Outlet: Marketplace

I want to make my retirement account more environmentally friendly. Thing is, this goal is in the same camp for me as learning to sew my own clothes, play the cello or speak French conversationally  — I love it in concept, but the reality of actually accomplishing those goals is beyond daunting.

I’ve considered divesting my retirement portfolio from fossil fuel companies. But when I brought up divestment to Witold Henisz, vice dean and faculty director of the ESG Initiative at Wharton, he offered a different perspective.

“It’s really important to think about the implications of a divestment strategy, as opposed to what’s called an ‘engagement strategy.’ And it might make you feel good to divest, it might make you feel like you’ve done something really concrete. But another word for ‘divestment’ is ‘disengagement,’” he said. “Disengagement is a less rosy-sounding, less positive-sounding term, but it’s really what you’re doing when you divest.”

If the folks who care about the energy transition divested from companies that invested in fossil fuel production, Henisz argued, who would be left holding those stocks or buying them up? How do you know those investors won’t push the company to invest more in fossil fuels?

“I’m certainly more on the camp of active ownership and exhibiting voice and trying to influence these companies from within,” Henisz said. He added that investors should look into the specific initiatives and investments that energy companies are putting forth.

“If we’re thinking about hydrogen, if we’re thinking about carbon capture, if we’re thinking about fusion, it’s reasonable to think that some of those innovations are going to come out of the fossil fuel companies,” he said.

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