Divesting Fossil Fuels: The Implications for Investment PortfoliosTrinks, A., Scholtens, B., Mulder, M. & Dam, L., 2017, Groningen: University of Groningen, SOM research school, 44 p. (SOM Research Reports; vol. 17001-EEF).
Research output: Working paper › Academic
Fossil fuel divestment campaigns urge investors to sell their stakes in companies that supply coal, oil, and gas. However, avoiding investments in such companies can be expected to impose a financial cost on the investor because of reduced opportunities for portfolio diversification. We compare the risk-adjusted return performance of investment portfolios with and without fossil fuel companies over the period 1927-2015. Contrary to theoretical expectations, we find that fossil-free investing does not seem to impair financial performance. These findings can be explained by the fact that fossil fuel company portfolios do not generate above-market performance and provide relatively limited diversification benefits. Significant performance impacts of a divestment strategy, however, are observed over short time frames and when applying divestment to less diversified investment portfolios.
|Place of Publication||Groningen|
|Publisher||University of Groningen, SOM research school|
|Number of pages||44|
|Publication status||Published - 2017|
|Name||SOM Research Reports|
- Fossil Fuel Divestment, Socially Responsible Investing, Portfolio Performance, Risk-adjusted returns, Market Capitalization, GARCH
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