I want to safeguard my financial future, and I also value the environment. I invest my money mainly in index funds that do not contain businesses that are active in the oil, tobacco or weapons industry. Thus, I also exclude the Dutch stock market favourite Shell from my investment portfolio. From a profit perspective, a sound decision!
For too long, oil companies such as Shell, ExxonMobil and BP were the cornerstones of traditional investment portfolios. You may have heard the phrase “Never sell Shell”. Oil companies such as these had a consistent turnover, a relatively stable stock exchange value and a considerable dividend payment each quarter (a profit payment for shareholders). This allowed you to make a profit off your shares even if the stock price remained the same by using the dividend to acquire new shares. But times are changing!
In a climate court case against Shell, the judge ruled last Wednesday (you can’t have missed it) that the oil company must reduce its CO2 emissions by 45% from the 2019 level within 9 years.
This puts an end to the idea that oil companies are a solid long-term investment, as far as I’m concerned. After this ground-breaking ruling, the question is which company is next to be held accountable for its high level of CO2 emissions. Will it be BP? Total? Or the relatively new Saudi Aramco?
This puts an end to the idea that oil companies are a solid long-term investment, as far as I’m concerned.
Whatever company it may be, their stock exchange value is bound to be affected. After this ruling, chances are that similar cases will take place both in the Netherlands and abroad against large CO2 emitting companies, and it is likely that there will be rulings in favour of the prosecution.
Even if you are not all that concerned about the climate, you may wish to steer clear of the polluting oil industries from a financial perspective
Even if you are not all that concerned about the climate, you may wish to steer clear of the polluting oil industries from a financial perspective. Fortunately, there are plenty of sustainable alternative ways to make your money work for you, for example, by investing in index funds with ESG exclusion, crowdfunding for green projects such as solar parks, or microcredits. Valuing the climate need not affect your financial ambitions!
Emma Mouthaan (25) is a master’s student of Molecular Nutrition and Toxicology and is also taking a master in Writing at the VU. Emma blogs on studying and finances on the website The Stingy Student. Previously, she wrote about fashion and food.