Such concerns have led institutional investors like CalPERS to embrace carbon footprint analysis as part of the way they mitigate or avoid the financial risks associated with climate change and policy.
Behar hopes that the data makes that kind of analysis easier on a retail and individual level.
“As demand increases and as investors become more aware of carbon risk from inside of their portfolios, investment vehicles start to shift,” Behar said. “That’s already happening, a lot of major funds are already out of coal and coal companies are going bankrupt. We’re going to see the same thing in oil and gas moving forward as people start to move more money into carbon constrained investment portfolios.”
Fund holdings can be actively screened against various lists of the largest carbon emitters on the planet, like “The Filthy 15,” a list of the largest American coal companies, or The Carbon Underground 200, an index from Fossil Free Indexes that identifies the top 200 publicly traded coal and natural gas companies. Holdings can also be screened against Morningstar’s industry classifications in oil/gas, coal and utilities.
In addition to the screens, the tool also tells investors the approximate total carbon dioxide emitted per $1 million invested within a fund, and allows them to compare that total against various benchmark indexes.
The tool allows end-investors to calculate the carbon footprint of their 401(k) plan holdings. If Fossil Free Funds users find that their 401(k) doesn’t offer low-carbon or carbon-free investment options, the site prompts them to contact their plan provider and sponsor to demand changes within the plan.
“Most companies aren’t offering any fossil free options, and that encourages climate risk,” Behar said. “This really should be evaluated because the choices are so limited in any particular workplace.”