Attempting to create a low fossil fuel investment plan

For a variety of reasons (to be covered in another article elsewhere), I have decided on investing my retirement savings in low-fee index funds that broadly reflect the US and international stock markets (leading me to Vanguard). At this point in time, I’d like to be able to do this by removing as many of the large carbon emitters as possible, particularly the energy companies.

I also want to spend little time or money of setting up and maintaining my allocations.

If I ignore the fossil-free goal, I would have my US holdings in the Vanguard Total Index Stock Market.

To pull out the particularly terrible actors:

  1. Vanguard FTSE Social Index Fund (VFTSX) for large cap — this doesn’t quite work, as it also has some mid-cap, but pulls the largest oil and gas companies.
  2. Vanguard mid-cap blended.
  3. Vanguard small-cap blended.

Percentage-wise, you could be a bit more agressive with the a Morningstar report (PDF) recommendation and go 40/30/30%. If you want to be closer to the actual Vanguard Total Stock Market index, the split will be closer to 70/20/10%.

My current international strategy: currently stymied. The Vanguard Total International Stock Market index includes Shell and BP in the top ten holdings. 🙁

Bonds: the Vanguard Total Bond Market index is pretty much federal government bonds with a smattering of corporate and other bonds. The only tinkering I would do here would be adding in some state and municipal bonds, on the theory that cities and states are usually doing good work with their bonds.

Got other options? There are a couple of different indexes being currently created that may get picked up by Vanguard for a low-fee fund, and I keeping my eye on them.