GUEST COLUMN: PERSONAL INVESTING Jacob Deschenes | Owner Era Capital Management LLC Jacob Deschenes is a licensed investment advisor operating a registered, fee-only investment management firm serving individuals, wealth advisors, and corporate clients throughout the United States. He uses contrarian methodology with uniquely-developed matrixex and mathematical and statistical analyses. Visit www.eracapitalmanagement.com.
Divesting of fossil fuel-related opportunities is hogwash The notion is hardly possible, let alone desirable
n environmental movement that is gaining traction suggests divesting large-investment portfolios from owning fossil fuel-related companies. Across the nation, especially many universities and their boards watching over foundations (such as Western Washington University right here in Bellingham) and endowment funds have experienced pressure to make this change.
The pressure comes from selfstyled, environmentally-conscious student associations and other national organizations. Locally, the Western Washington University Foundation was asked to divest its portfolio holdings from any fossil fuel related companies,* but choose not to participate in this illinformed initiative. The idea of filling the world's energy needs without the use of fossil fuels could be considered a wellintended, perhaps noble endeavor. But oil, coal, and natural gas are necessary material inputs to nearly 100 | BUSINESSPULSE.COM
everything aspect of our daily lives that cannot be replaced completely by wind and solar power sources. In the marketplace, we must recognize the benefits of having affordable, available-on-demand energy if we want a vibrant economy. Investment fads often get traction around an emotional appeal to draw you in – and fossil fuel-free investing is an example. Is it even
Look at the top 10 constituents of stock free fossil fuel, index holes begin to form large enough to drive a Mack truck through. possible to invest in a portfolio free of fossil fuels as the index promoters claim? It's a strong claim to be free of fossil fuel investment when free by its very definition means zero. If we look at the top 10 constituents that make up this stock free of fossil fuel, index holes begin to form large enough to drive a Mack truck through. Berkshire Hathaway, for example, is by no means a fossil fuelfree company; it fully owns BNSF Railways, which is a transportation company, and any transportation
company needs fuel to move goods. Investors need to exercise caution before removing entire sectors – in this case, the energy and utility sectors – from their portfolios and look under some layers. Not only because of diversification purposes, but you’ll discover also that these sectors form the backbone that allows every other business sector to exist. Other examples, by taking a deeper look past the seemingly simple concept of fossil-free investing: • Service-based companies such as financial institutions and technology firms are not exempt from the needs of fossil fuels. Companies require electricity for heating and air conditioning, as well as computer equipment office furniture and so on, all of which would not be possible without carbon-based fuels. • The Nissan Leaf by no means is a zero-emission product. The mining, refining, smelting, manufacturing, and transporting of the raw materials that make up the finished product gobble up considerable amounts of carbon-based fuels before becoming a finished product. With so much of our consumer products made overseas, the paradox out-of-sight and out-of-mind takes root. We cannot be naïve.
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