Climate change, environment, ESG, retirement, risk management, Socially Responsible Investing, SRI

What Role Do Moral Values Play in Investment Selection?

As a financial advisor, I am constantly approached by mutual fund and ETF wholesalers who are selling their investment vehicles. Yesterday I was approached by a representative who offered a vehicle that invested and looked at company fundamentals in a way that I believe is important. Before we talked, I asked if these were funds that invest based on sustainable or ESG (environmental, social, and governance) criteria.

He said, “These funds rank very highly based on ESG ratings.” And when I looked at the Morningstar ratings, they did. However, when I dug deeper several red flags jumped out at me. First, nowhere on the fund prospectus do they mention using screening for sustainability or ESG concerns. The second red flag was when I looked at existing holdings… their top holding is one of the largest US oil companies.

This to me is non-negotiable.

We are in the midst of a climate crisis and the largest contributor is the CO2 and methane released by fossil fuel companies. The IPCC has said that the global economy needs to become net zero in carbon emissions by 2030 if we are to avoid the worst impacts of rising global temperatures. (1)

The only way to reach that goal is to move from fossil fuels to renewables on a massive scale quickly. Yet, we find fossil fuel companies continuing to get leases to drill in new areas, expanding the release of CO2 and methane. (2) We find fossil fuel companies continuing to get funding from equity and high yield bond markets, banks and private equity firms. In October of 2023 Exxon expanded it’s carbon footprint when it announced it would spend $60 billion to buy Pioneer Resources, a company focused on fracking in the Permian Basin. (5)

Over the past decade, divestment has had an impact on the fossil fuel industry’s ability to access capital. (3) Prior to COVID, many companies struggled to survive.

As an investor, you have the ability to invest in a way the that avoids fossil fuel companies. By being proactive, you can feel empowered that your dollars are contributing to the solutions of the climate crisis, instead of its worsening.

Divestment is a moral decision to not invest in companies that don’t match your values. Divestment from fossil fuels is also a rational financial decision. Many policy makers have raised the issue of “sunken assets”, assets that become worthless as society moves away from fossil fuels.

In an interview with The Guardian, Mark Carney, former head of the Bank of England and currently head of Impact Investing at Brookfield Asset Management, said, “Companies that don’t adapt will go bankrupt without question.” (4)

US coal companies had already lost 90% of their value he noted, but banks were also at risk. “Just like in any other structural change, those banks overexposed to the sunset sectors will suffer accordingly,” he told the Guardian.

The central bank governor said transition to net zero carbon emissions would change the value of every asset, raising the risk of shocks to the financial system.

Running counter to this trend, in October 2023 a large US oil company announced its intention to invest $60 billion into purchasing a fracking company in the Permian Basin, instead of investing in renewables.

Circling back to the sales rep, I mentioned to him that he should talk to his supervisors about creating a vehicle using their financial model but overlaying a screen that eliminates fossil fuel risk. I told him, “You will find there is a real demand for such a product.”

He said, “I never thought of that…”

To learn more about how you can divest from fossil fuels please feel free to reach out to me. Email me at

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

To learn more contact:
James Cox
Cell: 267 323 6936
PAS 150 South Warner Rd.  Suite 120 King of Prussia, PA 19406

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Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 150 S. Warner Road, Suite 120, King of Prussia, PA 19406 (610)293-8300.  Securities products and advisory services offered through PAS, member FINRA, SIPC.  PAS is a wholly owned subsidiary of Guardian.

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2023-163190 exp 10/25