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Fossil Fuel Free Exchange Traded Funds

Another reinvestment option is to put money into an Exchange Traded Fund ("ETF"). ETFs invest in stocks in lock-step with a market index that is composed of a particular set of companies. The investments within an ETF are driven by the index - rather than being actively managed by a fund manager who moves money in and out of investments based on their changing views of companies and markets.

If you are an ETF investor, there are 4 easy options to approach fossil fuel free investing:

Option 1: Pick an ETF that tracks a small or medium sized company index like the Russell 2000 ("small cap" stocks) or the Russell Midcap Index. These ETFs won't include the major fossil fuel companies because those companies are too large.

Option 2: Pick an ETF that tracks the MSCI Low Carbon Target Index or the ETHO Climate Leadership Index - created to track companies with low carbon emissions and low fossil fuel reserves. Three possibilities are LOWC, CRBN, and ETHO.

Option 3: Pick an ETF that is focused on a clean (or "alternative") energy index.

Option 4: Pick a compelling sector specific ETF that is unlikely to hold investments in any fossil fuel companies (e.g., a fund that focuses on health care).

Be sure to read the prospectus of a fund before investing. Make sure you understand and are comfortable with your investment decisions before you invest.


This site is for general information purposes, and none of the information presented should be construed as investment recommendations. When investing, take advantage of the information available to you via professional investment advisors, company materials, financial websites, and the like. divestor.org does not act as an investment advisor, and does not provide investment advice.

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