FOSSIL FUEL DIVESTMENT MOVEMENT EFFECTS ON CARBON HEAVY INDICES AND STOCKS

Abstract

In order to stop the climate change, socially responsible investing (SRI) has become largely popular in the United States of America, almost doubling in assets from 2012 to 2014. In addition to traditional SRI, the sustainable investing scene has found a new way of impacting: the Fossil Fuel Divestment Movement (FFDM). Since 2011, the FFDM has managed to gather pledges to divest assets out of fossil fuel industries worth over $3.4 trillion. The main purpose of this thesis is to examine whether the FFDM divestment announcements, endorsements and climate change news have an effect on four different indices and two US-based stocks, which represent the four main features that could be affected by the FFDM: oil, gas, coal, sustainability indices and stocks. Excluding one global sustainability index, all examined US-based indices’ and stocks’ returns are statistically significantly negatively affected by the FFDM outputs.