Divestment from fossil fuel companies is a hot topic and may be a good long-term investment strategy. Many initially think of equities and fossil fuel stocks, specifically risks of the coal, oil, and gas sector. However, investors or their managers may also own corporate bonds issued by these companies in their fixed income portfolios. Divestment includes getting rid of stocks, bonds, investment funds, or any investment for that matter that a client finds unethical or morally ambiguous. It is important to look across all of your investments to see what kind of holdings may be linked to fossil fuel companies.
At Community Capital Management, Inc. (CCM), we have been managing fossil fuel free bond portfolios since 1999. Our portfolios primarily invest in agency mortgage-backed securities, taxable municipals, and the government-guaranteed portion of small business loans – all which support community and economic development in the United States (e.g., affordable housing, environmental sustainability, neighborhood revitalization and job creation). We do not hold debt of corporations. CCM’s impact bond strategy is an option for investors looking to put the proceeds of divestment to work in positive ways.
We feel that a focus on re-investment and support for local communities is an important part of the growing movement for fossil-fuel free investments. Divest/Invest.