Your golden years could be greener
...let's talk 401(k)s, and announcing our upcoming #AMA w/ Carbon Collective's cofounder!
👋 16 new community members!
📖 4 min read time
Retirement may seem like a distant future, but climate change is happening now. Let’s talk about what we can do about 401(k)s in the meantime.
🛜 CIC Slack news: #AMA with Carbon Collective’s Zach Stein
We’re hosting an asynchronous #AMA (Ask Me Anything) with Carbon Collective’s cofounder 🎉
Where: Climate Investing Club slack, #AMA channel
When: July 13th/14th (post your questions on 07/13, Alex will answer them the afternoon of 07/14)
Learn more: Check out this podcast or read the article below to learn more about Zach’s work
Save the date: Click here to add a reminder to your calendar!
Retirement plans get a climate makeover
Approximately $40+ trillion dollars are currently parked in US-based retirement assets, with $10+ trillion of that in defined contribution plans like 401(k)s and 403(b)s. That’s a lot of money, some major portion of which is invested across the market in broadly indexed funds, which contain shares of oil & gas.
Recent fossil fuel divestment campaigns have persuaded noteworthy institutions (universities, foundations, etc) to divest their endowments. However, retirement plans remain largely untouched despite their outsized influence.
On an individual level, our readers are often concerned about this, and come to us with questions like:
How can I figure out which companies are owned by funds in my retirement plan?
How can I get my retirement plan to consider climate?
These are the questions that a new crop of companies and organizations seek to address, and today we’ll explore what they offer.
Diagnosing the fossil-fuel investing problem: As You Sow
Usually, when you start a new job, you gain access to a retirement plan that’s put together by your employer. After signing up, you get to decide how to allocate future contributions to your plan.
This is a stressful moment — depending on the plan, you may see a list of 15-30 funds to choose from, with little indication of how climate-friendly they are.
As You Sow, a non-profit and advocate for shareholder engagement on climate action, recently launched two campaigns to help with this problem: Invest Your Values and Fossil Free Funds. These campaigns are critical first steps towards greener retirement plans. They provide visibility into hundreds of company retirement plans as well as climate-friendly ratings for mutual funds and ETFs.
These are great tools to consider using the next time you start a new plan or reallocate your current one!
Other orgs doing similar great work: CDP, Make My Money Matter (UK), iClima
A climate-friendly option for any retirement plan: Sphere
It’s entirely likely that none of the available options in your current plan’s funds list are climate-friendly. Alex Wright-Gladstein experienced this exact problem firsthand.
She founded Sphere after struggling to add climate-friendly options to her previous startup’s 401(k) plan. It turns out that most climate-friendly funds are ETFs, which typically aren’t included in retirement plans for various reasons.
That’s why Sphere developed the Sphere 500 Climate Fund (SPFFX) — it’s structured as a mutual fund so that any retirement plan provider can easily add it as an option. The fund tracks the top 500 US companies (by capitalization) but excludes fossil fuel companies, and uses investors’ shares to vote for climate action.
And to help you avoid the problems that Alex had, Sphere has a step-by-step guide that walks you through the process to request the addition of SPFFX or other climate-friendly funds to your employer’s 401(k) offerings.
Other orgs doing similar great work: Engine No. 1
Building a new kind of retirement platform: Carbon Collective
Carbon Collective, cofounded by next week’s #AMA guest, takes this concept a step further.
Like Sphere, they’ve created a climate-friendly fund that use investors’ shares to vote for climate action. But they’re also building a climate-friendly 401(k) platform for employers.
What’s this mean for you? The next time that you start a new job, the retirement plan you sign up for might provide *exclusively climate-friendly options!* And it’s worth noting that you can already roll over an existing 401(k) plan to their platform.
Other orgs doing similar great work: Arnie, Inyova (Europe), CIRCA5000 (UK)
Who else is innovating?
Our heads are spinning as we try to keep track of all the projects that aim to mobilize employers/employees to rebuild retirement plans to be climate-friendly. So what did we miss? Let us know in the comments below.
📈 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, DYOR.
Harvest Today ($15.15M pre-money valuation, common units): Patented scalable systems to revolutionize indoor food production
Oxydus (terms TBD…): Patented tech that could decentralize water distribution & solve a water crisis
New climate investing/finance podcasts
Invested in Climate: #59, Carbon Collective
Rethink Energy #144
👇 see you in the comments section👇
What’re you investing in this week? Let the community know below.