NEW YORK (April 29, 2014) – The Natural Resources Defense Council (NRDC), BlackRock and FTSE Group, the global index provider, partnered today in launching a groundbreaking equity global index series that will exclude companies linked to exploration, ownership or extraction of carbon-based fossil fuel reserves. The new investment tool will allow climate-conscious investors, including foundations, universities and certain pension groups, to match their investment strategy and financial interests with their values.
“This initiative is about creating the kind of world we want to leave for the next generation,” said Frances Beinecke, president of the Natural Resources Defense Council. “We want to move toward a world that no longer relies on dirty energy that threatens our future, damages our communities and destabilizes our climate. A fossil fuel-free future is where we see opportunity and promise, and that’s where NRDC wants to direct our financial resources.”
The FTSE Developed ex-Fossil Fuels Index Series is an innovative set of benchmark indices that excludes companies directly engaged in extracting so-called “stranded assets” in the hydrocarbons industry. This ground-breaking series is the first to implement total exclusion of fossil fuel linked stocks so that these enterprises are removed entirely from the constituency. The global benchmark includes over 2,000 securities across 25 countries.
As an integral member of the collaboration with the NRDC and FTSE, BlackRock has developed a solution that incorporates these advances and supports its goals. The index series and BlackRock’s solution are the first steps toward creating more opportunities for fossil fuel-free investing.
“FTSE is delighted to work with BlackRock and NRDC on this ground-breaking index series,” said Mark Makepeace, CEO of FTSE Group. “We are increasingly seeing demand from our clients for indices that reflect their overall business culture and values. Innovation is at the core of all our products and we are pleased to develop this global benchmark to implement total exclusion of companies linked to this theme.”
“We’re proud to work with two market leaders to offer our clients innovative investment options that appeal to their mission-driven goals,” said Richard Kushel, Head of BlackRock’s Strategic Product Management Group. “The scale of BlackRock’s Beta Strategies platform allows us to accommodate the varied needs of a diverse client base in an efficient, transparent manner and to consistently deliver benchmark performance.”
A well-diversified and low-cost stock market index solution provides a landmark opportunity for investors to responsibly divest from passive investments that indirectly expose them to fossil fuel producers. To create this opportunity, NRDC worked closely with FTSE to develop a comprehensive and transparent screening methodology to exclude companies that have proven and probable reserves or revenue from exploration and extraction of fossil fuels.
“NRDC was born in the fire of the first Earth Day, and even as they've become a powerful institution that original DNA shines through: with this move they've shown great leadership in transforming the divestment debate,” said Bill McKibben, 350.org co-founder. “They've stood up to the oil barons, and they've stood up for science: if we're to slow climate change we have to leave most of our carbon reserves in the ground, and that means we've got to take all of our money and our support away from this reckless industry.”
Demonstrating market demand for this strategy is expected to spur competition in creating comparable products and lead to new opportunities for individual investors to access similar investment strategies. Although NRDC helped develop the parameters for the index, NRDC is not engaged in the sale of any investment product and receives no remuneration.
“NRDC has a forty-year track record of devising innovative strategies and solutions to the world’s most pressing environmental challenges, including climate change,” said Peter Lehner, NRDC executive director. “We strive to create roadmaps that chart our collective course toward a better, safer, healthier future. Now it is time to chart a similar course in the investment realm.”
“Institutions across the world are rightfully reconsidering investments that directly threaten our climate and thus our economies,” said Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC). “The divestment index provides these institutions with yet another potentially powerful tool to align their investments with their missions. Its launch could not be more timely, in the lead up to the 2015 climate change agreement, that can and should delineate the path toward a more just and sustainable future.”