Decarbonize Your Money Recap and Video
Guest post by Mary Mulcaire-Jones
“Something big is starting to shift,” said Bill McKibben. “After years of effort from activists, there are signs that the world’s financial community is finally rousing itself in the fight against global warming.” McKibben, the founder of 350.org, shared this piece of good news in a New York Times opinion piece a couple of years ago. In light of this trend, he advised, “It would be wise to follow the dollar to see where the future of energy is headed globally.”
How does the individual investor act on this trend?
Helping folks answer this question was the goal of “Decarbonizing Your Money,” the first event in Families for a Livable Climate’s System Change series. The Zoom event on September 10th included a panel of local financial advisers and banking experts, who shared practical advice and specific steps to take with your money, not only for environmental reasons but as a way to maximize profit. Here are some highlights from the panel presentations. You can also watch the recording below.
Keith Fitchner, Edward Jones
Keith began his presentation by pointing out that, as environmental and social pressures grow more acute, the financial world is waking up to the fact that the world is changing. There is a growing realization among many investors that sustainable companies can be part of the solution to today's global challenges such as climate change. Keith wants to help his clients be part of this positive trend by assisting them in identifying investments that are profitable AND in line with their values. It turns out this is actually quite simple to do, simply by utilizing a screening instrument that considers investment criteria other than straight financials.
Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that investors can use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. Keith uses an ESG screen developed by Calvert Funds, a mutual fund company focused on sustainable investing. Research suggests that including ESG criteria in selecting investments tends to increase profitability, as it helps to identify companies positioned for strong long-term performance.
Susan Estep, Willow Creek Capital Management, Inc.
A Montana native, Suzie began her more than 35-year career in financial services working on the trading floor of the New York Stock Exchange in 1981. She has worked for many of the big financial firms, including J.P. Morgan and A.G.Edwards. For some years now she has been a partner at Willow Creek Capital Management in Missoula. Susan started her presentation with this quote from David Gardner, co-founder of Motley Fool:
Make your portfolio reflect your best vision for our future, always be thinking ahead, be optimistic. Think about the world you want to create, because sure enough your dollars and mine are capital that’s helping shape our world.
Susan’s concern about climate change has involved taking on some big corporations in the fight for clean energy. Now, she says, “things have come around, and what has come around is the price of oil.” The price of crude oil went from $103/barrel in 2014 to $23 in early 2020 and has not been above $50 since mid-March. This in effect took out a number of smaller oil companies that were using older, more expensive and more clumsy ways of getting carbon out of the ground. Susan expects this trend to continue, stating,
Decarbonizing your portfolio has become quite profitable.
Jack Lawson, CEO, Clearwater Credit Union
Jack Lawson took the discussion to a more local focus. Jack is the president and CEO of Clearwater Credit Union, a $675 million credit union in western Montana. Clearwater is Montana’s second largest credit union. Clearwater’s mission is to be a force for good in banking, for their customers, and for the community. Jack believes it is no longer enough to simply help members with the basics of banking, and ignore the context of what is going on in the world. What, he asked, does it mean to be a retail banking operation that is concerned with sustainability and environmental stewardship? As a local credit union, they are not dealing with huge sums of money. Nevertheless, there are things they can do.
First is the credit union facilities.
Since 2018, Clearwater has conducted annual Environmental Impact Assessments for all their facilities. Using this information, they have invested heavily in obtaining LEED certification for all their buildings, with a goal of carbon neutrality by 2020. They came very close to meeting this goal and, in fact, were able to cover the shortfall with carbon offsets, purchased through a new program, The Footprint Fund, developed in collaboration with the Missoula Housing Authority, Climate Smart Missoula, and MMW Architects (more about this below).
Second is a look at business operations apart from facilities.
This includes things like water consumption, paper consumption, and solid waste. Again, it starts with measuring current usage and then planning for reductions. Jack noted the importance of transparency in all these processes. Everything is available to the public on their website: financials, strategic plans, sustainability program details, and more.
Third is the balance sheet.
This is where the real power is, he stated. There is a massive reallocation of capital happening as we move from a fossil-fuel energy economy to a clean energy economy. At this point, Clearwater has one foot in this economy and one foot in the next. Moving towards the new economy, they are looking at increasing Impact Loans. These are loans that make an active contribution to 1) building inclusive economies; 2) empowering people; and 3) protecting the environment.
Additionally there is a plan to begin to measure the carbon impact of all loans and investments.This is now possible due to a new accounting method, developed in Holland, which uses open-source methodologies to measure the Greenhouse Gas Emissions of all asset classes within their loan and investment portfolios. The Partnership for Carbon Accounting Financials (PCAF) is now a global movement, an industry-led effort to facilitate transparency and accountability of the financial sector within the Paris Agreement. Jack concluded his presentation by saying that Clearwater had started down this path because of their mission to be a force for good, but it turns out that it all makes really good business sense as well.
Caroline Lauer, Program Director, Climate Smart Missoula
As Climate Smart Missoula's Program Director, Caroline works on a wide range of projects to help make Missoula more resilient and equitable. Her focus for the last year has been developing a county-wide resiliency plan, Climate Ready Missoula; working with the local architects, engineers, and developers to decarbonize Missoula's building sector; and establishing the Footprint Fund, a community carbon offset program that will allow citizens to offset their carbon footprint by supporting local projects that benefit Missoulians. Caroline holds a Masters in Urban Planning from the Harvard Graduate School of Design, where she focused on the intersection of climate change, affordable healthy housing, and creative financing mechanisms.
Caroline started off with a definition of a carbon offset: It reduces a measurable and verifiable amount of carbon in one place to compensate for carbon emission elsewhere. A common example is when someone wants to offset the carbon emissions from a plane flight and their offset purchase is used for a forestry project of planting trees. An important criteria for an offset project is that it would not happen without the purchase of the offsets.
This led to the story of the Clearwater Credit Union, Missoula Housing Authority, Climate Smart Missoula, and MMW Architects mentioned above. The Missoula Housing Authority had a project in the works, a 12 unit transitional housing space for homeless individuals and families.
MMW architects had plans for using a heat pump system for the project, with higher up front costs but great energy savings over time. The project costs increased and heat pumps got dropped. Missing out on this opportunity would mean the difference between huge carbon reductions over many years and no carbon reductions. The team got together with Clearwater Credit Union, which claimed all the offsets for two years of their operations, and this made it possible to put the heat pumps back in the program. Caroline is a leading force behind the Footprint Fund, the program that made this minor miracle happen for the transitional housing project.
Watch the recording of this informative session now.
