I’ve got a couple of reflective kids that often feel defeated by what seems to be a lack of means to bring change to areas of the world that need it. Some problems are so large that our efforts don’t seem to have much of an impact. Through investing in companies that have been screened using ESG criteria, climate related issues can be influenced.
The latest UN report on climate change was recently released with some dire warnings. Here’s a couple of statements from the report:
“Global surface temperature will continue to increase until at least the mid-century under all emissions scenarios considered.”
“Evidence of observed changes in extremes such as heatwaves, heavy precipitation, droughts, and tropical cyclones, and, in particular, their attribution to human influence, has strengthened since the Fifth Assessment Report.”
So, back to trying to answer my kids’ question of what can be done. This is an investment blog so, I’m not going to attempt to critique government policy or talk about climate science.
One very tangible way to influence change is through the power of the dollar.
We’ve seen incredible growth over the past decade in SRI, not only in the investment offerings available, but more so in the increase of invested capital which is very exciting to see.
Investing in companies that are actively working to reduce negative effects and improve their practices is a very tangible way of making an impact in this area. Positioning a portfolio which is directed towards these types of companies should make a positive impact on climate issues, while keeping you on track towards your own financial goals.
Although there are several sectors that are the main culprits of climate change due to greenhouse gas emissions in the United States (such as transportation, electricity, industry, real estate, and agriculture and represented in this chart), there are also dozens of solid companies in each of these areas that are not only working on ways to address climate related issues but are also turning a profit and provide the potential for strong returns for investors!
Jack Schniepp is a CERTIFIED FINANCIAL PLANNER™ (CFP®, ChFC®), financial advisor and the owner of Cascade Financial Strategies. CFS is a registered investment advisor licensed in Oregon, California, Washington, Arizona and Idaho. They specialize in socially responsible investing which integrates environmental, social, and corporate governance (ESG) criteria into portfolio construction.