Break Up With Fossil Fuels

How to invest sustainably and divest effectively

Breaking up is hard to do.

That’s true of the relationship we’re all in with fossil fuels.

It’s an unhealthy relationship, but we’ve relied on fossil fuels for years. They support our way of life. Fossil fuels are familiar to us, and they provide us familiar benefits. It’s easier to stay with them.

Or is it?

Starting the breakup

Maybe you’ve already started to break up with fossil fuels. Maybe you’ve signed up for clean wind power for your home, or put solar panels on your roof, or bought an electric car.

Those are the kinds of actions we help people with every day at MyDomino — and they’re important actions to take.

But if you’ve done those — even if you’ve gotten to 100% clean energy in your home — does it mean you’ve really broken up? What about your investment dollars?

We explored this question at an informative panel event at the MyDomino office. Experts in divesting from fossil fuels and investing sustainably gave us tips on what we can all do with our investment dollars — even if we don’t have a lot of dollars.

Divesting from fossil fuels

You may want to start by ensuring your money is not supporting fossil fuels.

Sandy Emerson, head of the individual divestment campaign for Fossil Free California, noted that divestment is a powerful part of your toolkit.

Wondering what impact you can make by divesting? Over 600 institutions and over 60,000 individuals have taken a pledge to divest, with total assets of $5 trillion.

That has a real impact on companies. When enough people participate, boycotts and divestment work. Sandy gave the example of Peabody Coal, which called out the divestment movement in their bankruptcy filing as one of the factors that had brought down their value.

John Katovich, Founder of Cutting Edge Capital, added that a movement against Monsanto led to their shares dropping in price, which led to Bayer buying them — and that will likely mean a check on Monsanto’s activities.

Investing in sustainable funds

To make the most impact by divesting, it’s also a good idea to invest your money sustainably. John calls this “the push to the pull of divestment.”

What do you push your funds into? Dale Wannen, President of Sustainvest Asset Management, helps people with that at his fee-only investment advisory firm. Clients come to him, he said, because they see they have investments they don’t feel good about. He encourages them to not only move their money into sustainable funds and consider impact investing, but also engage in shareholder activism, which you can take part in if you own a small amount of shares.

If you think you won’t make as much money in sustainable investments, think again. Or as Dale put it, “That’s complete BS.”

Many sustainable funds, said Dale, are doing as well as a Vanguard or similar fund. What makes them sustainable? They’re all screened for fossil fuels, and may also consider many more criteria, depending on the fund family. If you run across the term ESG when looking at these funds, that stands for environmental, social, and corporate governance.

Investing in your community

Another way to invest sustainably is one most people haven’t heard of. Cutting Edge Capital connects people with companies in their communities. They’ve especially become known for the direct public offering, John said, which gives all of us — not just accredited investors, aka wealthy people — the opportunity to invest in something other than a traditional investment. Depending on the company, you may be able to invest with as little as $50.

To do this, people have to know what’s available to invest in. Most of us don’t even think about investing in a company that may be two blocks from us but isn’t listed on the stock market. Some people think it’s not possible. But it’s perfectly legal, said John, as long as you follow certain rules.

What’s the significance of this kind of investment opportunity? It lets people invest in their community, and in something that’s meaningful to them. For those wondering if these investments are risky, John noted that “a parent doesn’t think about investing in their child’s education in terms of risk.”

This is clearly a different kind of investment from what we’re used to. Until it gains legitimacy and builds a track record, for most people, John would suggest moving 5% of their funds into this type of investment.

Taking the breakup all the way

Dale’s message for us: We’ve been stuck in our ways, but we have many more options now than we did 30 years ago. We can all make a difference with our dollars.

John suggested we all ask ourselves a “simple but complicated” question: “What is money? What does money mean to you, and what does it mean to invest it?” Many of us are very disconnected from what our money is doing in the world, he said. Instead, we can think about what impact we want to make with it.

If you’re ready to make an impact, here are some things you can do:

  • Divest: Check out the resources at Fossil Free California and at Divest Invest, advised Sandy. Fossil Free Funds provides a platform where you can enter a ticker symbol or company name and add fossil fuel screens of your choice, to find funds that have been screened for all kinds of criteria.
  • Invest your 401(k) sustainably: Sandy also suggested that we all pressure our employers to offer a low-carbon fund. Many employees are doing this now. Divest Invest even has a petition to encourage employers. And now, Sandy said, even big fund families like TIAA-CREF have good fossil-free 401(k) funds.
  • Invest in sustainable funds: The Clean 200, said Sandy, shows you individual stocks you can invest in. And of course, you can go to a company like Dale’s to have someone manage your sustainable funds for you.
  • Invest in your community: Cutting Edge Capital and CuttingEdgeX both have resources on companies you can invest in.
  • Bank sustainably: Dale suggested avoiding banks like B of A and Wells-Fargo, and checking out credit unions.

Dale encouraged us to start with little steps. That’s what we’re all about at MyDomino: the small steps we can all take that add up to very big impacts.

Why not start now?