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December 2017

The dirty secret in your investment portfolio

How you invest your savings might just be the single most important determinant of your carbon footprint. 

New research shows your investment portfolio may have more of an impact on your carbon footprint than any other individual action – including having a child.

Chances are you heard about the controversial study released earlier this year that said the greatest impact individuals can have in fighting climate change is to have one less child.¹

According to the study, the next best actions are selling your car, avoiding flights and going vegetarian – actions that many of us commit to routinely in an effort to lessen our footprint and combat climate change, but which pale in comparison to the choice of having one fewer child.

But to the team of advisors at Canadian sustainable investment firm CoPower, the study left out a critical component of an individual’s personal decisions – how we invest our money.

When they dug a little deeper, they were shocked to discover that the average investor does more climate damage with their investment portfolio than they do with all other actions in their daily lives combined.

DirtyPortfolio-CoPower.jpg

Take the example of a married couple, Jamie and Leslie. Jamie is a government employee and Leslie is a doctor. They own a home downtown and consider themselves to be environmentalists. Their latest car purchase was a hybrid, although it doesn’t get that much use since their neighbourhood is walkable. They’ve been reducing their meat consumption and often try to buy local or organic. They take one trip by plane per year. A personal carbon calculator would give them a combined footprint of approximately 23 tonnes per year.²

The total value of their combined investment portfolio is $500,000. The carbon impact of that portfolio: a whopping 46.7 tonnes of CO2** per year, double that of their other personal decisions

And the climate impacts of our investments are not limited to only well-off individuals like Jamie and Leslie. According to CoPower, an investment of just $10,000 in the Toronto Stock Exchange index has an annual carbon footprint of 800 kg CO2** – equivalent to driving 1900 miles in a car, tumble-drying 332 loads of laundry, or eating 264 quarter-pound hamburgers.

Carbon_portfolio_table

“Most people won’t be shocked to learn that their investment portfolios are in part funding oil, gas and other carbon intensive projects, but they will be to learn the extent of the impact those investments are having on the climate,”  – Toby Heaps, CEO of Corporate Knights.

‍The upside of all this is that unlike the major life decision of whether or not to have children (which for many of us might be too late!), factoring climate change into our investment decisions is a powerful and relatively simple way to do better.

“Over the past decade we’ve seen investors become increasingly concerned about how and where their money is invested and the impact of those investments on the climate,” said Patti Dolan, a portfolio manager at Raymond James. “In our own selection process, evaluating the environmental, social  and governance practices of the companies we invest in, as well as their preparedness for climate change has become increasingly important.”

And the good news is, as Dolan notes, there are profits to be made too. “The data shows that considering that impact, positive or negative, in addition to financial metrics actually leads to more educated investment decisions and often improved financial performance.”

By transferring even just a portion of their investments to a fossil-free fund, the average person could shrink their carbon footprint significantly.

And it’s easier than it sounds. To get started:

1. Understand your carbon impact. Tools like Fossil Free Funds help you look up the carbon impact of your mutual fund and Decarbonizer helps you see how your portfolio would perform historically if you removed some of the dirtiest polluters.

2. Learn about impact investing options and take action.  Open Impact is a catalogue of impact investing products.

3. Seek help from a Responsible Investment (RI) Certified Advisor or sustainability consultants to provide trustworthy, credible advice on how to divest.

Notes and References:

1. The initial study referenced, “The climate mitigation gap: education and government recommendations miss the most effective individual actions” was published by researchers at the University of Lund in July 2017.

2. The personal carbon footprint numbers for our couple, Jamie and Leslie were calculated using: http://www.footprintcalculator.org/. Other personal carbon impact numbers were based on the EPA’s GHG calculator.

3. Our example investment portfolio assumes a 50/50 split between two typical funds, the S&P/TSX Composite Index Fund and the MSCI World Index Fund. The carbon impact of this portfolio was calculated by using the Index Carbon Footprint Metrics and using October 27th, 2017’s spot US to CAD exchange rate of 0.78.

4. The carbon impacts of daily actions found throughout this blog and infographic were drawn from the EPA GHG emissions calculator, the Lund study and the Guardian. Specific numbers for the following actions can be found here: drivingburgerstumble-drying laundryan omnivorous diet,flying, having a child, driving a gasoline car.

This article has been reposted with permission by CoPower. If you live in Canada and are considering investing in the clean economy , check out CoPower’s 5-year, 5% Green Bond.

10 Tips to make this year a waste-free holiday season

The holiday season is filled with joy, get-togethers and merriment, but it can also be filled with a whole LOT of waste. According to the EPA, American household waste jumps 25 percent between Thanksgiving and New Year’s Day. Oy.

