Climate Change has been called one of the most economically impactful events in human history. Increasingly people want to direct their investments into climate solutions.
Companies are reporting on so-called ESGs (Environmental, Social and Governance) but for James Regulinksi this just wasn’t enough.
“We started digging into some of these ESG funds and other things that were available, and we just couldn’t make heads or tail of how it would make a difference to invest in them,” says Regulinski.
So along with partner Zach Stein, they co-founded the Carbon Collective an online investment advisory firm based in Seattle, Washington.
“We are moving forward the energy transition by filling the funding gap between where we are currently investing in a clean economy and where we need to be investing to avert a climate disaster,” says Regulinski.
“The Genesis of Carbon Collective came out of two issues that we found: One was how do we meaningfully solve climate change? And my co-founder and I had just finished reading Project Drawdown, which lays out how using technologies that exist today…we would get to a point where we’re pulling more CO2 out of the air, then we’re releasing,” says Regulinski.
Solving Climate Change Needs $5 Billion Investment
“Climate change is a solvable problem,” says Zach Stein, co-founder of Carbon Collective. “We have the technological innovation at hand, but an annual investment of $5 trillion is needed to make real change.
To evaluate a company’s actions on climate change the “Carbon Collective analyzed more than 400 publicly-traded U.S. exchange-listed companies for consideration, with 169 equities making it into the 2022 Climate Index.”
Carbon Collective is a registered investment advisor based in the U.S. and they have set up two portfolios focused on positive climate actions.
They’ve set up one low carbon portfolio that is more conservative and has “a 70% overlap with the general market.”
Then there is the Climate Only portfolio which is just climate solution companies in green bonds. “It has a lot more volatility in it, which is what we’d expect from a fund that only has 169 companies.” It also investors to maximize their impact with high risk and potentially higher rewards.
Carbon Collective launched in late 2020 and Regulinski says they are fairly small with “tens of millions in investments” but they are busy launching new products hoping this idea will catch on.
In time Carbon Collective will also engage in shareholder advocacy to push for increased action on climate change. Regulinski says they are interested in companies “reporting on climate goals, emissions reduction plans, and science-based targets.”
“What we want to be doing in the future is also bringing some of those shareholder resolutions to the table,” says Regulinski. “We would be really excited to see executive compensation tied to their climate action goals and stop having it just be the price of the share.”
“We get a lot of interest from Canadians,” says Regulinski, but alas Carbon Collective is registered only in the U.S. and they would have to navigate a completely different regulatory system to operate in Canada.
It certainly gets you thinking about your investments as you pour over their 2022 Climate Index of companies.
