Many of us have become concerned about climate change. Long-term scientific research shows that carbon dioxide (CO2) levels in the atmosphere are increasingly unabated and that the average global temperature has risen almost 1°C since pre-industrial levels. With the exception of 1998, the 10 warmest years in the past 134-years have occurred since 2000. And, according to the U.S. National Centers for Environmental Information, 2016 ranks as the warmest year since 1880, beating the previous record set in 2015.
How might divesting from fossil fuels affect the performance of your portfolio?
While many investors believe removing energy stocks from their portfolios causes lower returns and higher risk, the evidence suggests otherwise. Genus’ research began by excluding energy, utilities and transportation industries from the respective indices. We performed a quarterly optimization of the stock weightings to improve the consistency of the portfolio against benchmark. The findings show the Fossil Free Optimized strategy out-performed their respective indices in Canada, the U.S. and international stock markets.
Going Fossil Free
Genus Capital has a long-standing commitment to, and expertise with, Socially Responsible Investing having launched its first sustainable portfolios in 1994. Today, Genus offers Canada’s first Fossil Free Fund which was recognized by the Responsible Investment Association as placing in “the most robust subcategory of Fossil Free products.” The Genus Fossil Free Fund Family was developed in collaboration with leading environmental organizations to address the needs of investors concerned about climate change. Our Fund Family contains zero fossil fuel reserves, and our Fossil Free Equity Funds are committed to continually achieving a carbon emissions intensity that is 70 percent lower than the market as a whole.
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Stronger returns
Genus Fossil Free’s climate-friendly equity funds have both beaten their benchmark on an annualized basis for three years.
Better impact
Divesting from fossil fuels and reinvesting your money into cleaner and more efficient energy solutions can be a sound strategy.
Lower risk
Divestment reduces exposure to the energy sector’s volatility and the associated ‘stranded asset risk’ of carbon reserves devaluing prematurely.