What is Sustainably Conscience Divestment?
Each of the nine major mutual fund organizations invests in around 10% of their money in fossil fuels. Now, that may not seem like much, but when funds like Blackstone handle over $1 trillion in investments, the small percentage adds up. Sustainably conscience divestment is a movement to promote citizens and organizations to remove their money from funds or bonds that invest in fields that cause harm to the environment and society, not limited to just fossil fuels. Other industries that the movement takes aim at are the tobacco industry and the gun industry. Divestment is a significant construct in the ever more monetized world. The idea is to use your money as an extension of your vote by choosing where your hard earned cash is invested.
One of the main arguments for divesting from fossil fuels and other environmentally harmful industries is that it will stem the tide of climate change by hitting them where it hurts - the financial bottom line. The movement for divesting from fossil fuels originated on college campuses in 2011 when students at Harvard and Columbia called for their universities to take money away from the schools' endowments that were in large oil companies. This was largely successful and spread around the globe to about 30 different nations. The fundamental idea of divestment is what the Smith School of Enterprise and Environment of Oxford University describes as "materially increas[ing] the uncertainty surrounding the future cash flows of fossil-fuel companies."
How to Divest?
You can divest your own funds within your 401(k) and other investments. As mentioned previously, it is foundational to invest your money wisely and put it in industries that you care about. Here are a few additional articles that do a great job walking you through the details of how to divest your own personal funds:
How to divest your 401K from fossil fuels [Medium Corporation] - Walkthrough of someone going through the process of divesting their funds.
How to Divest from Fossil Fuels [Social Venture Network] - Identifying what you own and reinvesting in climate solutions walkthrough.
How to Divest [Go Fossil Free] - One of the main organization force behind divesting.
How to Divest your Bank Account from Fossil Fuels [The Gardian] - Great article with some background on divestments and how to divest your bank account.
There are two forms of environmentally conscience investing, socially responsible investing and impact investing.
Socially responsible investing fund managers tend to be passive and take more of a 'do no harm' track where impact investing funds go beyond just working to create a positive impact, they measure and report their impact in a transparent way.
Impact investment, as defined by GIIN, are “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return”.
Why invest for impact?
You might be thinking to yourself that positive practice for donations and investments are only for the extremely wealthy. That used to be the case but is no longer true. If you have investments, that money is having an impact. We just need to make sure it's having a positive one and that your investments aligned with your values. No matter how much you make, there are services and organizations that allow anyone to delve into impact investing.
So how do I do it?
Making the shift to 100% impact does not have to be overnight. Jacobsen, co-founder of private equity firm Dolphin Capital and impact investment platform Gratitude Rail says it well: “We all matter in the impact space. It’s like standing on the ground floor of a skyscraper looking up. Just take the first step. Choose to dine at the minority-owned local restaurant. Sell your tobacco stock. Invest in a company whose mission you believe in. The journey to 100% impact begins by understanding that every dollar you touch has an impact."
Have a Financial Advisor? If you do, reach out to them to start the discussion.
Want to dip your toe in risk-free? If you're more hands-on but just want to just dip your toe in (with zero risks btw.) we recommend you put together a virtual portfolio of impact companies with a tool like MarketWatch’s Mockfolio. That way you get to experiment with potential options and combinations and track how they perform over time.
(Our favorite) Jump right in! Just like everything else we do, we recommend just starting. Which is why we really like Swell. With just $50, you can start to invest for impact and learning as you go. The platform makes it really easy to get going and allows you to choose what percentage of the money you’d like to allocate across six different portfolios: green technology, renewable energy, zero waste, clean water, healthy living and disease eradication. Each portfolio contains approximately 50-60 companies that derive their income from their cause.
Have experience in impact investing? Have something you could add to the discussion and our guide? We want to hear from you!
Email us at Grove@Sekoyia.com
Here is a list of additional resources we found to be useful in learning more about impact investing:
Global Impact Investing Network - A database of over 400 sustainable companies that you can invest stock.
Impact Investing can be for everyone - The Balance
My Journey to 100% Impact Investing - Real Leaders
Short Guide to Impact Investing - Case Foundation
Where to Invest - Vox, 10 ways to accelerate progress against climate change
Acorn Investing is a simple to use app that allows anyone to invest any way they like. The company asks for a fee each month and their employees will invest for you so you do not have to be a financial analyst to make profits. On top of the monthly fee of your choosing, the app will round off small purchases from your debit card and put that money into your investment portfolio. For example, if you spend $2.64 at a convenience store, 36 cents will go to your portfolio for investment. The app gives you the option of how risky you want to be with your money. It also gives you the capability to make an impact on investing a fundamental piece of your portfolio.