 Fossil Fuel Divestment and Portfolio PerformanceArjan Trinks, Bert Scholtens, Machiel Mulder and Lammertjan Dam Ecological Economics, 2018, vol. 146, issue C, 740-748 Abstract: Fossil fuel divestment campaigns urge investors to sell their stakes in companies that supply coal, oil, or gas. However, avoiding investments in such companies might impose a cost on the investor in terms of foregone potentially profitable investments and reduced opportunities for portfolio diversification. We compare financial performance of investment portfolios with and without fossil fuel company stocks over the period 1927–2016. Contrary to theoretical expectations, we find that fossil fuel divestment does not seem to impair portfolio performance. These findings can be explained by the fact that, so far, fossil fuel company stocks do not outperform other stocks on a risk-adjusted basis and provide relatively limited diversification benefits. A more pronounced performance impact of divestment can be observed over short time frames and when applied to less diversified market indices. Keywords: Fossil Fuel Divestment; Socially Responsible Investing; Portfolio Performance; Risk-Adjusted Returns; Market Capitalization; GARCH (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:146:y:2018:i:c:p:740-748 DOI: 10.1016/j.ecolecon.2017.11.036 Access Statistics for this article Ecological Economics is currently edited by C. J. Cleveland More articles in Ecological Economics from Elsevier |
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