News

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.

What's local journalism worth to you?

Support Mountain View Online for as little as $5/month.

Join

Donna Davies is a Mountain View resident.

Stay informed

Get daily headlines sent straight to your inbox.

Sign up for free

Stay informed

Get daily headlines sent straight to your inbox.

Sign up for free

Follow Mountain View Voice Online on Twitter @mvvoice, Facebook and on Instagram @mvvoice for breaking news, local events, photos, videos and more.

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.

Comments

Steven Nelson
Registered user
Cuesta Park
on Apr 18, 2021 at 2:59 pm
Steven Nelson, Cuesta Park
Registered user
on Apr 18, 2021 at 2:59 pm

There are some smaller asset fund managers that have developed a full set of different 'socially conscious' ways to diversify fund your IRA or taxable investments. My wife used Pax World Funds to manage some college, UGM funds for our kids. (they are investment advised by IMPAX Asset Management)

Warning - all investments may loose principal. Pax funds for instance may loose more (or loose relative to the S and P 500 Index) than a 'straight low overhead fee cost index fund from Vanguard). Your money - your wealth - your decision. Do you only buy a car with 'recycled steel, copper, and plastic' in it? It "would be possible' but I know of no such transportation vehicle made by any company. So - you walk everywhere local - except when you take public transportation (I know of no bicycle made of 'recyclables').

And, of course - you wouldn't dare 'Uber'. Moderation.

Divesting over a decade (for taxable equity investment) makes a lot of sense. In the UC Retirement anti-aparthide reinvestment approach - they tended to do it quicker than a decade - once the UC Regents were persuaded to act.


SRB
Registered user
St. Francis Acres
on Apr 18, 2021 at 5:53 pm
SRB, St. Francis Acres
Registered user
on Apr 18, 2021 at 5:53 pm

Thanks for writing this. As you note, one challenge when divesting is to avoid taxable events. One trick I've used for divesting from some "dirty" stocks was to simply donate them. Most charities will accept donation in stocks; they get the full market value and you can write off that full market value (as charity donation) without paying a penny on stock appreciation.


Raymond
Registered user
Monta Loma
on Apr 19, 2021 at 3:03 pm
Raymond , Monta Loma
Registered user
on Apr 19, 2021 at 3:03 pm

The most effective way to protect the planet might be to divest from China & Russia. China has scheduled zero GHG reductions through 2030, when it will consider the question.


Neighbor
Registered user
Shoreline West
on Apr 19, 2021 at 3:45 pm
Neighbor, Shoreline West
Registered user
on Apr 19, 2021 at 3:45 pm

Thank you so much for this! Great resources that I will apply shortly.


Stephen Raillard
Registered user
Cuesta Park
on Apr 19, 2021 at 4:57 pm
Stephen Raillard, Cuesta Park
Registered user
on Apr 19, 2021 at 4:57 pm

Great article, thanks for sharing. If investors small and large invest in ways that are true to their core beliefs as people we can all really make an impact and move the needle into a more sustainable world for all.
Just one caveat: Green and ESG investing has gained quite a lot of momentum. As with everything else, it is worth "looking under the hood" and study the advertised information carefully. Quite a bit of what runs under these banners is trying to attract investors money without always showing a strong dedication to the true causes stated.


Donna Davies
Registered user
Cuesta Park
on Apr 20, 2021 at 3:51 pm
Donna Davies, Cuesta Park
Registered user
on Apr 20, 2021 at 3:51 pm

The Financial Times reported this week that American oil drillers are struggling to raise money from private-equity firms and are “dying on the vine.”

Green-minded investors have every reason to think divestment is influencing the petroleum industry.


Bruce Karney
Registered user
Old Mountain View
on Apr 20, 2021 at 4:13 pm
Bruce Karney, Old Mountain View
Registered user
on Apr 20, 2021 at 4:13 pm

The City of Mountain View divested from fossil fuel bonds several years ago. The move was championed by then-Council member Ken Rosenberg. (Like most government agencies, the City owns few, if any, individual stocks or stock funds.)


Don't miss out on the discussion!
Sign up to be notified of new comments on this topic.

Post a comment

In order to encourage respectful and thoughtful discussion, commenting on stories is available to those who are registered users. If you are already a registered user and the commenting form is not below, you need to log in. If you are not registered, you can do so here.

Please make sure your comments are truthful, on-topic and do not disrespect another poster. Don't be snarky or belittling. All postings are subject to our TERMS OF USE, and may be deleted if deemed inappropriate by our staff.

See our announcement about requiring registration for commenting.