Is owning Tesla stock considered climate impact investing?
...and new ways to invest in climate!
👋 welcome - 28 new community members!
📖 read time - 5 min
Over the past 3+ months, Intention has conducted dozens of interviews with potential customers and investors. Our favorite question to ask is “how do you currently invest in climate impact?” More often than not, the reply we receive is something along the lines of “I own Tesla stock. Does that count?”
🚗 Tesla stock (TSLA): it doesn’t count!
From our vantage point, the answer is that TSLA, the original climate unicorn, is not currently an impact investment (and that’s okay!) Below are the characteristics that make an impact investment. Let’s see if TSLA qualifies using a simplified climate impact checklist:
Intentionality: Investor designs and implements investments with the explicit intention of enabling impact.
✅ This qualifies if purchasing TSLA with the explicit intent of impact.
Measurement: Measurement to ensure that impact is actually achieved.
❌ It’s extremely difficult to measure if purchasing stock in a public company generates impact. TSLA doesn’t provide this info.
Returns: Financial performance is still expected.
✅ Impact investing and financial gains aren’t exclusive. Historically, TSLA shareholders have been rewarded.
Additionality: Investment provides additional resources for a company’s deployment that it wouldn’t otherwise have at its disposal.
❌ When purchasing TSLA stock, your money doesn’t go to the company, it goes to someone just like you on the secondary market. This is called secondary issuance, it’s how most people invest, via a stock exchange.
Impact analysis result (2/4): not impact ❌
It’s likely that *buying* a Tesla has more impact thanks to avoided emissions and the added demand signal triggered by your vehicle purchase. However, it’s perfectly fine to own shares of TSLA! The company itself is wildly impactful via its electric vehicles, battery/supply chain innovation and human capital effects. Therefore, owning Tesla stock may be values-aligned but calling it impact is too big a stretch. This distinction probably seems trivial to an average investor — however, it’s anything but trivial for those trying to maximize their impact on future climate action.
We’re much more confident in impact derived from investing directly in a company, which is called primary issuance. In this case, the company is the direct recipient of your investment, which gives them the resources necessary to undertake work that wouldn’t otherwise be performed. Examples of primary issuance are VC, angel investing, debt financing and more.
It’s worth noting that Tesla was once an amazing impact opportunity when it was a startup! Remember, the prospect of a profitable EV business was practically unthinkable two decades ago. Elon Musk famously invested $6.5 million dollars early in the company’s tenure, and in spring 2009, the US Department of Energy provided a struggling Tesla with a $465 million loan, which helped it bring EVs to market 5-10 years early and IPO to become one of the first climate unicorns ever.
There are many ways to generate impact, but buying stock post-IPO is rarely one of them. Do you think owning TSLA stock is a form of impact investing? Let us know in the comments 👇👇👇
🌲 Climate startups outpacing the overall market?
This image from a recent McKinsey report has been making the rounds lately. We’re happy to see that the market values climate-related companies but we shouldn’t be too surprised given the massive incentives promised by European and US governments.
📈 New ways to invest in climate
What’s new since last week’s newsletter. Disclaimers: selection based on company description but impact not assessed. Not investing advice.
LPP Fusion ($67.92M pre-money valuation, SAFE): developing a new energy source, modeled on fusion energy that powers our Sun.
NextPower360 Co. ($6M valuation, common stock): creating one of the world’s most advanced wind generators and electric motors.
Tau Lotus ($38.44M valuation, common stock): developing electric motorcycles for a more human future.
Pure Culture Beauty ($7.5M valuation, SAFE): tech-enabled personalized skincare — clean, vegan + sustainable.
New climate investing/finance podcasts
👇 see you in the comments section👇
What’re you investing in this week? Do you think owning TSLA stock is a form of impact investing? Let the community know below.