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 own direct stock investments, and can only display up to 3,000. 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.
If a fund holds stock in a fossil fuel company
Five different fossil fuel screens are used to flag investments.
We calculate the total amount of 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.
For each of the five fossil fuel screens, a fund can earn a badge if it's clean for that screen - i.e., does not own any of the companies on that list. If a fund earns all five badges, that means it doesn't own any of the fossil fuel companies we look for. You'll see a chart like this:
However, if a fund does own stock in fossil fuel companies, you'll see a chart like this, showing the overall exposure.
You can see the breakdown of fossil fuel exposure for each of the five fossil fuel screens.
If you click a category that a fund has exposure to, you can see the breakdown of the individual companies in that category that the fund owns.
We calculate the 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, below median, above median, and high. If the fund's results are higher than all 20 benchmarks, it is labeled very high. 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 track socially responsible funds
We use Morningstar's "socially responsible fund" indicator to determine which funds are displayed as socially responsible. Socially responsible funds make investment decisions based on issues like environmental responsibility, human rights, or religious views. A socially responsible fund 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 are socially responsible.
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 the production, licensing, and/or retailing of tobacco products, or in the manufacturing of products necessary for production of tobacco products. 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.