As part of the Guardian’s Keep it in the ground campaign, which is urging the world’s largest charitable foundations to move their money out of fossil fuels, we look at personal divestment and how you can encourage your pension scheme to shift its portfolio or offer divestment options. If you’d like more information, sign up to our series on personal divestment and we’ll make sure you get all you need to know in your inbox.

What you need to know

1. Can I make my pension scheme entirely divest from fossil fuels?

There are no legal barriers to a pension fund selling out of fossil fuel investments. The fidicuiary duty of trustees to ensure the best returns for members is a flexible one, according to industry body the National Association of Pension Funds. As the law stands, a decision to divest, taken for financial reasons – such as a view that the assets of BP, Shell, etc, will become “stranded” in the ground and therefore worthless – is an acceptable reason for a fund to do so.

It becomes legally trickier if divestment is done for moral or ethical reasons, although that has not been tested in court. Generally, pension schemes based on final salaries have less flexibility than the more common “defined contribution” schemes where your pension is dependent purely on stock market returns.

2. What if they say divestment isn’t technically possible?

This is because many workplace pension funds simply follow an index – such as the FTSE 100 – where giant resource companies such as BHP Billiton and Glencore (both big coal miners), as well as BP and Shell, make up a significant part of the index. But in recent months big index companies, such as MSCI and FTSE, have created indices which track the FTSE 100 or the S&P500 but eliminate the fossil fuel companies. Pension funds, if they want, can choose to track these indices, making divestment relatively straightforward.

3. Will divestment hit returns?

Not necessarily. Indeed, in recent years indices which screen out fossil fuel companies have outperformed those that don’t. MSCI found that investors who divested from fossil fuels would have earned an average return of 13% a year since 2010, compared to the 11.8% earned by conventional investors.

4. I am self employed with a personal pension. Can I divest?

Yes and no. Major pension providers such as Standard Life, Aviva and Legal & General do not currently offer a fossil-free option – the best you can do is to encourage them to do so.