This week Portfolio 21 Investments released a new paper entitled Managing Investment Portfolios without Fossil Fuel Stocks. The paper details the unique investment risks of the coal, oil, and gas sector, as well as how our firm manages portfolio diversification without fossil fuel exploration and production stocks.
Our investment process is designed to identify the global leaders most capable of thriving in the emerging economy that will carry society forward. Certain business activities entail unacceptable risks in environmental, social, or governance areas. Our research has shown that the fossil fuel exploration and production industry poses unique risks that are not manageable to the extent required to make companies directly involved in this activity attractive investments. The paper outlines these risks, as well as Portfolio 21 Investments’ long-held rationale for not investing in the sector.
We believe that the fossil fuel sector is unnecessary to prudent portfolio structure and that it is possible to produce risk adjusted returns that are competitive with appropriate broad-market benchmarks through a portfolio that does not invest in fossil fuel companies.
Portfolio 21 Investments has a number of policies in place as negative screens to avoid industries and business activities that are simply too environmentally risky or present social outcomes that are too unattractive to warrant investment consideration.
Please share the paper with others and we welcome your comments and questions.
John Streur is President of Portfolio 21 Investments. He has 25 years of experience in the field of investment management.