How it works: Methodology
Finding a fund
Fossil Free Funds sources financial data on equities and mutual funds from Morningstar. Our database contains information on thousands of U.S. open-end and exchange traded mutual funds, some of the most common funds held in 401(k)s, 403(b)s, and other retirement plans.
Search for mutual funds using name, ticker symbol, or asset manager. Use the search page to filter funds by investing style, fund family, and more. When you find a fund you're looking for, click on it to see the full results.
We don't have everything in our database — we only screen mutual funds that are at least 50% invested in stock investments, and our data license restricts us to displaying only 3,000 portfolios.
Looking for your favorite fund and can’t find it? With more resources, we could include more funds — make a gift today to make a difference.
Screening a fund
For each mutual fund in our database, we examine every holding and determine if it is a stock issued by a fossil fuel company.
We only look for direct stock holdings in fossil fuel companies. That means that holdings that are not stocks, like cash holdings or bonds, are not rated. In the fund's investment profile, we show a Percent Rated metric, equivalent to the percent of the fund that is invested in stocks. The higher a fund’s Percent Rated value, the more holdings we were able to examine. A fund with a lower Percent Rated value may have hidden fossil fuel-related investments that our tool cannot account for, in the form of bond holdings or other asset types.
Fossil fuel investments
Five different fossil fuel screens are used to flag investments:
Calculating total exposure
Mutual funds can have a varying number of holdings, from less than one hundred to several thousand. We calculate the total number of flagged holdings in the fund, and the total amount and percentage of the fund’s assets that are invested in those companies.
If a fund doesn't invest in any of the fossil fuel companies we look for, that means it earns an A grade. You'll see a chart like this:
However, if a fund does have stock investments in fossil fuel companies, you'll see a chart like this, showing the overall exposure.
The breakdown of fossil fuel exposure is listed for each of the five fossil fuel screens.
If you click a category that a fund has exposure to, the chart will change to a breakdown of the fund's holdings in that category.
Banks and insurance
Fossil Free Funds now incorporates fossil finance into our fossil fuel ratings.
By continuing to finance fossil fuels, banks and insurance companies are not only responsible for exacerbating climate impacts, but they are also exposing investors to financial risk.
Our new fund ratings use data on bank lending and insurance company policies to assess portfolio exposure to finance-industry climate risk.
Learn more about our new fossil fuel finance and fossil fuel insurance ratings
Grading fund fossil fuel investments
Funds are assigned a fossil fuel grade based on their total fossil fuel exposure, measured as the percent of fund assets invested in holdings flagged by any of the five fossil fuel company screens, where the funds with more exposure earn lower grades. Any funds with 0% exposure are assigned an A grade. If a fund does have fossil fuel exposure in the form of direct stock holdings of companies from the five fossil fuel company screens, a letter grade as assigned based on the level of exposure.
Updated August 2022: The fossil fuel grades have been adjusted to account for the new fossil fuel finance and insurance ratings.
Fossil fuel exposure is 0%, fossil fuel finance and insurance exposure is 0%
Fossil fuel exposure between 0% and 3%; OR, fossil fuel exposure is 0%, fossil fuel finance and insurance exposure above 0%
Fossil fuel exposure between 3% and 5.5%; OR, fossil fuel exposure below 3%, with investments in top 200 carbon reserve owners and/or top 30 coal-fired utilities
Fossil fuel exposure between 5.5% and 9%
Fossil fuel exposure between 9% and 100%
These percentage thresholds reflect the distribution of results across funds, placing a roughly equal number of funds from the analysis universe in each grade range.
Overall financed emissions
The basis for a carbon footprint is the annual GHG emissions of each company within the respective fund. To independently analyze and calculate carbon footprints for the mutual funds, we used the powerful "Carbon Footprint Analysis Tool" of yourSRI.com, which provides the data on corporate emissions worldwide - comprised of more than 40,000 companies.
We show two key metrics related to carbon emissions - the fund's relative carbon footprint, and the relative carbon intensity. The carbon footprint is based on amount of emissions per unit of investment, while the intensity is based on amount of emissions per unit of revenue.
For these two metrics, we compare the fund's results to a slate of 20 benchmarks from major index providers like MSCI, FTSE/Russell, S&P, and Morningstar. Using iShares ETFs as a stand-in for each index, we calculate the carbon footprint and divide the benchmarks into quartiles, labeled:
Low — Fund footprint/intensity is within the range of the bottom 25% of benchmarks
Below median — Fund footprint/intensity is within the range of the second 25% of benchmarks
Above median — Fund footprint/intensity is within the range of the third 25% of benchmarks
High — Fund footprint/intensity is within the range of the top 25% of benchmarks
Very high — Fund footprint/intensity is higher than all 20 benchmarks
We recalculate the benchmark quartiles each month based on their corresponding iShares ETFs.
We also show the emissions weight of the top 10 holdings in the fund. If a holding's emissions weight is higher than its portfolio weight, it means the holding is responsible for an outsized amount of the fund's carbon footprint.
We display which funds earn Morningstar's "sustainability mandate" indicator. Sustainability-mandated funds make investment decisions based on issues like environmental responsibility, human rights, or religious views. A fund with a sustainability mandate may take a proactive stance by selectively investing in, for example, environmentally-friendly companies, or firms with good employee relations. They may also avoid investing in companies involved in promoting alcohol, tobacco, or firearms, or in the defense industry. Look for this symbol to find funds that have a sustainability mandate.
The Forum for Sustainable and Responsible Investment is a group advancing sustainable, responsible, and impact investing. Asset managers who are members of US-SIF often have policies to exclude or restrict investments in companies involved in fossil fuels, including energy companies and utilities. Look for this symbol to find funds that are members of US-SIF.
Fossil free action toolkit
When you're done looking up funds and finding the data you need, what's next? You can learn how to make a change and move your money with our fossil free action toolkit. Whether you’re an individual investor or if your investments are in your employer-sponsored plan at work, our step-by-step toolkit can help. There's links to external resources, a video how-to guide, a sample letter to send to your employer 401(k) manager, even a detailed white paper on the financial details of fossil free retirement plans - everything you need to make a change and get started investing your money fossil free.
We offer sustainable investment tools that highlight issues dealing with climate change, gender equality and more
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