Which of the following markets would you want your pension fund to have invested in this year? Would it be the one tracking the benchmark index, which has gained about 20%? Or would you prefer it to have bought the subindex that’s climbed by almost three times as much? It sounds obvious — until you dig into the detail.
Gains of about a fifth for the S&P 500 index seem respectable enough. But they’re dwarfed by the 56% return available from the energy companies index, which is dominated by the likes of Exxon Mobil Corp., Chevron Corp., ConocoPhillips and other carbon-intensive firms. Your heart, aware of the damage energy companies are doing to the planet, may have one view. Your mind, conscious of the need to build enough of a nest egg to finance a comfortable retirement, may well take the opposite stance.
Of course, this is a bit of a false dichotomy. If we continue to wreck the planet, there might not be anywhere left for you to enjoy those twilight years sipping margaritas, making the value of your nest egg a moot point. But it does illustrate that investment continues to flow into the world’s most polluting companies, leaving profits on the table for those willing to keep financing their activities.
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