One of our New Year’s resolutions for 2018 is to cut down on the amount of waste that we create (Lauren from Trash is for Tossers is one of our idols!), and what better way to get a jump start on that goal than by eliminating waste from our holiday celebrations?

Check out these nine tips to not only help you cut down on the waste, but also save you some money, and importantly, time to spend with the people you love. Because that’s the point of the holiday season, right?

1) Give homemade consumables in a returnable or reusable jar. We’re thinking jams, pickles, homemade kombucha etc. The time it takes you to make something for someone you love will be remembered far longer than something you can pick up at a store.

Children at aquarium of La Rochelle

2) Give experiences instead of “stuff”. We think the greatest gifts don’t come in a box. Some of our favourite gifts include memberships to the local aquarium, museum or gym, theater tickets, movie passes, dinner at a local restaurant, a massage — even an e-book (or credit for Audible so they can choose their own.) One of our staff got gifted “Big Magic” by Elizabeth Gilbert as her first ever foray into the world of audiobooks and is now hooked. Think your loved one might want to learn a new skill? Give the gift of a class on cooking, rock climbing, guitar, spinning or crafts. A new skill is the gift that keeps on giving!

3) Cut down waste, not trees. Approximately 33 million live Christmas trees are sold in the U.S every year. Consider a living (potted) tree that can be planted in the backyard when the holidays are over, even asking your local nursery to rent you one. Or, simply decorate a live tree that is already in your yard or porch!

If you do opt for a cut tree, recycle it into mulch, a birdfeeder or even a soil erosion barrier with these tips from the National Christmas Tree Association.

When trimming your tree, make decorations that you or the birds can eat, like strings of cranberry and popcorn. Use LED lights to save energy (they’ll last up to 10 times longer and use 80% less energy), and of course, plug your holiday lights into a power strip so it will be easy to turn them off when not in use. (For more energy-saving holiday tips, check out our “12 Days of Energy Saving” blog.)

4) Give a “vintage” gift. Thinking of giving your kid a bike for the holidays? Consider finding a used one on Craigslist or your local used-item site or thrift shop. We like to label these items “vintage” since it sounds a bit fancier than “used”. Board games, puzzles and sports equipment are often dropped off at thrift shops in nearly perfect condition. Save the harmful effects of new items on the environment, and a couple bucks too!

5) Shop in your attic for zero-waste gifts. Change the way you think of a ‘new’ gift from an item you buy to something that can be simply new to you or a loved one.  Consider giving a gift of history this year. Pass on a piece of jewelry, or a family heirloom that will be cherished by someone else.  Search through your attic to find vintage treasures such as beaded sweaters and antique furniture.  

6) Use no-waste gift packaging. Alternative gift-wrappings let you express your personal creativity while cutting down on waste. Use recycled newspaper, and for extra brownie points, match the newspaper articles and pictures to the recipient’s interests. Got fabric lying around? Try cloth wrappings inspired by the Japanese Furoshiki tradition— a beautiful and sustainable alternative to wrapping paper. Shopping online? Request minimal packaging – many sellers are happy to oblige!

7) Cut down on food waste this holiday season

  • Fancy yourself an indoor composter? Repurpose a yogurt container, or check out the Sure-Close kitchen container.  
  • Help family and friends use up all of their leftovers by giving a copy of Suzy Bowler’s The Leftovers Handbook. With 34 recipes for using leftover bacon, who can resist?
  • Gift store credit on surplus food apps like PareUp (NYC) and Feedback (in Canada).
  • Adjust your grocery shopping during the holidays. If you attend more events or tend to have leftovers from your own festivities, buy less.  Freeze some of your leftovers right after an event to enjoy them later.  Keep a food journal this holiday season to plan your food strategy for next season.

8) Let friends and family know about our zero waste efforts. (share this blog on your Facebook page if you’re not keen on the face-to-face conversation?), so they know not to give gifts with lots of packaging or items that are not compostable at best or recyclable at worst (i.e, plastics).

9. Throw a re-gift party after the holidays. Once the holiday craze slows down, invite your friends over for a re-gift party — to make sure some of the gifts you and your guests receive will end up in appreciative hands. Who knows, you might find something really useful yourself! Check out this post describing a regift party from the team at WeHateToWaste for ideas.

10. Give to your community.  Look for opportunities to volunteer as a family with those less fortunate. It can be a fun family activity to help prepare and distribute meals or clothing and a great reminder of how fortunate we all are.  For our head of product, it also tends to trigger a pre new years “kon mari” effort to identify items that aren’t need and can be donated to shelters.

Want more zero-waste lifestyle tips like these? Head over to wehatetowaste.com where some of our favourite ideas for this post came from.

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