Last week, the Environmental Protection Agency announced a framework for a complete overhaul of pollution regulations on coal-burning power plants. These regulations, which come just weeks after a proposal to freeze anti-pollution and fuel efficiency standards for cars, is a considerable rollback of Obama’s Clean Power Plan and fulfills a major campaign promise made by the current administration in states like West Virginia and Pennsylvania. The “Affordable Clean Energy Rule,” which seems like a misnomer, would result in roughly 1,400 more deaths by 2030 and an additional 15,000 cases of upper respiratory issues according to the analysis done by the U.S. Environmental Protection Agency.
The rule would allow individual states to dictate their emission standards and even restricts the ability of states to come up with alternatives to coal-powered energy. Given the void in leadership on environmental issues in the federal government, it’s no wonder that individuals and businesses are using their investment portfolios and their power as shareholders to keep making progress on the fight against climate change.
For years, Amalgamated Investment Services has offered access to Socially Responsible Investing options that help clients invest both in their financial futures and also in the greater good. Environmental, social and governance (ESG) strategies have long been the hallmark of our program, and, recently, we’ve witnessed an uptick in clients seeking assurances that their portfolios do not include investments in any of the businesses that comprise the fossil fuel industry. While the fossil fuel divestment movement has been gaining steam for several years now, we’re proud to offer access to what we believe to be the first standalone investment portfolios for consumers that are totally divested from fossil fuels. Previously, environmentally-conscious investors had to shop around to different fund managers, which made it challenging to build a truly diversified portfolio. Many of the available options required investors to open accounts directly with the fund manager, a process that would not permit an investor to put all of his or her fossil free investments under one roof, and thus require them to manually rebalance their portfolios to maintain a risk profile in line with their investment objectives.
As a bank that puts an emphasis on lending to sustainable businesses and environmental organizations, it only made sense to offer consumers access to an investment tool that affords them the opportunity to reduce their carbon footprint. So with Infinex, we launched Aria, a suite of completely fossil fuel free investment products and one-stop solution for environmentally conscious investors. By utilizing Fossil Free Fund’s screening tool, we were able to narrow down to a Socially Responsible Investment universe in which coal, oil, gas and fossil-fired utilities industries were excluded while other social responsibility screens were added. From this list, three risk-based models were developed and we offered access to these models broadly.* Institutional share classes are used where possible, resulting in lower fees than what an individual retail investor might incur on his or her own. For those investors looking to build a cleaner and greener future, Aria may be the answer.
What we do as individuals is very important, but given the scale of the challenge presented by climate change, we know it’s not enough.
The good news is that in the face of these rollbacks by the federal government, it’s not only individuals who have taken reducing emissions into their own hands; businesses have stepped up as well. One way we are doing this is by working with other corporate leaders, through shareholder engagement, to set long-term climate goals. Last year, Amalgamated completed work with Carmax that resulted in the company agreeing to conduct a greenhouse gas emissions inventory and prepare a feasibility report on their ability to achieve net-zero operations. This year, after putting together the study, Carmax agreed to reduce energy consumption contributing to greenhouse gas emissions, expand the use of renewable energy and invest in carbon offsets in an effort to hit full net-zero by 2030. It’s these types of innovative approaches to tackling climate change that will help move the needle despite a lack of action on the part of the federal government.
As time marches on, we grow closer and closer to a real climate crisis, and yet, some are trying to turn back the clock when it comes to sustainable policies and safeguards. Individuals, local governments and businesses, motivated partly by the reality of the situation but also by the sense that if they don’t act, no one will, are thankfully taking matters into their own hands. It is encouraging to see financial institutions respond to calls for environmentally conscious investment options and it is our hope they continue to innovate for a greater, and greener, impact.
* Investors should be aware that a lack of diversification within a portfolio may limit returns.
*All information and data on this blog site is for informational purposes only. No representations as to accuracy, completeness, suitability, or validity, of any information is being made. All information is provided AS IS with no warranties, and confers no rights. Because the information on this blog are based on personal opinion and experience, it should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. This does not constitute an offer to invest or solicitation of an offer to buy interest in a fund. Investment products are not insured by the FDIC (or any other state or federal agency), are not deposits, obligations or guaranteed by Amalgamated Bank or any bank or non-bank affiliate thereof, and are subject to investment risks, including the loss of principal amount invested. Consider a strategy’s investment objectives, risks, charges and expenses carefully before investing. Past performance is not indicative of future results.