparisons for two investors—one in the MSCI ACWI and the other in the MSCI ACWI ex Fossil Fuels index—across two investment strategies. Here are the visual comparisons: Lump Sum Investment ($100,000 at Start) Year MSCI ACWI MSCI ACWI ex Fossil Fuels 0 $100,000 $100,000 1 $113,650 $114,720 3 $141,625 $143,449 5 $187,280 $185,880 10 $242,222 $248,049Systematic Investment ($10,000 annually for 10 years) Year MSCI ACWI MSCI ACWI ex Fossil Fuels 0 $0 $0 1 $10,000 $10,000 3 $33,841 $33,997 5 $65,280 $65,060 10 $153,754 $155,677 As you can see from the data, either from a lump sum or systematic investing perspective, the fossil fuel free index wins over a historical 10 year period. Ways to Incorporate Fossil Fuel-Free in Your Retirement Investments If you want to invest in a fossil fuel-free global portfolio, you don't need to be a stock picker or hire a hedge fund manager. You can invest through low-cost ETFs that track these indexes. Sphere The Sphere 500 Fossil-Free Index tracks the Top 500 US companies by market capitalization minus 93 fossil fuel and related companies: The independent non-profit As You Sow creates the list of fossil fuel and other companies that are excluded. Green Century Green Century is a mutual fund manager that provides several fossil fuel free mutual funds. Two are index fund based and the other actively managed. The Green Century Equity Fund seeks to achieve its objective by investing in the stocks of the companies that make up the MSCI KLD 400 Social ex Fossil Fuels Index, a custom index calculated by MSCI, Inc. The International Index Fund tracks the MSCI World ex USA SRI ex Fossil Fuels Index. This Index is composed of the common stocks of the approximately 240 companies in the MSCI World ex USA SRI Index that is then customized for Green Century to eliminate the stocks of companies that explore for, process, refine or distribute coal, oil, or gas, or produce or transmit electricity derived from fossil fuels, or have carbon reserves. The Balanced Fund is an actively managed fund comprised of equities and fixed-income securities. It typically holds 60% to 70% of its net assets in multi-cap stocks and 30% to 40% in investment-grade quality bonds. The Balanced Fund was an early investor in green bonds and now has more than 74% of its fixed-income portfolio in green and sustainable bonds.[1] As You Sow's Fossil Fuel Free Funds Research As You Sow provides a publicly available Fossil Fuel Funds Free research tool. You will find that it's methodology and evaluation may vary from the other providers discussed earlier. There research highlights that some mutual fund companies may score high that don't scream like they are fossil fuel free. For example, the Amana Growth Fund doesn't have Green in its name but gets an A grade. All of the funds listed in this article do not constitute an investment recommendation. I am providing these as examples to encourage you to do your own research or find an investment advisor that is knowledgeable in this area. There are even professional tools that go beyond what I've shown. Final Thoughts on Fossil Fuel Free Retirement Investments For years, the narrative was that investing according to your values—such as avoiding fossil fuels—meant settling for lower returns. But that argument is no longer supported by the data presented today. So, if you're wondering whether fossil fuels deserve a place in your portfolio, should focus on your goals, your values, and what you believe about the future of energy and the economy. This article shows that fossil fuel-free retirement investments don't automatically mean sacrificing return. Related Reading: Evaluating Risk-Adjusted Returns: The Key To Smarter Investing Social Values-Adjusted Investment Returns: Balancing Profit & Purpose
The Guardian
a day ago
- Politics
- The Guardian
Suspend UK from oil oversight body over protests crackdown, say campaign groups
A coalition of civil society groups is calling for the UK government to be suspended from a key global body that oversees how oil and gas companies are run. The campaigners say Keir Starmer's Labour party has overseen a 'fossil-fuel sponsored crackdown' on peaceful protest and direct action in the UK since it came to power last year. They argue that these measures – which have led to a record number of peaceful climate activists jailed – are incompatible with the UK's continued membership of the Extractive Industries Transparency Initiative (EITI), an organisation that brings together governments, companies, and civil society to improve the governance of big oil. Jolyon Maugham, the executive director at the Good Law Project, was one of the those to sign Friday's submission, which was sent to the EITI on Friday morning. 'Until our government remembers it isn't a private security firm for the oil and gas industry, recognises the important right to protest and stops jailing peaceful climate activists, the UK should be suspended from the initiative,' he said. The UK government has faced severe criticism for its crackdown on the right to protest. Michel Forst, the UN rapporteur on environmental defenders, has described the situation in the UK as 'terrifying'. This week the government moved to proscribe Palestinian Action under the Terrorism Act, putting the direct action group into the same legal category as al-Qaida and Islamic State. The EITI, which is based in Oslo, has more than 50 countries – including the UK – as members. It aims to give equal voice to big oil, governments and civil society groups in overseeing how extractive industries are run, from how contracts are awarded, to political donations and taxes. Part of its standard, to which all signatories must adhere, states: 'The government is required to ensure that there is an enabling environment for civil society participation with regard to relevant laws, regulations and administrative rules as well as actual practice in implementation