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What Is Fossil Fuel Divestment? All You Need To Know

What is fossil fuel Divestment?

As the world moves forward towards clean energy and green alternatives the prices of renewable energy drops, a new clean energy movement wishes to make another change in the energy industry.

“Fossil fuel divestment” movement

Just as the name suggests, the movement’s target is to convince stock market investors (Big organizations and private households) to un-invest in the fossil fuel industry.

But not many understand “What is Fossil Fuel Divestment?”

It seems a lot of Households are invested in Fossil fuel companies through mutual funds, without even knowing.

“fossil fuel free” movement wishes to change that.

Wait, what Is fossil fuel exactly?

The Term “Fossil Fuels” refers to Coal, Oil and Natural Gas.

And the reason they are called this way is that they are actually made from the fossils of tiny dead animals and plants.

Millions of years of underground heat and pressure caused buried masses of fossils to deform into what we know today as Coal, Oil and Natural Gas.

So “Oil fields” or “Coal Mines” are basically an ancient pile of dead plants and tiny animals buried deep underground.

Do fossil fuels have any advantages?

Fossil fuels are such a popular source of energy for two main reasons.

#1 Extra Heat
when burning fossil fuel extra heat energy is released.
we use these extra heat to warm our houses, run our engines or to make electricity by worming water to steam power.

#2 Chain reaction
Fossil fuel only need a single spark in order to blaze, and due to a chemical chain-reaction will continue burning until we cut off the air, fuel or heat source. Making it an extremely easy to tame energy source.      

Read more about the chemistry of fossil fuels

What’s the problem with fossil fuel?

  • Burning fossil fuel releases Co2 gas to the atmosphere.
    The High concentration of Co2 in the atmosphere is considered to be the main reason for climate change.
  • Fossil fuels are not renewable.
    There is a limited amount of fossil fuel on our planet and it won’t last forever. We can’t count on it as our main source of energy.

How can we reduce fossil fuel use?

We need to use more renewable energy like wind, solar, geothermal and nuclear while minimizing the amount of fossil fuel we use.

One way of doing that is moving our investments away from the oil, gas and coal industry. In other words, divestment.

What is fossil fuel divestment?

Divestment is the act of un-investing in a certain company or fund over ethical, political or financial considerations.

Fossil Fuel divestment means to pull-out any money one may have invested (directly or indirectly) in the Fossil Fuel industry.

Am I invested in fossil fuel?

Many of us are contributing to the fossil fuel industry without even knowing.
(I know I was…)

The money we set aside, our savings and our pension scheme, is in many times invested in an organization that may not suit our ethical principles.

Contact your broker

To find out exactly who your money is working for, ask your pension fund manager or your broker for the full list of your portfolio.

Most investing portfolios include mutual funds (ETFs) which are like investing in one product that follows a lot of different companies, for example, S&P 500.

While ETFs are a very efficient invest tool, they tend to include gas, coal and oil companies (unless stated otherwise).

Use this fantastic website to see “How Green” the mutual funds (ETFs) in your portfolio really are.

How to avoid “fossil fuel” in my stocks portfolio?

If your money is invested by a third party like a broker, an investment company, or a pension fund, call the company and ask if they have a “Fossil Fuel Free” package you can acquire instead the one you have?

Change programs

In case they don’t have one, consider changing to a company that does offer a “Fossil Fuel Free” package.

If you manage your money Independently and personally decide where to invest,
you can independently avoid fossil fuel companies in your portfolio.

If your portfolio includes mutual funds (ETFs) consider replacing them with
“Fossil Free Mutual Funds”

What are “fossil fuel free” mutual funds?

Fossil fuel free mutual funds work just like a regular mutual funds only without including the companies that are apart of the coal / Gas / Oil industry.

For example, S&P 500 Fossil Fuel Free follows the same stocks as the regular
S&P 500 index only without the companies that are apart of the fossil fuel industry.

So by investing in S&P 500 Fossil Fuel Free you actually invest in the top 500 American companies that do not produce fossil fuel.

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