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Fossil Fuel Divestment and Public Pension Funds

June 7, 2017
By Daniel R. Fischel, Christopher R. Fiore, Todd D. Kendall

Fossil fuel divestment won't deliver the environmental benefits promised but it will reduce returns to the portfolios that embrace divestment hurting retiree's, public employee pension funds and other institutional an individual investors.

Climate alarmists and anti-fossil fuel activists fossil fuel divestment who are pushing portfolio managers, public employee pension funds, and universities, among other institutional investor groups to divest their portfolio’s holdings of companies doing business in the fossil fuel industry falsely promises the purported problem of human caused climate change can be reduced with such a strategy. if investors in certain companies refuse to hold the securities of those

In truth, economic theory and existing academic literature studying previous divestment attempts, conclude fossil fuel divestment will have minimal or no environmental impact but it will be costly to investors. “In particular, based on a 50-year retrospective sample period, the study found that an optimal equity portfolio including fossil fuel stocks outperforms a portfolio of equal risk that is divested of energy stocks by an average of 0.5 percent per year …  [adding up] to a 23 percent reduction in the value of a divested portfolio over a 50-year period.”