As the effort to pressure colleges, cities and religious institutions to divest from fossil fuels gains traction, a small but growing number of individual investors are examining their retirement funds and portfolios with an eye toward eliminating their exposure to coal, oil and natural gas.
The "Go Fossil Free" movement, driven by growing concern over the impact of climate change, is the latest iteration of what's known as "socially responsible investing," in which individuals and institutions examine their portfolios for companies whose businesses offend their political or ethical views, whether it's gunmakers, tobacco companies or, in this case, businesses involved in the petroleum industry.
It's impossible to track with accuracy how many individual investors have joined the effort, or how much money has been moved out of fossil fuel companies due to privacy issues regarding individual portfolios. But financial advisers say they are hearing from more clients who are at least taking a deeper look at their investments.
"It's coming up a lot in conversation," said Will Lana, a senior vice president at Trillium Asset Management, a Boston-based firm that is the oldest independent investment adviser devoted exclusively to sustainable and responsible investing. Trillum manages $1.4 billion and does not invest in coal, oil or gas companies or utilities that generate most of their electricity from fossil fuels.
"Roughly one-fifth of our clients are fully divested from the fossil fuel sector," Lana said. "For certain investors, the approach makes a lot of sense."
The Go Fossil Free movement is largely being organized by author and environmentalist Bill McKibben and 350.org, the climate change organization he co-founded. The group has a "Personal Divestment Roadmap" on its website that urges individuals to find out how much they have invested in fossil fuel companies and to consider investing in a clean energy future. Tom Steyer, a billionaire active in California and national climate politics, is perhaps the wealthiest individual who has pledged to divest his personal fortune.
So far, nine colleges, including San Francisco State and the Foothill-De Anza Community College District foundation, 22 cities, two counties (including San Francisco) and more than 20 religious institutions have pledged to "Go Fossil Free," with campaigns to force divestiture under way at an additional 300 college campuses across the country. And earlier this year, 17 private foundations that oversee nearly $2 billion in assets jointly announced an initiative to divest from the 200 largest fossil fuel companies and invest in the clean energy economy.
The obvious targets of the divestment movement are the major oil and gas producers, such as San Ramon-based Chevron and ExxonMobil. But some financial advisers say divesting from fossil fuel companies is easier said than done, and that it can be hard to know where to draw the line. For example, do you divest from oil, coal and natural gas, but still invest in the stocks of companies that make gas-burning automobiles?
"A lot of index funds have fossil fuels," said Kathy Kristof, a columnist for Kiplinger's Personal Finance magazine. "If you are really adamant about this, double the portion of your actively managed portfolio. You can make more of an impact by supporting the companies you like, like a company in cleantech, vs. pulling money out of the ones that you don't."
Other advisers warn that divesting from fossil fuel companies can reduce a portfolio's diversity, exposing it to more risk.
Tupper Hull, a spokesman for the Western States Petroleum Association, says the divestment effort is misguided because petroleum remains a needed source of energy.
"It seems incumbent on people who feel it's necessary to divest investments in petroleum energy companies to explain where they believe our energy will come from," said Hull. "Despite a great deal of exciting new technology development and alternative fuel development, petroleum energy is going to be a vital part of our energy portfolio for a very long time."
Raphael Sperry, 40, an architect and green building consultant who lives in San Francisco, became aware of the Go Fossil Free movement as an alumnus of Harvard, where students are calling on the university to divest its roughly $30 billion endowment.
"I wrote a letter to Harvard," said Sperry, who graduated in 1995 and wanted to lend an alumni voice to student efforts. "How can universities be investing in a business model that will destroy the world that they are training their students to manage?"
Last fall, Harvard President Drew Faust released a letter saying that the university's endowment is an economic resource, not a tool for social or political action, and that she does not believe that "university divestment from the fossil fuel industry is warranted or wise."
Sperry was disappointed. Then he began looking more closely at his own mutual funds and discovered he had holdings in Range Resources, a Texas-based oil and gas company.
"Range Resources does fracking. I was like, wow, that's in my portfolio?" said Sperry. "So I talked to my financial adviser about going fossil free, and we sold the shares."
Sperry's adviser is Justin Martello of Effective Assets, a small Berkeley firm that specializes in socially responsible investing. It began offering fossil fuel free portfolios last fall in response to the increased demand from clients.
"Most people have no idea what their mutual funds are actually invested in," said Martello. "If you have a mutual fund, there's a great chance that an oil or gas company is in there. It's part of having a diversified portfolio, and it's a big part of the market."
Until recently, it was hard to find fossil free financial funds. But that has begun to change.
A year ago, Green Century Capital Management in Boston, which has a Balanced Fund that is fully divested from fossil fuel companies, oversaw roughly $50 million in assets in the fund. Now it has grown to nearly $104 million. The fund saw a 24 percent return last year, driven in large part by a strong year for the stock market in general; the S&P 500 jumped 30 percent.
"You can invest fossil free and still see competitive returns," said Green Century's president, Leslie Samuelrich.
Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.
9 Colleges, including San Francisco State and the Foothill-De Anza Community College District foundation
300 Additional college campuses across the country that have campaigns to force divestiture
2 Counties, including San Francisco
20+ Religious institutions have taken the pledge to go fossil free
17 Number of private foundations that oversee nearly $2 billion in assets with an initiative to divest from the 200 largest fossil fuel companies