Second, there is the risk of stranded assets and a material loss to the portfolio.
After all, various reports suggest that 66%-80% of fossil fuel reserves need to stay in the ground if a 2 °C climate change target by 2050 is to be achieved.
A confused logic
There are counter-arguments worth considering by investors, especially trustees. The first issue is engagement versus divestment. Is it better for investors to engage with and persuade companies to move ahead more quickly down the low carbon path?
From a moral stance, there may be certain activities, say selling tobacco or pornography, which investors prefer not to engage in even if they are legal.