Do fossil fuel divestments from large capitalization fossil fuel firms lead to a change in emissions and returns?

Abstract

How should asset managers deal with the issue of divesting or engaging with fossil fuel companies? By looking at the effect divesting has on variables that are important to the fund and its owners. In this debate, we argue that the return and emissions caused by the company are the issues most relevant for an asset manager. Through panel data regression models containing information on divestments, monthly return, emissions and risk factors, and a thorough review of ownership data on a large number of international fossil fuel companies, conclusions on the best course of action can be made to ensure more profitable funds and a healthier planet.