Published on August 17th, 2019 | by Andrea Bertoli0
How To Start With Sustainable Investing
August 17th, 2019 by Andrea Bertoli
Before I dive into my story of sustainable investing, I will preface this article by noting that I’m a novice investor, and neither my team nor I can offer professional financial advice. You need to do your own research and evaluate any investments before throwing your money at them, etc., etc.
The first thing to note: I’m on the fence about this whole capitalism thing. As I think about investment and savings, I’m always wondering if 70-year old Andrea will have the opportunity to reap the rewards of my decades of investment, or will the white supremacist, fossil fuel evildoers have their way and kill everything livable and beautiful on our planet? On most days I believe the former, and I invest as such. So here’s the story about how I am building my sustainable investment and retirement portfolio.
Over the past two years I’ve gotten really excited about finances generally and investment specifically. If you had told me three years ago that sustainable investing would be my newest passion, I would not have believed you. Now I spend weekend afternoons reading prospectuses and learning about the difference between market or limit buys with the customer service team at TD Ameritrade.
I have deep conversations with my friends about their retirement planning and investments, and deep conversations with my sweetheart (a formal financial advisor and mortgage industry professional – yes, it’s very helpful!) about the future of money and the economy. I co-facilitate a women’s finance group at my coworking space; I even moved the Stocks iPhone app out of my Junk folder, and use it to see what’s happening with #TSLA (still down). It’s been a huge transformation.
I have no kids, so my primary goal is saving for present and future. And as a values-driven human, I’m committed to making the best decisions for both my financial security and our planet. My personal values are deeply focused on sustainability and gender equity. When I began my investment journey, I assumed it would be pretty easy to find investments that aligned with my values – but you know what they say about assumptions.
A Life Committed to Sustainable Values
Some background: When I was a kid, I wrote my school papers about humpback whales and saving the Amazon rainforest; I became an ethical vegetarian when I was 14, and have never once chosen a different option. When I was a barista as a teenager I started an in-house recycling program and carried the gross jugs of milk to the local recycling center a few times a week, which inevitably stunk up my little car. All this to say, I’ve always held really strong values around environmental issues, and I remain steadfast in my dedication to a deeply sustainable lifestyle.
I really, truly believe that everyday we have the opportunity to vote with our dollars for the future that we want to see. Many of us have the opportunity to make excellent, sustainable choices each day when we choose what to eat, where to shop, how to buy, and how to invest our money. Though I decided to use standard investment modalities and platforms, I was determined to find sustainable investing opportunities that align with my deep green values.
What’s in Your Portfolio – and WHY?
If you’ve worked with regular financial planners, you know they are focused on getting you the best return on your investment (well, if they are good advisors, anyway). But what companies are in your portfolio to garner those consistent returns? Unfortunately, many traditional investments (including some of the ‘green’ or ‘sustainable’ funds) are built around well-performing stocks and funds built around companies that are anything but sustainable.
These well-performing stocks can ensure a more stable financial outlook… for now. If your portfolio contains oil, gas, coal and other dying industries, it’s time to get out: #divestyourinvestment
We are facing a climate crisis – a true climate emergency. Whatever phrasing you choose, it’s happening, and it would be smart if financial advisors took this into consideration. Despite those historically good returns, we are swiftly approaching peak oil. This means that within 5-6 years, global oil production with be cut in half. Sure, I’m a novice investor, but it seems really commonsensical to me – if you know your company stocks are going to be facing huge losses in coming years, don’t you want out… uh, NOW?
Even if you take the view that oil and gas stocks are valuable (and performing well) presently, and that we should invest in oil and gas while we still can, there is still the social justice component of it. We know conclusively (unless you’re a very special type of stupid like the President), that fossil fuels are directly linked to climate change, and we also know that fossil fuels are killing life on the planet as we know it.
In one of my favorite articles ever on this site, the Captain of this Sustainability Ship (aka, President and Director of CleanTechnica), Zachary Shahan, asks simply Why Kill? In this short article, Zachary asks a simple but profound question: why are we still using technologies that we know have negative impacts on air pollution, ecosystem health, and human health? Why are we still driving, shopping, and investing the same way if we know that, quite literally, our lives are at stake?
In another article from The Beam focused on climate justice, the author speaks at length about the bigger picture of what we now call climate justice. “[Climate change] is much more than an environmental issue. Climate change is just as much a social, ethical and a political issue, as well as a human rights issue. [We] need to assume our historical responsibility for climate change and we need people-first solution and policies that prioritize the needs of the most vulnerable.”
If you believe that you can vote with your dollars, then you can take it to the next level and really invest with your values – whatever those might be.
How to Build a Portfolio Based on Better Values
So when starting with sustainable investing, it was obvious that I’m not going to invest in oil and gas. That’s actually pretty easy to avoid – if you do the research. But if you want to take your investment to the next level of truly values-driven, there is a lot more research to be done. There is so much nuance in the so-called sustainable investment firms and green funds. And, of course, ‘green’ is a totally subjective term. My research gave me the opportunity to really question my values – it made me ask if I’m willing to choose financial stability (longer-term) over ecological values (TL:DR: no).
For example, many green funds or gender equity funds offered by platforms I’ve listed below include companies like Coca-Cola or Pepsi. While these companies may meet some sustainability or gender benchmarks, they make money selling unhealthy products produced in in ecologically damaging ways. I disagree strongly with investing in a soda company that creates products linked to the worst health issues of our time. Then there are companies like Facebook, which offer a mediocre service but generally don’t care about humans, and companies like Unilever and Proctor & Gamble, which offer body care products with chemical, animal, and petroleum ingredients. Many of these types of companies find their way onto green funds, but it’s not good enough for me.
