TheFossilFuelDivestmentLandscape

EricBecker,CFA

CleanYieldAssetManagementNorwich,VermontDecember10,2015

TheCarbonBubble

hDp://fossilfreeindexes.com/2014/05/06/the-allocated-carbon-budget/“UnburnableCarbon2013:Wastedcapitalandstrandedassets.”CarbonTrackerIniTaTveincollaboraTonwithGranthamResearchInsTtuteonClimateChangeandtheEnvironment.

IEA:Tokeepwarming<2°C“65%to80%oflistedcompanies’reservescannotbeburnedunmiTgated.”

TheCarbonBubble

“Infinancialterms,weesTmatethatthevalueofunburnablereservescouldamounttoover$100trillionoutto2050.”–CiTEquityResearch,August2015

TheEconomicIncenTveforAcTon

TheCarbonBudget

SincethereisahardlimittohowmuchcarboncanbeemiDedwithoutcatastrophicresults(bothecologicallyandeconomically),theglobalcommunityismovingtowardimposingacarbonbudget.Thisbudgetentailssignificantrisksforownersoffossilfuelreserves.GeneraTonInvestmentManagementidenTfiestheprimaryrisksas:•  RegulaTon(includingmandatesforefficiencyandclean

energy)•  MarketForces(e.g.cheapercleanenergy)•  SociopoliTcalPressures

Risk/ReturnImpactsofDivestment

USFossilFreeIndexRisk/Return

EAFEFossilFreeIndexRisk/Return

$2.6TrillioncommiDedtodivestmentCOLLEGES/UNIVERSITIESCollegeoftheAtlanTcGeorgetownUniversityGreenMountainCollegeHampshireCollegeNaropaUniversityPitzerCollegePrescoDCollegeSanFranciscoStateUniversityStanfordUniversitySterlingCollegeSyracuseUniversityUnityCollegeCITIESSeaDle,WASanFrancisco,CAPortland,OREugene,ORBerkeley,CABoulder,COSantaFe,NMMadison,WIStateCollege,PAIthaca,NYProvincetown,MAProvidence,RICambridge,MANorthampton,MA

RELIGIOUSINSTITUTIONSUnitedChurchofChrist–NaTonalMassachuseDsUnitedChurchofChristMinnesotaUnitedChurchofChristEvangelicalLutheranChurchofOregonFirstUnitarianChurchofSaltLakeCityFirstParishUnitarianUniversalistChurchinCambridge,MAPortsmouthSouthChurchUnitarianFirstUnitarianChurchofPiDsfield,MEFirstUnitarianSocietyofMilwaukee,WIFirstPresbyterianPaloAlto,CADoverFriendsMeeTng,Dover,NHUnitarianUniversalistSocietyofAmherst,MASocietyforCommunityWorkEpiscopalDioceseofMassachuseDs,MAMaineCouncilofChurches,MEPENSIONFUNDSCaliforniaPublicEmployees’ReTrementSystem(CalPERS)CaliforniaStateTeachers’ReTrementSystem(CalSTRS)CityofProvidence,RIUnitedMethodistChurchGeneralBoardofPensionandHealthBenefits

FOUNDATIONSDivest-InvestPhilanthropicGroupRockefellerBrothersFundSierraClubFoundaTonWallaceGlobalFundJubitzFamilyFoundaTonEducaTonalFoundaTonofAmericaParkFoundaTonRussellFamilyFoundaTonComptonFoundaTonKLFelicitasFoundaTonTheChorusFoundaTonSingingFieldFoundaTonNiaCommunityFoundaTonJohnMerckFundJosephRowntreeCharitableTrustSolidagoFoundaTonJessieSmithNoyesFoundaTonGranaryFoundaTonTheSchmidtFamilyFoundaTonBen&Jerry’sFoundaTonPaxFundThresholdFoundaTon

InvestmentOpTons

Indexeshaverolledoutoverpast18months•  S&P500FossilFuelFreeIndex•  FTSE/Blackrock–N.AmericaandAll-WorldIndexes•  MSCIACWI(AllCountryWorldIndex)•  FossilFreeIndexes(FormerS&PexecuTves)

Managedaccounts

•  Blackrock(FTSEex-FossilFuelsIndexSeries)•  Parametric(FossilFreeIndexesUSandEAFE)•  AperioGroup(customscreening)•  TrilliumAssetManagement(customscreening)

ETFs

•  SPYX–S&P500FossilFuelFreeSPDR–0.20%exp.raTo

Summary

TheCarbonBubblepresentssignificantriskstoowneroffossilfuelreservesaspressureincreasestolimittheburningoffossilfuels.ThereisnoevidenceofareturnpenaltyfordivesTngfromfossilfuelcompanies.Fossilfuelfreeindexreturnsshowcomparableorlowerriskthantheirbenchmarks.436insTtuTonswith$2.6trillioninassetshavecommiDedtodivest.FossilfreeinvestmentopTonsarequicklyemergingforinsTtuTonalinvestors.