Fossil fuel divestment and portfolio performance

Arjan Trinks, Bert Scholtens, Machiel Mulder, Lammertjan Dam

Research output: Contribution to journalArticlepeer-review

38 Citations (Scopus)
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Fossil fuel divestment campaigns urge investors to sell their stakes in companies that supply coal, oil, or gas. However, avoiding investments in such companies might impose a financial cost on the investor because of foregone potentially profitable investments and reduced opportunities for portfolio diversification. We compare financial performance of investment portfolios with and without fossil fuel companies over the period 1927-2016. Contrary to theoretical expectations, we find that fossil fuel divestment does not seem to impair portfolio performance. These findings can be explained by the fact that, so far, fossil fuel company stocks do not outperform other stocks on a risk-adjusted basis and provide relatively limited diversification benefits. A more pronounced performance impact of divestment can be observed over short time frames and when applied to less diversified market indices.
Original languageEnglish
Pages (from-to)740-748
Number of pages9
JournalEcological Economics
Early online date8 Jan 2018
Publication statusPublished - Apr 2018


  • Fossil fuel divestment
  • Socially responsible investing
  • Portfolio Performance
  • Risk-adjusted returns
  • Market capitalization


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