Green Investing! New index excluding fossil fuel companies
The FTSE Group, in collaboration with the Natural Resources Defense Council (NRDC) and BlackRock, has launched a first equity global index series that excludes companies linked to production of fossil fuels like coal, oil and natural gas. The index is called “FTSE Developed ex-Fossil Fuels Index Series” and has more than 2000 securities from 25 nations. The goal is to discourage the fossil fuel companies from further extracting carbon-based fuels and provide an impetus to the renewable energy industry. This is the first investment tool that completely excludes stocks of fossil fuel-related companies and thus allows environmentally-conscious investors (e.g. university endowment funds, etc.) to invest in securities that match their values. Read more about it here.
This development closely follows similar other developments related to the energy industry. Students of the Harvard University have started a Divest Harvard campaign which calls upon the University to freeze new investments in fossil fuel companies, and divest direct and indirect holdings in publicly-traded fossil fuel companies. Rising awareness among investors and shareholders has also led to companies acknowledging the risks related to “stranded assets” – these are the carbon assets that a company may not be able to exploit in order to limit global warming to 2 degrees Celsius. ExxonMobil recently issued an environmental report disclosing its “carbon risk” in response to demands from shareholders.