Fossil Fuel Divestment: Risks and Opportunities

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By: Daniel Kern, CFA, Jim Blachman, CFA, and Gerard Cronin, CFA

Summary

Divestment from oil companies and other fossil fuel based companies is of interest to socially responsible investors who are concerned about climate change. Setting aside social considerations, our investment analysis suggests that removing these energy stocks from a well-diversified portfolio has little impact on investment risk; however, the evaluation of the impact on portfolio performance will depend on an investor’s perspective.

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