The extraction and burning of fossil fuels is helping to accelerate the climate crisis — and investments in your portfolio may be helping fund it.

So what’s an investor concerned about the environment to do? Divest? Engage more?

Amy Scott, host of the Marketplace podcast “How We Survive,” joined “Marketplace Morning Report” host David Brancaccio to talk about how some large investors have thought about this issue. The following is an edited transcript of their conversation. 

David Brancaccio: How do we start to understand the scale here?

Amy Scott: There is a group called stand.earth that has counted more than 1,600 institutions worth more than $40 trillion collectively that have committed to divesting some or all of their assets from fossil fuels, and that list includes faith-based organizations, colleges and universities, pension funds. Some have committed to selling stocks or bonds or other investments in any fossil fuel-related business. Others, though, have just pledged to get out of the dirtiest energy sources, like thermal coal and tar sands. But there is some debate about how effective divestment is at actually reducing greenhouse gas emissions.

Brancaccio: Well, I want to ask you about that. I mean, divestment is credited with contributing to the end of apartheid in South Africa. Does this divestment movement involving energy have the potential to have real-world effects? I mean, I'm talking about lowering greenhouse gas emissions.

Scott: Right, it can be very effective, but "How We Survive" spoke with Kelly Shue, who teaches finance at the Yale School of Management, and her research has shown that the strategy can actually backfire, because it makes it harder and more expensive for so-called "brown companies" to raise money. And that makes them less likely to invest in new technology or abatement efforts.

Kelly Shue: And what we find is empirically, when brown firms have experienced a higher cost of capital in the past, they actually go out and pollute more per unit of capital, because that's the way they get cash right now.

Scott: Shue says climate-conscious investors may have more impact by engaging with the companies to push them to invest in cleaner energy.

Brancaccio: All right — engaging. Shareholder resolutions, [things] like that?

Scott: Exactly, or voting for more climate-friendly board members. New York City is one example. Its public employee pension system has a goal of net-zero emissions in its portfolio by 2040. To get there, it has divested from thermal coal and fossil fuel reserve owners and stepped up in its investment in clean energy. But it's also using its power as a big shareholder to pressure other big emitters, like utilities, to decarbonize. We spoke with Brad Lander, who's comptroller for New York City — I should also say he's running for mayor. Lander says the city sees both engaging and divesting as tools in its climate efforts.

Brad Lander: Where we can engage and get people to move and make real plans for transition, like we're working on with those utility companies or with car companies, great.

Scott: And Lander says the city's engagement is actually more effective because companies know it's serious about divesting if they don't make enough progress.

Brancaccio: Now, individual investors will decide for themselves on this issue, but there are essentially calculators to at least help them see what they own.

Scott: Yeah. A good place to start is the website fossilfreefunds.org, where you can look up your individual mutual funds or ETFs if you have a retirement account, for example, to see how much fossil fuel exposure you have and compare greener alternatives.