Take ExxonMobil as an example.

The oil company used to be a titan of American industry. It spent decades in the top 10 of the S&P rankings, alongside giants like General Electric, Coca-Cola, and Microsoft. From 2006 to 2011, as the price of oil approached its highest levels in history, ExxonMobil was the most valuable company in the S&P, and in 2007 its market capitalization exceeded $500 billion.

But in the years since, as the oil price has crashed and global action on climate change has complicated the outlook for fossil fuels, the company’s fortunes have faltered. In 2019, it fell out of the S&P’s top 10—leaving that group bereft of oil companies for the first time in the index’s 60-year history.

Today, Exxon has fallen even farther. After the coronavirus pandemic triggered one of the biggest oil market busts in history, ExxonMobil ranks number 24, behind Netflix, Bank of America, and even Home Depot. The same story is true for all the oil companies in the S&P 500, which, in addition to oil services companies like Halliburton, account for all the energy-sector companies in the ranking.

“The oil industry has gone from the mainstream to the fringes of investors’ portfolios with remarkable speed,” said Andrew Logan, senior director for oil and gas at the sustainable investment nonprofit Ceres. “The oil industry’s representation in financial indices is now so small that mainstream investors no longer feel like they need to own the sector to avoid underperforming the index. In fact, the opposite seems to be true—the way to outperform the market is to underweight oil and gas. This would not have been the case at almost any time in the past 50 years.”

📬 Sign up for the Daily Brief

Our free, fast, and fun briefing on the global economy, delivered every weekday morning.