Publication

The financial impact of divestment from fossil fuels

Plantinga, A. & Scholtens, B., 29-Mar-2016, Groningen: University of Groningen, SOM research school, p. 1-47, 47 p. (SOM Research Reports; no. 16005-EEF).

Research output: Working paperAcademic

APA

Plantinga, A., & Scholtens, B. (2016). The financial impact of divestment from fossil fuels. (pp. 1-47). (SOM Research Reports; No. 16005-EEF). Groningen: University of Groningen, SOM research school.

Author

Plantinga, Auke ; Scholtens, Bert. / The financial impact of divestment from fossil fuels. Groningen : University of Groningen, SOM research school, 2016. pp. 1-47 (SOM Research Reports; 16005-EEF).

Harvard

Plantinga, A & Scholtens, B 2016 'The financial impact of divestment from fossil fuels' SOM Research Reports, no. 16005-EEF, University of Groningen, SOM research school, Groningen, pp. 1-47.

Standard

The financial impact of divestment from fossil fuels. / Plantinga, Auke; Scholtens, Bert.

Groningen : University of Groningen, SOM research school, 2016. p. 1-47 (SOM Research Reports; No. 16005-EEF).

Research output: Working paperAcademic

Vancouver

Plantinga A, Scholtens B. The financial impact of divestment from fossil fuels. Groningen: University of Groningen, SOM research school. 2016 Mar 29, p. 1-47. (SOM Research Reports; 16005-EEF).


BibTeX

@techreport{15db3398666349188747b32b25bca4c9,
title = "The financial impact of divestment from fossil fuels",
abstract = "Divesting from fossil companies has been put forward as a means to address climate change. We study the impact of such divesting on investment portfolio performance. To this extent, we systematically investigate the investment performance of portfolios with and without fossil fuel company stocks. We investigate mispricing in stock returns and test for the impact of (reduced) diversification by excluding fossil fuel companies from the portfolio. While the fossil fuel industry outperforms other industries based on returns only, we show that this is due to the higher systematic risk of this industry, as there is no statistically significant difference between the riskadjusted performance of stocks in the fossil fuel sample and the non-fossil fuel sample. We conclude that divesting from fossil fuels does not have a statistically significant impact on overall portfolio performance, and only a very marginal impact on the utilityderived from such portfolios. The policy implication is that investors can divest fromfossil fuels without significantly hurting their financial performance.",
keywords = "Divestment, Fossil fuels, Investment management, Portfolio performance, Stock markets",
author = "Auke Plantinga and Bert Scholtens",
year = "2016",
month = "3",
day = "29",
language = "English",
volume = "16005-EEF",
series = "SOM Research Reports",
publisher = "University of Groningen, SOM research school",
number = "16005-EEF",
pages = "1--47",
type = "WorkingPaper",
institution = "University of Groningen, SOM research school",

}

RIS

TY - UNPB

T1 - The financial impact of divestment from fossil fuels

AU - Plantinga, Auke

AU - Scholtens, Bert

PY - 2016/3/29

Y1 - 2016/3/29

N2 - Divesting from fossil companies has been put forward as a means to address climate change. We study the impact of such divesting on investment portfolio performance. To this extent, we systematically investigate the investment performance of portfolios with and without fossil fuel company stocks. We investigate mispricing in stock returns and test for the impact of (reduced) diversification by excluding fossil fuel companies from the portfolio. While the fossil fuel industry outperforms other industries based on returns only, we show that this is due to the higher systematic risk of this industry, as there is no statistically significant difference between the riskadjusted performance of stocks in the fossil fuel sample and the non-fossil fuel sample. We conclude that divesting from fossil fuels does not have a statistically significant impact on overall portfolio performance, and only a very marginal impact on the utilityderived from such portfolios. The policy implication is that investors can divest fromfossil fuels without significantly hurting their financial performance.

AB - Divesting from fossil companies has been put forward as a means to address climate change. We study the impact of such divesting on investment portfolio performance. To this extent, we systematically investigate the investment performance of portfolios with and without fossil fuel company stocks. We investigate mispricing in stock returns and test for the impact of (reduced) diversification by excluding fossil fuel companies from the portfolio. While the fossil fuel industry outperforms other industries based on returns only, we show that this is due to the higher systematic risk of this industry, as there is no statistically significant difference between the riskadjusted performance of stocks in the fossil fuel sample and the non-fossil fuel sample. We conclude that divesting from fossil fuels does not have a statistically significant impact on overall portfolio performance, and only a very marginal impact on the utilityderived from such portfolios. The policy implication is that investors can divest fromfossil fuels without significantly hurting their financial performance.

KW - Divestment

KW - Fossil fuels

KW - Investment management

KW - Portfolio performance

KW - Stock markets

M3 - Working paper

VL - 16005-EEF

T3 - SOM Research Reports

SP - 1

EP - 47

BT - The financial impact of divestment from fossil fuels

PB - University of Groningen, SOM research school

CY - Groningen

ER -

ID: 31178683