I posted this on !climate@slrpnk.net a few months ago, but figured I'd repost it here, as I think it fits better.
Original Post:
I was debating posting this here, since, ya know... Investing isn't very punk.
However, Climate Town recently did a fantastic video detailing how banks use our money just sitting around in our account to invest in fossil fuels.
Wanting to avoid this, I figured it'd be better to direct any unused money in an investment that's at least a little less planet destroying, which lead me down this ecological rabbit hole that I thought might be worth sharing.
The most powerful/useful thing I found in this regard was Fossilfreefunds.org, which allows you see exactly how much of an index or mutual fund is invested in not only fossil fuels, but also insurance companies and banks that support the fossil fuel industry.
I know there's a lot of controversy around ESG funds as greenwashing, and after checking a lot of common index funds and money markets with this fund checker, that controversy is unfortunately pretty well-earned. Most of them are still heavily invested in fossil fuels, or industries and banks that support fossil fuels.
However, there are a few funds that really do seem to divest from fossil fuels. Unfortunately most index funds will often still be invested in unethical companies like Amazon and Google, but it's nearly impossible to truly ethically invest unless you pick individual companies, which if done in isolation is probably a recipe to lose a good chunk of your money. So I settled for at least doing better, even if it's not perfect.
I also want to note that most ESG funds tend to have pretty damn high expense ratios (the yearly fee you'll pay on your investment for them to 'manage' it), though I have found a couple that buck that trend.
The most promising fund that has a low expense ratio that was the Sphere 500 Climate Fund, which is basically a copy of the S&P 500 minus all fossil fuel investments. The only downside with it is that it's fairly limited on what investment brokers host it, with the main one being Vanguard. It has an expense ratio of 0.07%.
The other low-cost option was Vanguard's ESGV ETF, which unlike every other mainstream Total US Stock Market ESG Index from Fidelity, Shwab, or Blackrock, actually does seem to limit their fossil fuel investments. It's not perfect, as a small percentage of the portfolio is still invested in the fossil fuel industry, but it's significantly better than its peers, which gets it consideration from me, purely due to its low expense ratio and the fact that it's an ETF, so you can get it from any brokerage. It has an expense ratio of 0.09%.
Vanguard also has an ESG Total International Market Index fund (for those of you who follow the Boglehead 3-fund strategy), VSGX, with an expense ration of 0.12%.
Alternatively, if you're willing to accept a higher expense ratio (0.91%) to divest from ALL fossil fuels, the Amana Mutual Fund seems like a decent one. It has a solid performance track record, and I believe (though I may be wrong!) this is equivalent to a Total Stock Market Index Fund.
Anyway, I hope some of you found that website useful! If you have any other suggestions on climate friendy-er money management, I'd be interested to hear it. :)
I really wish there was a free robo adviser that would take these types of things into account. List a bunch of filters for environment and ethical sourcing and such.
That would be nice, maybe something with different weights so you can focus on whatever concerns you the most. I'm not sure we'll ever see something like that from the mainstream brokers. Maybe a small independent one will pop up someday that'll focus purely on ecological investing (Though I wish I didn't have to bother with any of this at all).
Even without personalization, I would be happy if a good AI machine accurately exposed the perversions of ESG’s shitty ratings by digging up dirt on the highly rated orgs. People actually trust those ESG scores.