Energy Stat of the Week by J. Marshall Adkins

Energy Stat: Should Energy Investors Be Concerned About Fossil Fuel Divestments?

August 13, 2018

If your energy portfolio consists solely of renewables/clean tech stocks, you can stop reading right now and turn your attention to something more entertaining. But most of our readers – and most energy investors broadly – are predominantly invested in oil and gas. Chances are, you have heard about the trend of fossil fuel divestment, whereby certain institutional shareholders have decided to sell their fossil fuel-related holdings and refrain from owning such stocks in the future. Today, we will discuss this trend – which remains for the most part below-the-radar, at least outside Europe – and what it means for energy investors. To be crystal-clear, this report is not about carbon emissions regulations – here we are referring to equity ownership decisions made by institutional shareholders. Our central message: for the vast majority of the world’s publicly traded oil and gas companies, this is a non-event. It is relevant for coal – and, to some extent, oil sands – but even for them it’s not game-changing.