And yet, companies that are green and progressive in many ways are deeply flawed in others. Some of the few companies that I have invested in, like Tesla and Apple, have their own issues (like sexual harassment at Tesla, and child labor and personal data issues at Apple). Beyond Meat, which continues to do really well after its recent IPO, has been plagued with pushback from consumers because it’s not healthy or organic enough.
This investment research reminds me of an important mantra from an important person: don’t make the perfect the enemy of the good. Is there any such thing as a perfect company that is 100% aligned with my values about sustainability, gender equity, health, and wellness AND will also fit my low-risk, long-term investment profile? If there is, I’ve not found it yet. And should that company exist, it might not align perfectly with YOUR version of an ideal investment opportunity.
Resources for Sustainable Investing
On the path of my investing project, I’ve tried a lot of different platforms and projects. I thought it would be helpful for other novice investors to share some of the tools and platforms I’ve used to build my portfolio. If you have additional resources for green investment, please share any good ideas you have in the comments. As always, do your own research before investing; these notes below are not an endorsement of the companies, and all opinions/experience is my own.
One of the biggest names in green investing, yes – but I was really disappointed with their offerings. My financial advisor recommended a few green funds, but I realized they had too many incompatible companies, like Pepsi, Proctor & Gamble, and Facebook. Sure, their funds are probably BETTER than others, but I didn’t find a single one that worked for my needs, and I remain uninvested. Do your research beyond the name of the fund to see which companies are included.
Green Century Funds
Another big name in sustainable investing. These funds are better, though I remain uninvested as their funds didn’t fully align with my values. For this one too, you have to do your research and dive really deep.
Natural Investments is a sustainable investment service for high net worth individuals. My friend who works there kindly pointed out that while I don’t qualify for their services (YET!), they have an awesome FREE resource on their site called the Heart Rating. The Natural Investments team has screened hundreds of funds and rated them based on shareholder advocacy, community investment, and overall environmental, social, governance (ESG) ratings. When I started working with a traditional financial advisor, I gave him this list and said that I’d be interested in any 5-heart rated options found here. He found one that his company worked with, and I’ve been been able to put away two years of investment into a Roth IRA.
TD is what I’d consider a ‘traditional’ platform – not focused on sustainable investing – and they have offices in most cities, are online, and have a good mobile app. Though I thought a green firm would be a better fit (see above) I’ve really come to love working with this company. I can call them any time of any day and talk to a human (always a man, FWIW), and get answers to all my questions. I call them frequently, and the team has continuously been helpful and kind. When doing research for investment, you can use their Screeners for research, and there is a Responsible Investment Screen for mutual funds with hundreds of results so that you can help build your Watchlist for stocks and fund.
Ellevest is a women’s-focused investment platform that is designed to help women invest better and sooner to close the gap (ICYMI: yep, there is still a wage gap and an investment gap, too). Founded by the incomparable Sallie Krawcheck, formerly of Bank of America, Ellevest is focused on building a better investment opportunity for women, who have historically been left out of the investment model. They offer social impact and gender impact funds, and have a great customer service team. Despite the gorgeous design, I really disliked using their platform, I had many technical difficulties using it, and wasn’t impressed enough with their social impact fund offerings. Therefore, I decided to move my SEP IRA to a different platform – and even that didn’t work correctly. Even if the platform is super glitchy, their blog is great. Be sure to read their excellent blog (see screenshot at right for some of the great copy). Even though it’s written for women, I bet the menfolk will find some value in learning more about investing through a gendered lens.
There are now a few mobile-focused sustainable investing platforms aimed at millennials (I’m on the cusp, I suppose). COIN is one of this new style of investment platform that’s easy to use and curated based on values-driven investment (it’s backed by John Hancock). I’ve just invested a tiny amount bit here, mostly to test out the platform as a client. So far it seems easy to use and functional. Their investment is done via ‘Impact Areas’ like Climate Action, Gender Equity, Better Health, Clean Water, Cities, and a few more. You can see which companies you’re invested in (sort of) on the dashboard; when I reached out Customer Service, they explained, “Customers’ actual holdings may vary depending on the amount they have invested” and that you have to request the list of holdings. So I don’t really know how much I have invested in each of these companies. I’m not super stoked on this design or many of the holdings, see screenshots below). Their Climate Action Impact Area doesn’t have any renewable energy companies within, which seems like a huge missed opportunity. I have followed up and will be publishing an interview with COIN soon – stay tuned.
Like COIN, Swell was a low-touch, mobile-focused platform that is based around values-driven investment. I reached out to their team multiple times for media comment and customer service, and got a very delayed response from customer service that explained they are an online-only service, and don’t offer a lot of support. Thus, it was not surprising when I checked their site for this article and found they are shutting down as of August 30, 2019.
A Conclusion, Kinda
The conclusion is … that there is no final conclusion. There are so many things to keep learning about in the world of sustainable investment, and so much due diligence on the part of the investor who’s committed to sustainability values. I want to continue writing about this subject here on CleanTechnica – I don’t think it’s covered enough here and I want to encourage all the EV-driving, solar-panel using, wind farm-supporting readers to dive deeper into their own portfolios and see what’s hiding inside.
And also – I’m really excited to hear from you, readers. How do you align your values and your portfolio? What specific choices have you made to improve your portfolio, and which companies and funds do you think are worth our time?