FYI: Clean energy remains the most popular theme among environmental, social and governance (ESG) ETFs. Nearly two-thirds, or 64%, of the $6.3 billion currently invested in them are held in funds carrying some kind of screen for greenhouse gas emissions or for involvement in the coal, oil and natural gas industries.
Yet the vast majority of these ETFs still invests in the users and producers of fossil fuels—even the ones marketing themselves as being fossil fuel free.
Regards,
Ted
http://www.etf.com/sections/features-and-news/fossil-fuel-free-funds-arent?nopaging=1
Comments
BLES is a Xian-themed fund; it has 10% in the energy sector, the word "fossil" appears nowhere in the prospectus, and the principle investment strategies section lists the security types it avoids: "abortion, gambling, alcohol, pornography, the LGBT lifestyle" and countries where persecution of or discrimination against Christians exists.
Such a blatant error calls the whole piece into question.
P.S. Noticed also that FAN, the wind energy etf, is listed. FAN invests in "public companies throughout the world that are active in the wind energy industry" (no reference to avoiding all forms of fossil fuel investment), including utilities with significant wind profiles - but which also may have interests in nat gas, etc. -- apparently the source of the writer's claim.
Short version: the writer is holding FAN to a standard she made up out of thin air, and which the fund in no way claims as its own.
Lousy article.
@AndyJ: Evidently you are unaware that, per the "presidential" example, all "standards" are now made up out of thin air, and subject to revision at any moment without prior notice, post notice, or in fact any notice. Given our new fake standards regime it seems to me that you are being a little harsh with respect to this article.
As I understand it, ESG takes a holistic approach, looking at how well a company acts overall. In contrast, SRI investing applies screens, positive or negative, with binary results - either a company passes a screen (e.g. no fossil fuels) or it doesn't.
So unless an SRI fund explicitly screens for fossil fuels (and even then, you have to look at how that screen is defined), the fund many be just as "dirty" as a typical fund. On the other hand, ESG funds may be more likely to have "cleaner" companies, but less likely to have "spotless" ones.
This is consistent with what AndyJ wrote about BLES. That apparently has no screen on fossil fuels.
Me, I'm intrigued by the idea that an ETN (GRN), which is nothing but a promisory note, could be considered SRI, let alone the top performing "ETF".
@msf- I love it!!
Re: GRN. Somehow I'd never thought of trading carbon credits as fossil-fuel-free investing. From the etf.com entry for GRN:
This ETN will be delisted after the close on 04/12/2018. GRN is on the bleeding edge, and investors have suffered for it. The ETN offers exposure to the thinly traded and poorly developed global carbon markets as represented by a Barclays index that measures the performance of emissions units issued under the Kyoto protocol. Unfortunately for GRN, there's much deserved skepticism about the viability of that carbon market. Investors determined to invest in GRN will have to circumvent mile wide bid/ask spreads and hope the fund doesn't close before carbon markets develop further.