Environmentally responsible personal finance: What is it?
Emma Athena |
Environmentally responsible personal finance: What is it?
Where you store and how you invest your money has an environmental impact (surprise!), here’s how to “invest your values”.Around here, we talk about gear all day long—used gear, specifically. Because not only do we enjoy saving money, but we prioritize saving the planet from all the waste generated by new outdoor gear and clothing. The carbon footprint of it all is just not justifiable when there’s perfectly good UnNew gear sitting unused in someone’s closet when it could be out adventuring with you. And while we busily work to help people sidestep the cost (to ourselves and the planet) of new stuff, we think hard about the power we consumers have to vote with our dollars to support a more sustainable economy. We got to thinking: not only do we need to spend deliberately, but we need to look at our entire personal finance situations with an eye for sustainability too.
What we support by the way we spend—and save, and invest.
Money. We all have it; we all need it; and yet, it can be hard to talk about. Among many things, the pandemic made clear there’s a savings crisis among most Americans. Before the pandemic, 2019 data from the Federal Reserve (the last data available) showed the median bank balances of white Americans was $8,200; for Hispanic Americans: $1,950; and for Black Americans: $1,150; and for the category “Others:” $5,000. This is to say, storing money and investing isn’t a reality for many Americans; so, if you are in a position to store and invest money, consider doing so in a way that helps the greater good: sustainable investments that prioritize good environmental, social, and governance principles. There are many ways to invest and store money. You can store money in a bank and/or through investment accounts. You can manage your money yourself, or pay small fees for other people (or an institution) to manage your money for you. When you invest, you purchase part of a larger financial institution (stock in a company, bonds from the government, real estate, etc.) and then share in either the appreciation (growth) or depreciation (shrinkage) of that institution. You’re essentially feeding money to help said financial institution, so where you invest matters. If you or your investment accounts managers are investing in fossil fuel companies, for example, you’re supporting the industry. We won’t go through all the details on how to get started on investing in general in this post (plentyofgoodwebsitescanhelpyouwiththat); we’ll detail how to begin researching and approaching sustainable investing—that is, how to figure out where and how your money is being used while it’s invested—and some recommendations on banks and investment platforms to begin your research.
First, some good news: Institutional Divestment
Before we get into individual actions for how to save money in an environmentally sound way and navigate ESG funds (funds that score high in environmental, social, governance principles), it’s worth remembering that corporations play an outsized role in climate change and should therefore stay centered in conversations about climate solutions.Some good news: In the last few years, more and more investors have divested from fossil fuel investments. In September 2021, for example, Harvard University joined 1,300 other schools and institutions (including foundations, pension funds, institutional investors, and others) in announcing the University would end all investments in fossil fuels. To divest is to sell off or dispossess someone of something; as the website, Fossil Free defines it: “Divestment is the opposite of an investment – it simply means getting rid of stocks, bonds, or investment funds that are unethical or morally ambiguous.”Divestment has become a tool used by the environmental movement to help accelerate the renewable energy translation by giving fossil fuel investments the boot. The idea is not so much to financially handicap fossil fuel companies by reducing investments (as of yet, there have always been more people willing to fill in the investment vacancies and capitalize on its finances), but more so to add a public stigma to the fossil fuel industry and elevate renewable energy investments as a more responsible option. There is far more work to do in this realm, so continue adding pressure on institutions to consider and evaluate how and where they invest the large sums of money that few individuals have.
So, what can you do yourself, as an individual?
Start with your bank.
Do you know what your bank is investing in? Banks finance projects like oil pipelines, fracking operations, inefficient transport methods, and much, much more. Environmental activists have consistently been clamoring for banks to divest themselves of projects that contribute to climate change. Do research on what values your bank stands on. Certain banks like Aspiration (which environmental activist Pattie Gonia uses) were created to specifically address the need for easy, transparent “clean savings.” As their site reads: “Your savings and debit card purchases will never be used to fund the oil or coal industries.” In addition, Aspiration has a program that plants a tree every time you use their card. Use existing certifications to vet your bank and/or redirect your money. Is your bank a B-Corp? Here’s a list from The Good Trade that shares 7 “certified B Corps focusing on the triple bottom line: people, planet, and profit.”
Use online scorecards/databases to evaluate your current investments.
If you already invest (in a retirement fund, via an independent portfolio, or use an asset management company to invest your money for you), inquire and vet how and where they are channeling your investments. “In order to know if you’re investing sustainably, you have to know what you own. Finding out what retirement plans and mutual funds are investing in is not obvious, but you can get some info on them with a few steps,” state the website “As You Sow,” a non-profit leader in U.S. shareholder advocacy. These free online tools can show you exactly what companies are embedded in your funds and which funds are aligned with your values:
Weapon Free Funds shows how your money is invested in weapons of war.
Tobacco-Free Funds shows tobacco companies and those promoting tobacco to kids.
Prison Free Funds shows investments in companies involved in the prison industrial complex through mass incarceration and the criminalization of immigration.
If you’re looking to invest for the first time or ready to switch, look for investment and asset management corporations with explicit environmental focus and value systems.
By no means is this a comprehensive list, but here are some good starting points for exploring the different ways in which you can employ your personal finances for good without having to manage all your money yourself.
Here’s another list from The Good Trade that details 5 socially responsible investment platforms that are “easy, automated, transparent, and customizable so you can invest your money in green tech, renewable energy, clean water, and more.”
The investment management company BlackRock is “committed to helping more and more people experience financial well-being, and we believe the transition to a net-zero economy by 2050 is a big part of that ambition. That’s why we’re dedicated to advancing climate innovation, research, and analytics–to help our clients invest sustainably and build a net-zero economy that serves us all.” They published useful guides on “Understanding climate-focused investing” and “Exploring different approaches to sustainable investing.”
Filter your investments through Vanguard’s “ESG line-up.” “Most of our funds are indexed and follow an exclusionary strategy that omits companies that don't meet certain ESG criteria.”
Morningstar, a financial services company, publishes investment approaches that use environmental, social, and corporate governance as guiding criteria. They also debunk common investment greenwashing techniques.
As a consumer, you have so much more power than you may have ever realized. What you buy, what you don’t … what you spend, what you don’t … where you stash your money, and where you say no thanks…. It all adds up to impact. We at Geartrade are deeply passionate about the power of everyday people to not only rethink old models but to put new ones into action. If consumers insist, the systems will follow.
Emma Athena is an award-winning journalist and fresh-air lover. She writes about adventure and the environment, where humans and nature intersect at their most impactful moments. When she’s not glued to her keyboard or curled up with a book, she’s running in the mountains with her dog or camping with people she loves. To read more of her work and get in contact, visit emmaathena.com.
It is now easier than ever to sell your gear on Geartrade. With our new Consignment Selling option you can finally reclaim your gear closet.Send it in. We take care of the rest.
Emma Athena is an award-winning journalist and fresh-air lover. She writes about adventure and the environment, where humans and nature intersect at their most impactful moments. When she’s not glued to her keyboard or curled up with a book, she’s running in the mountains with her dog or camping with people she loves. To read more of her work and get in contact, visit emmaathena.com.