David Schreiber, CFP®
Progressive Asset Management Group
Why should our investment dollars go to the support of an industry which operates to the detriment of our interests as residents of this planet and small business owners? The impact of fossil fuel use is apparent in the increase of intensity and frequency of storms causing extensive damage to property and infrastructure. The expense of repair and recovery is born by all while the fossil fuel industry counts its profits. Small businesses are particularly vulnerable because they seldom have the depth of financial reserves needed to repair the damage and have no other source of cash flow while the work is being done. We in Boston, like other coastal communities, are especially vulnerable to rising seas which can flood us out when the right combination of wind and tide occur as they did to the New York area when Sandy struck.
There is another compelling reason for small businesses to put their investment dollars to work elsewhere and that is the political power that the 200 major fossil fuel companies have to influence legislation in their own favor and often at the expense of the small business. This power comes from the enormous concentration of assets claimed by these corporations. The actual value of those assets however, is seriously in doubt. The latter gives us yet another reason to divest from the fossil fuel industry and that is the risk it adds to our retirement and savings portfolios.
The future prospects for fossil fuel companies are suffering, and in coming years, increasingly, will suffer from at least four rapidly evolving developments triggered by growing global awareness of the existential threat that climate change poses for the planet. These developments will include governmental restrictions on carbon release, leading to the stranding of carbon bearing fossil fuel assets carried on the balance sheets of fossil fuel companies; advances in alternative sources of energy for power, electricity and transportation; resulting in a lessening demand for coal, gas and oil; a rising tide of public action at the grass-roots level, including actions by stockholder groups, against fossil fuel companies, demanding such obvious steps as cessation of capital expenditures on exploration and development of more fossil fuel; growing reputational effects from the foregoing, turning fossil fuel companies into pariahs, with adverse consequences for hiring, employee morale and motivation, stockholder satisfaction and equity valuations. (Paraphrased from The Financial Case for Divestment of Fossil Fuel Companies by Endowment Fiduciaries, Bevis Longstreth; published 3/28/2014 in Huff Post Politics)
David Schreiber CFP® is a representative of and offers securities through Financial West Group (FWG), Member FINRA/SIPC. The Progressive Asset Management Group (PAM Group) is the socially responsible investment division of FWG. Progressive Asset Management, Inc. (PAMI) and FWG are unaffiliated entities.