Aug 2022 Updates: Introduced a dedicated page with robo-advisors; modified website logo; removed RBC "Fossil Fuel Free" mutual funds due to the presence of fossil fuel companies; updated VirtualWealth branding to Qtrade Guided Portfolios.

Fossil Fuel Free Funds in Canada

Is your money fueling the climate crisis? Browse Canadian mutual funds, robo-advisor portfolios and exchange traded funds that are omit fossil fuel companies.

Image alIllustration by Victoria Belyakova from Ouch!t

Investment Types

Mutual Funds

If you want to work with an advisor at your bank, mutual funds are likely your main option. They typically have higher fees but those cover your advisor's salary. Most are actively managed, meaning that the fund manager advocates for better ESG practices while also trying to outperform market returns. Mutual Fund Portfolios → Specialized Mutual Funds →

Robo-Advisor

If you want lower fees while not having to rebalance your portfolios, robo-advisors do the work of investing in an ETF portfolio for you based on your risk preference and also let you meet with an advisor online. Although many robo-advisors offer SRI options, only four currently have fossil-free options. Robo-Advisor Portfolios →

Canadian Dollar Exchange Traded Funds

If you would prefer to invest on your own through a direct investing platform, exchange traded funds provide an option, typically with the cheapest fees. These funds all contain a screening to exclude fossil-fuel companies and use other ESG factors, but are typically often to follow market performance ex-fossil fuels. ETF Portfolios → Specialized ETFs →

Wondering if your savings account or GIC/term deposit is fossil free? View the directories by Banking on a Better Future or Bank.green to find out. Some financial institutions also offer fossil-free, market-linked GICs, such as the EarthLink GIC from Envision Financial.


What about my pension fund? See the resources by Shift Action For Pension Wealth and Planet Health.


Looking for impact investments? Most impact investment offerings in Canada are either limited to high net-worth individuals, have a higher risk than public markets or are community-specific. We don't yet have a directory for these offerings. You can check with your local credit union or community foundation to see if they have any options.


A note for institutional investors and private wealth clients: There are many more options available to you through investment managers such as Genus Capital Management and Vancity Investment Management. The Responsible Investment Association in Canada maintains a member list with financial advisors and firms that you can reach out to regarding fossil-free offerings.

Our Methodology

  • Excludes stocks of companies with the highest carbon emissions and/or lowest ESG score in each sector.
  • No direct holdings of companies that derive greater than 10% of revenue from the extraction, production and transportation of fossil fuels
  • Railways that are mandated by the federal government to transport fossil fuels and utility providers with a concrete transition plan to 100% renewables before 2050 do not need to meet this point.
  • No direct holdings of companies that have violated the United Nations Global Compact or are involved in the operations of private prisons.
  • No manufacturers of tobacco products or civilian firearms.
  • The majority of corporate bonds must have sustainability-related goals, and ideally, are green bonds. [Due to the large that role Canadian banks play in the bonds market, only the ETFs marked as green bond are guaranteed not to be used for loans by those banks to the fossil-fuel sector.]


Why Divest?

Shareholder engagement versus divestment

Canadian fund providers, such as NEI, have been engaging with oil and gas companies for over 15 years, yet those companies have yet to develop transition plans for a renewable energy future, as shown in a report by Environmental Defence. We are at a critical point in the climate emergency and incrementalism is no longer acceptable. If a fossil fuel company decides to build a renewable energy project, they can still use a green bond from the funds on this list if the money is segmented. Additionally, research has shown that divestment harms the fossil fuel industry's social capital.

Historical returns

By factoring the risk of each asset, funds using environmental, social and governance criteria typically show higher long-term returns. Analysis shows that funds without fossil-fuel companies perform better than their conventional counterparts. Furthermore, to stop warming beyond 1.5°C, oil and gas companies will be left with stranded assets that haven't been fully factored into their stock prices. Investing in fossil fuel companies is betting against a livable future.

Contact

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