Dirty Secret: Fossil Fuels Worst Performing Sector in the Stockmarket

Research published today by The Australia Institute shows that fossil fuel stocks have been the worst performers in the Australian stock market over the last decade.

Fossil fuel stocks have lost around half their value in the first quarter this year with the COVID crisis compared to 23% for the wider market, continuing a decade-long trend of underperformance.

Key findings:

  • The fossil fuel sector was the only sector to have lost value over the decade.
  • $100 invested in the fossil fuel dominated S&P ASX 300 Energy index in 2010 was worth just $104 by January 2020, dropping to $51 with COVID.
  • $100 in the wider market peaked at $237, falling to $169 with COVID.
  • Excluding fossil fuels from a portfolio of the ASX 300 would have increased returns by 8.6% over the decade.

“Fossil fuels have not only damaged the climate over the last decade, but have damaged most Australian’s superannuation savings,” said Richie Merzian, Climate & Energy Program Director at the Australia Institute.

“Coal and gas supporting politicians and lobbyists routinely claim that fossil fuels are contributing to the financial wellbeing of Australians, yet the data shows that fossil fuels have been a poor investment over a long period.

“The poor financial performance of fossil fuel companies would likely come as a surprise to most Australians, particularly those of us with super funds invested in broad portfolios that have experienced these losses.

“Australian companies such as Santos, Origin, Woodside, Whitehaven, and New Hope have all cost investors dearly, while also damaging the climate and dividing communities with controversial gas and coal projects.

“Australia is not alone. The US stock market and global markets have seen fossil fuels perform worse than the wider market. 

“Exxon Mobil shares were worth US$70 in January 2010, US$70 in January 2020 and just US$38 once the COVID crisis hit.

“Australian investors and governments should realise the risk that fossil fuels present to savings and the climate and take action to protect both.”

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