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Fossil fuel divestment and portfolio performance

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Fossil fuel divestment and portfolio performance. / Trinks, Arjan; Scholtens, Bert; Mulder, Machiel; Dam, Lammertjan.

In: Ecological Economics, Vol. 146, 04.2018, p. 740-748.

Research output: Contribution to journalArticle

Harvard

Trinks, A, Scholtens, B, Mulder, M & Dam, L 2018, 'Fossil fuel divestment and portfolio performance' Ecological Economics, vol. 146, pp. 740-748. https://doi.org/10.1016/j.ecolecon.2017.11.036

APA

Trinks, A., Scholtens, B., Mulder, M., & Dam, L. (2018). Fossil fuel divestment and portfolio performance. Ecological Economics, 146, 740-748. https://doi.org/10.1016/j.ecolecon.2017.11.036

Vancouver

Trinks A, Scholtens B, Mulder M, Dam L. Fossil fuel divestment and portfolio performance. Ecological Economics. 2018 Apr;146:740-748. https://doi.org/10.1016/j.ecolecon.2017.11.036

Author

Trinks, Arjan ; Scholtens, Bert ; Mulder, Machiel ; Dam, Lammertjan. / Fossil fuel divestment and portfolio performance. In: Ecological Economics. 2018 ; Vol. 146. pp. 740-748.

Bibtex - Download

@article{22004d7ffc57469baf14bfaace401db7,
title = "Fossil fuel divestment and portfolio performance",
abstract = "Fossil fuel divestment campaigns urge investors to sell their stakes in companies that supply coal, oil, or gas. However, avoiding investments in such companies might impose a financial cost on the investor because of foregone potentially profitable investments and reduced opportunities for portfolio diversification. We compare financial performance of investment portfolios with and without fossil fuel companies over the period 1927-2016. Contrary to theoretical expectations, we find that fossil fuel divestment does not seem to impair portfolio performance. These findings can be explained by the fact that, so far, fossil fuel company stocks do not outperform other stocks on a risk-adjusted basis and provide relatively limited diversification benefits. A more pronounced performance impact of divestment can be observed over short time frames and when applied to less diversified market indices.",
keywords = "Fossil fuel divestment, Socially responsible investing, Portfolio Performance, Risk-adjusted returns, Market capitalization, GARCH",
author = "Arjan Trinks and Bert Scholtens and Machiel Mulder and Lammertjan Dam",
year = "2018",
month = "4",
doi = "10.1016/j.ecolecon.2017.11.036",
language = "English",
volume = "146",
pages = "740--748",
journal = "Ecological Economics",
issn = "0921-8009",
publisher = "Elsevier",

}

RIS (suitable for import to EndNote) - Download

TY - JOUR

T1 - Fossil fuel divestment and portfolio performance

AU - Trinks, Arjan

AU - Scholtens, Bert

AU - Mulder, Machiel

AU - Dam, Lammertjan

PY - 2018/4

Y1 - 2018/4

N2 - Fossil fuel divestment campaigns urge investors to sell their stakes in companies that supply coal, oil, or gas. However, avoiding investments in such companies might impose a financial cost on the investor because of foregone potentially profitable investments and reduced opportunities for portfolio diversification. We compare financial performance of investment portfolios with and without fossil fuel companies over the period 1927-2016. Contrary to theoretical expectations, we find that fossil fuel divestment does not seem to impair portfolio performance. These findings can be explained by the fact that, so far, fossil fuel company stocks do not outperform other stocks on a risk-adjusted basis and provide relatively limited diversification benefits. A more pronounced performance impact of divestment can be observed over short time frames and when applied to less diversified market indices.

AB - Fossil fuel divestment campaigns urge investors to sell their stakes in companies that supply coal, oil, or gas. However, avoiding investments in such companies might impose a financial cost on the investor because of foregone potentially profitable investments and reduced opportunities for portfolio diversification. We compare financial performance of investment portfolios with and without fossil fuel companies over the period 1927-2016. Contrary to theoretical expectations, we find that fossil fuel divestment does not seem to impair portfolio performance. These findings can be explained by the fact that, so far, fossil fuel company stocks do not outperform other stocks on a risk-adjusted basis and provide relatively limited diversification benefits. A more pronounced performance impact of divestment can be observed over short time frames and when applied to less diversified market indices.

KW - Fossil fuel divestment

KW - Socially responsible investing

KW - Portfolio Performance

KW - Risk-adjusted returns

KW - Market capitalization

KW - GARCH

UR - http://www.sciencedirect.com/science/article/pii/S0921800917310303#appd001

U2 - 10.1016/j.ecolecon.2017.11.036

DO - 10.1016/j.ecolecon.2017.11.036

M3 - Article

VL - 146

SP - 740

EP - 748

JO - Ecological Economics

T2 - Ecological Economics

JF - Ecological Economics

SN - 0921-8009

ER -

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ID: 252009649