of the EITI.' But the campaigners say successive UK governments have been in breach of this requirement, pointing to a swathe of harsh anti-protest measures that have been introduced – and highlighting the influence of individuals, including the government's independent adviser on political violence, and rightwing thinktanks with links to the fossil fuel industry. Sign up to Down to Earth The planet's most important stories. Get all the week's environment news - the good, the bad and the essential after newsletter promotion Tim Crosland, the director of the climate justice charity Plan B, which also signed today's submission, said: 'The UK government has sold off democracy to its sponsors in the fossil fuel industry. It allows them to draft the laws to silence and jail their own civil society critics. If that conforms to the EITI standard for promoting civil society engagement in extractive industry governance, the standard isn't set very high.' Member countries must be validated against the EITI standard at least every three years and the UK's validation period is due to begin on 1 July. The submission was was signed by the Good Law Project, Plan B, the Corner House and Defend Our Juries. A decision on the UK's continued membership is expected later in the summer.
The Guardian
a day ago
- Business
- The Guardian
Elizabeth Warren presses oil companies on tax break lobbying for Senate bill
Democratic lawmakers led by the Massachusetts senator Elizabeth Warren are pressing two energy companies about their efforts to 'win a $1.1bn tax loophole' in Donald Trump's so-called 'big, beautiful bill'. The proposed exemption, which Senate Republicans inserted into their version of the reconciliation mega-bill this month, would exempt fossil fuel companies from paying a tax codified by Biden in 2022. 'It's an insult to working people to give oil companies a massive tax handout while slashing healthcare and raising energy prices for millions of families,' Warren, who was a major advocate for the tax, told the Guardian. Enshrined within the Inflation Reduction Act, the corporate alternative minimum tax (CAMT) requires corporations with adjusted earnings over $1bn to pay at least 15% of the profits they report to their shareholders, which are known as 'book profits', in taxes. The Senate finance committee's proposal would shield domestic drillers from that tax by allowing companies to deduct certain drilling costs when calculating their income – a change that would allow some companies to pay zero dollars in federal taxes. Winning the tax tweak has been a major priority for fossil fuel interests this year. The oil major ConocoPhillips and Denver-based petroleum company Ovintiv directly lobbied for the change, federal disclosures show. On Thursday morning, Warren, the Rhode Island senator Sheldon Whitehouse, the Oregon senator Ron Wyden and the Senate minority leader, Chuck Schumer, sent letters to ConocoPhillips and Ovintiv pressing for answers on their role in shaping the CAMT change. 'Your company's lobbying disclosures explicitly prioritize this handout,' read the letters, which were shared exclusively with the Guardian. Both companies could 'benefit tremendously from this provision', read the letters, which are addressed to the ConocoPhillips CEO, Ryan Lance, and the Ovintiv CEO, Brendan McCracken, respectively. The Guardian has contacted ConocoPhillips and Ovintiv for comment. In their missives, the senators asked how much each company has spent on lobbying for the provision and will spend this year, how much each has donated to elected officials advocating for fossil fuel tax cuts, and how much of a reduction in taxes each company would see if the provision is finalized, requesting answers by 9 July. 'The rationale for CAMT was simple: for far too long, massive corporations had taken advantage of loopholes in the tax code to avoid paying their fair share, sometimes paying zero federal taxes despite earning billions in profits,' the signatories wrote. The proposed change, the letters note, closely resembles a bill introduced by the Oklahoma senator James Lankford this year, which would allow companies to subtract 'intangible drilling and development costs' from their CAMT income calculations. Lankford accepted nearly $500,000 in donations from the fossil fuel sector between 2019 and 2024, making it his top source of industry funding. The Guardian has contacted the senator for comment. Deductions for intangible drilling costs – referring to costs incurred before drilling, such as for labor and equipment – have been on the books since 1913, making them the oldest, largest US fossil fuel subsidy, according to one report on the Lankford proposal. 'Big oil now wants this deduction to apply not only for purposes of their taxable income, but for book income purposes as well,' the letters say. 'Put another way, if enacted, this provision would reduce or even eliminate tax liabilities for oil and gas companies under CAMT, allowing some to pay no federal income taxes whatsoever.' Other energy-related provisions in the draft reconciliation bill would phase out incentives for clean energy manufacturing and energy efficiency, causing utility bills to rise and jobs to be lost. This makes the tax break proposal 'especially insulting', says the letter, which was sent as temperatures spiked across much of the US. 'Americans deserve to know if big oil paid for these Republicans in Congress to carve out tax breaks just for them,' said Warren. As drafted, the reconciliation bill would also jeopardize energy security by curbing the growth of renewable energy, Schumer told the Guardian. 'The Republicans' plan is a complete capitulation to big oil at the expense of clean energy and American families' wallets,' Schumer said. 'Republicans would rather kill over 800,000 good-paying jobs and send energy costs skyrocketing than stand up to their big oil billionaire buddies.'
