Few Funds Are Ready for this $100 Trillion Risk - The fossil-fuel free future of mutual funds

davfor

"The value of sustainable business opportunities could reach $10 trillion annually by 2050 — 4.5 percent of the world’s projected GDP: Morgan Stanley"

"There's a $100 trillion global sleeper risk behind the moves to fossil fuel-free investments."

"One of the concerns is that fossil fuel companies' won't be able to tap reserve assets across the globe in the future due to the governments of the world waking up to a worsening environment and taking strict regulatory action. The idea that oil and gas companies will have to write off tons of natural resources underground, and possibly go bankrupt themselves, is referred to as the "stranded assets" theory."

For those who are interested, here are a few carbon-free socially responsible funds:

Parnassus Endeavor Fund (PARWX)
Expense ratio: 0.95 percent
5-year return:15.23 percent
$1.4 billion in assets

PAX World Growth (PXGAX)
Expense ratio: 1.26 percent
5-year return: 12.28 percent
$191.3 million in assets

Gabelli SRI (SRIGX)
Expense ratio: 1.64 percent
5-year return: 7.66 percent
$73 million in assets

Portfolio 21 Global Equity (PORTX)
Expense ratio: 1.4 percent
5-year return: 6.27 percent
$433 million in assets

Calvert U.S. Large Cap Core Responsible Index Fund (CISYX)
Expense ratio: 0.60 percent
5-year return: 14.34 percent
$636.5 million in assets

See: Constance Gustke

Dennis Baran

PARNX is also fossil free as of Feb. 18, 2015.

PRESSmUP

I'm thinking that the risk is low that oil producers will find their wares unwanted....though the geopolitical impact of the shift away from petroleum-based energy is fascinating to contemplate.

I suppose you could argue that the free market is helping to drive this shift, but it is also undeniable that the kick-start from governments was also helpful. And actually, by governments, I was mainly talking about China...though we are clearly trying to play catch up.

thanks for the post Davfor...posted below is another link with related information.

press

http://fs-unep-centre.org/publications/global-trends-renewable-energy-investment-2015

davfor

@PRESSmUP You're welcome.

China is an interesting case. They appear to be "getting serious" about solar. But, the most recent data I have seen tells me 2/3's of China's energy still comes from coal. And, solar just represents a blip on their energy source chart. Five times a blip just makes for a big blip. Also, I have read that what they are doing in part is to shut down their dirtier coal burning plants close to urban areas and replace them with plants located further from those urban centers. (From an environmental perspective, this helps their domestic population somewhat but not the planet.)

About the possibility oil will wind up be left forever in the ground....well, forever is a long time. I suspect future extraction will increasingly come with more strings attached. Here are some quotes about that general subject from an article I just read:

"The International Energy Agency (IEA) and many other credible parties continue to forecast that our growing world population from 7 billion people today to 9 billion by 2050 will need much more energy – in particular as most of these people will aspire a life like we have here in North America."

"“Sustainable Innovation” may become key to future energy financings and.....oil and gas companies will have to innovate much more than they do today in order to survive as energy-producing Fortune 500 companies in the decades to come."

"....lacking some spectacular new innovations, longer term most Canadian oil sands reserves will likely remain undeveloped."

See: This Oil Bust Will Change The Energy Industry Forever

VintageFreak

openice said:

PARNX is also fossil free as of Feb. 18, 2015.

I actually assumed all Parnassus was "fossil free".
PS Someone needs to file a pattent on Fossil Free Mutual Fund quickly. In fact, I'm expecting FOSFX launch soon now. Fossil Free Large Cap. Wisdom Tree Small Cap. Tree of Wisdom. Free off Fossill.

PRESSmUP

I trust that this change won't be complete for awhile, as I added to my KMI stake today.

LewisBraham

Here's my prediction: Fossil fuel companies will continue to deny climate change is real and of human origin until alternative energy becomes competitively priced and a true threat to their business at every level sans government subsidies. Then fossil fuel companies are going to go on a buying binge, acquiring all of the major alternative energy companies. Once they have complete control of the alternative energy industry, they will acknowledge that climate change is real and of human origin. It's sort of like tobacco companies buying companies with products to help you quit smoking now that the cat is officially out of the bag about smoking: abcnews.go.com/Business/buying-cigarettes-quit-smoking-aids-company/story?id=9057261 Win-win for them. They get to continue to sell fossil fuels and get to look like the good guys for offering alternatives to fossil fuels. Where would that leave socially-responsible funds? Unfortunately, it's problematic.

VintageFreak

LewisBraham said:

Then fossil fuel companies are going to go on a buying binge, acquiring all of the major alternative energy companies. Once they have complete control of the alternative energy industry, they will acknowledge that climate change is real and of human origin.

Hah! I'm not the only one who see's conspiracies. Fossil Free world will not be realize unless Fossil Fuel companies want it. Absolutely. They are already killing Alternative Energy investments by depressing price of oil (while it may be only because Saudi's are worried about oil sands). McDonald killed Burger King just based on pricing. OPEC will do what it needs to dampen interest in alternative energy investments.

bee

Interesting to think that Oil companies started preparing for this 40 years ago.

Exxon Predicted the Present Cheap Solar Boom Back in the 1980s

"The oil giant's 25-year-old research into the economics of solar was spot-on."

I recall years ago Exxon Mobil buying the patent rights to integrated solar roof shingle technology (not panels that are mounted on the roof, but are integrated into the shingle).

bloomberg.com/news/articles/2015-11-04/exxon-predicted-today-s-cheap-solar-boom-back-in-the-1980s

Article on Integrated Photovoltaics:
nytimes.com/2009/09/27/business/27novel.html?_r=0

bee

Nova aired Part 1 of the "Making of North America". Let's keep in mind the natural forces at work when we discuss climate change. The discovery of Fossilized Palm fronds and coral found along the coast of Alaska are discussed in this episode.

Article and Part 1 Episode:

gpb.org/blogs/family/2015/11/04/nova-making-of-north-america

jlev

Even when we no longer need oil for energy it will remain a major component of plastics and pharmaceutical processes.

A different scale for sure, but worth remembering that it's not juts used for energy.

scott

The issue that I have is this: Okay, oil is no longer used. So...is the government going to buy everyone an electric car? I'd like a Tesla please. I'll also take a few solar panels if the government is buying.

What happens to all of the products that are made - to some degree - with oil?

I get the desire for people to be green, but this sort of discussion is unrealistic and more than a little absurd.

We have no energy plan, are not forward thinking and if we eventually all move to green things, it will not because the government puts a cap on oil, it will because something happened with oil and we have no other choice but to move to alternatives - and I don't see that happening for a very, very long time.