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Why you should consider divesting

Oct 13, 2016

What if you learned that despite your best efforts to go green—eating locally grown food, biking to work, buying less stuff—on the whole, you have contributed more than ever to climate change because you have money invested in the fossil fuel industry?

For many of us, this is the reality. While we double our efforts at home to fight climate change, our investment dollars are pouring into the tar sands, undoing whatever progress we thought we had made.

This reality is the driving force behind the divestment movement. “Divestment” is the practice of quitting investments that you feel are being used for immoral ends. The idea is that by pulling our investments out of fossil fuel we can put the brakes on the dirty-energy economy. Remember, the dirty-energy economy is not inevitable; fossil fuel extraction companies do go bankrupt.

The divestment movement is growing quickly. Some recent highlights are

Figuring out whether mutual funds in your portfolio or retirement plan are financing fossil fuels can feel daunting because funds are often comprised of over a hundred stocks. But don’t worry. Fossilfreefunds.org is a free, online database that does the work for you. Just enter the mutual fund name or ticker into the search engine and voilà. Bring your findings to your financial advisor and speak with them about divestment and reinvesting in clean energy options.

Fossilfreefunds screenshot

If you work for a company that contributes into an RRSP for you, and you discover that the fund finances dirty energy, here are the steps you can take to change how they invest your money.

Making informed, ethical investments is tricky in a global economy. Even if you divest from fossil fuels, how can you be sure you’re not reinvesting that money into some other harmful fund? Does the new fund finance deforestation, war, or child labour? You can start by checking out the Responsible Investment Association’s Guide to Responsible Investment for some tips.

One option is opting for private impact investments, like SolarShare, where you know upfront what your money is financing. These investments are difficult to find, although they are gaining in popularity. With SolarShare, you can be sure that 100% of your money is going to finance clean, solar energy in Ontario. Similar impact investments are offered by the Ottawa Renewable Energy Co-operative, Community Energy Development Co-operative, and CoPower.

You may have to seek out a financial advisor who specializes in ethical (also called “impact”) investing. To do so, visit the Responsible Investment Association’s website that features a map highlighting various ethical investment advisors throughout the country.

Remember, whatever environmentally (or socially) conscious lifestyle decisions you make, if your money is invested fossil fuels, you may be undoing your hard work. Take time to figure out what your investments are funding. And if you don’t like what you see, you can reinvest in organizations that are doing good work, while earning a great return.