The Independent
a day ago
- Business
- The Independent
Israel-Iran war highlights Asia's dependence on Middle East oil, and slow progress on clean energy
Asia's dependence on Middle East oil and gas — and its relatively slow shift to clean energy — make it vulnerable to disruptions in shipments through the Strait of Hormuz, a strategic weakness highlighted by the war between Israel and Iran. Iran sits on the strait, which handles about 20% of shipments of the world's oil and liquefied natural gas, or LNG. Four countries — China, India, Japan and South Korea — account for 75% of those imports. Japan and South Korea face the highest risk, according to analysis by the research group Zero Carbon Analytics, followed by India and China. All have been slow to scale up use of renewable energy. In 2023, renewables made up just 9% of South Korea's power mix — well below the 33% average among other members of the Organization for Economic Cooperation and Development, or OECD. In the same year, Japan relied more heavily on fossil fuels than any other country in the Group of Seven, or G7. A truce in the 12-day Israel-Iran war appeared to be holding, reducing the potential for trouble for now. But experts say the only way to counter lingering uncertainty is to scale back reliance on imported fossil fuels and accelerate Asia's shift to clean, domestic energy sources. 'These are very real risks that countries should be alive to — and should be thinking about in terms of their energy and economic security,' said Murray Worthy, a research analyst at Zero Carbon Analytics. Japan and South Korea are vulnerable China and India are the biggest buyers of oil and LNG passing through the potential chokepoint at the Strait of Hormuz, but Japan and South Korea are more vulnerable. Japan depends on imported fossil fuels for 87% of its total energy use and South Korea imports 81%. China relies on only 20% and India 35%, according to Ember, an independent global energy think tank that promotes clean energy. 'When you bring that together — the share of energy coming through the strait and how much oil and gas they rely on — that's where you see Japan really rise to the top in terms of vulnerability,' said Worthy. Three-quarters of Japan's oil imports and more than 70% of South Korea's oil imports — along with a fifth of its LNG — pass through the strait, said Sam Reynolds of the Institute for Energy Economics and Financial Analysis. Both countries have focused more on diversifying fossil fuel sources than on shifting to clean energy. Japan still plans to get 30-40% of its energy from fossil fuels by 2040. It's building new LNG plants and replacing old ones. South Korea plans to get 25.1% of its electricity from LNG by 2030, down from 28% today, and reduce it further to 10.6% by 2038. To meet their 2050 targets for net-zero carbon emissions, both countries must dramatically ramp up use of solar and wind power. That means adding about 9 gigawatts of solar power each year through 2030, according to the thinktank Agora Energiewende. Japan also needs an extra 5 gigawatts of wind annually, and South Korea about 6 gigawatts. Japan's energy policies are inconsistent. It still subsidizes gasoline and diesel, aims to increase its LNG imports and supports oil and gas projects overseas. Offshore wind is hampered by regulatory barriers. Japan has climate goals, but hasn't set firm deadlines for cutting power industry emissions. 'Has Japan done enough? No, they haven't. And what they do is not really the best,' said Tim Daiss, at the APAC Energy Consultancy, citing Japan's program to increase use of hydrogen fuel made from natural gas. South Korea's low electricity rates hinder the profitability of solar and wind projects, discouraging investment, a 'key factor' limiting renewables, said Kwanghee Yeom of Agora Energiewende. He said fair pricing, stronger policy support and other reforms would help speed up adoption of clean energy. China and India have done more — but gaps remain China and India have moved to shield themselves from shocks from changing global energy prices or trade disruptions. China led global growth in wind and solar in 2024, with generating capacity rising 45% and 18%, respectively. It has also boosted domestic gas output even as its reserves have dwindled. By making more electricity at home from clean sources and producing more gas domestically, China has managed to reduce imports of LNG, though it still is the world's largest oil importer, with about half of the more than 11 million barrels per day that it brings in coming from the Middle East. Russia and Malaysia are other major suppliers. India relies heavily on coal and aims to boost coal production by around 42% from now to 2030. But its use of renewables is growing faster, with 30 additional gigawatts of clean power coming online last year, enough to power nearly 18 million Indian homes. By diversifying its suppliers with more imports from the U.S., Russia and other countries in the Middle East, it has somewhat reduced its risk, said Vibhuti Garg of the Institute for Energy Economics and Financial Analysis. 'But India still needs a huge push on renewables if it wants to be truly energy secure,' she said. Risks for the rest of Asia A blockade of the Strait of Hormuz could affect other Asian countries, and building up their renewable power generating capacity will be a 'crucial hedge' against the volatility intrinsic to importing oil and gas, said Reynolds of the Institute for Energy Economics and Financial Analysis Southeast Asia has become a net oil importer as demand in Malaysia and Indonesia has outstripped supplies, according to the ASEAN Centre for Energy in Jakarta, Indonesia. The 10-nation Association of Southeast Asian Nations still exports more LNG than it imports due to production by Brunei, Indonesia, Malaysia, and Myanmar. But rising demand means the region will become a net LNG importer by 2032, according to consulting firm Wood Mackenzie. Use of renewable energy is not keeping up with rising demand and production of oil and gas is faltering as older fields run dry. The International Energy Agency has warned that ASEAN's oil import costs could rise from $130 billion in 2024 to over $200 billion by 2050 if stronger clean energy policies are not enacted. "Clean energy is not just an imperative for the climate — it's an imperative for national energy security,' said Reynolds. ___ The Associated Press' climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at
Yahoo
2 days ago
- Entertainment
- Yahoo
Over 200 actors call on SAG-AFTRA pension to divest fossil fuels
This story was originally published on ESG Dive. To receive daily news and insights, subscribe to our free daily ESG Dive newsletter. More than 200 members of Hollywood's top union, the Screen Actors Guild and the American Federation of Television and Radio Artists (SAG-AFTRA), are urging their pension plan to divest from fossil fuels, according to a Tuesday press release from climate nonprofit A-list actors Jane Fonda, Don Cheadle and Mark Ruffalo were among signatories to an open letter asking the SAG-Producers Pension Plan's trustees to excise more than '$100 million [invested] directly in fossil fuel companies' from its portfolio. The SAG-Producers Pension Plan is SAG-AFTRA's retirement plan and oversees over $5 billion in assets. The actor-led 'Retire Big Oil' campaign also asks the fund to reinvest 'at least 10%' of the divested funds in 'climate-safe, socially responsible funds' within five years. The letter — whose signatories also include Rosario Dawson, Laurence Fishburne and Mark Hamill — said the pension fund's fossil fuel investments are 'not just bad for the planet but for the wallets of every member of [the] union.' The actors told the plan's trustees that fossil fuels have been the worst performing sector of the economy over the past 10 years, based on S&P Global's sector index data. The actors are asking that the retirement fund divest from all fossil fuel companies, including those working in extraction, pipelines and related businesses. The letter said SAG-AFTRA's members depend on the fund in their retirement 'and fossil fuel investments are hurting their ability to retire well.' Cheadle — known for roles in 'House of Lies,' Marvel's 'Avengers' and more — said in the release that he has 'seen how fossil fuel pollution hits Black and Brown communities first and worst.' 'It makes no sense for the SAG pension to fund an industry driving these injustices,' Cheadle said. 'Divesting from Big Oil isn't only the right thing to do morally, it's also financially responsible for workers and retirees as the world rapidly moves toward clean energy.' The SAG-Producers Pension Plan has more than 65,000 participants, and the Retire Big Oil campaign will join the Climate Safe Pensions Network, which is coordinated by The campaign comes after January saw wildfires rage across more than 50,000 acres of Los Angeles, costing more than an estimated $250 billion in damages and economic loss, forcing hundreds of thousands to evacuate and leading to at least 29 deaths. Executive Director Todd Paglia said in the release that the actors' pension plan has 'the opportunity to lead in securing a sustainable future for its members' as the city rebuilds and wildfire risk intensifies. 'This fossil fuel divestment call is coming from working artists and creators who are the foundation of the labor union,' Paglia said. 'Together, we're urging SAG-AFTRA to align its investments with the values we fight for on- and off-screen: sustainability, justice, and long-term security.' The Global Fossil Fuel Divestment Commitments Database tallies 1,667 institutions who have divested from fossil fuels with an approximate $40.76 trillion collective asset value. Faith-based organizations make up 35.9% of the divesting institutions, followed by educational institutions (16%) and pension funds (12%), according to the database. Recommended Reading COP29 negotiators approve Article 6.4, establish standards for global carbon market Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
