Greening Your Finances Interview
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Listen as Youth Climate Lab's Community Manager, Celeste Alcena, and Elizabeth Landau of GreenPortfolio discuss the world of climate finance and greening your finances! Topics include ESG ratings, greenwashing in banking, and how to leverage personal financial decisions to make a change.
This interview is a part of a collaborative initiative on climate finance from Youth Climate Lab and Greenportfolio. Read about the associated Q&A Webinar on our website.
INTERVIEW SUMMARY
The interview content has been condensed for the sake of this written summary. The following is for informational purposes only and not financial advice. Opinions expressed here are not those of any bank, credit card issuer or financial institution. Please complete your own due diligence before making any financial decisions.
What is GreenPortfolio?
Elizabeth: The idea for GreenPortfolio was born when my co-founder, Bonnie Gurry, was working over 10 years ago fighting climate change in her day job developing renewable energy projects while her 401k was off funding fossil fuels - it was just something that seemed totally misaligned to her. But unfortunately at that time there weren’t many options for people who were average investors to shift their holdings.
Fast forward to 2020, and there were a lot more stocks, bonds, and ETFs, along with checking and savings accounts claiming to be green. This increase in options was being driven by interest from consumers! People who were voicing their preference for sustainable financial products. Based on Morgan Stanley’s recent poll, 99% of millennials want sustainable investments. With GreenPortfolio, we’re focused on providing transparent assessments regarding how an investment or financial institution may be funding climate solutions or investing in fossil fuels.
Can you tell us about carbon emissions, Environmental, Social and Governance Criteria (ESG), and what they have to do with greenwashing in banks?
Elizabeth: Scope 1, 2, and 3 are different levels of carbon emissions reporting. Scope 1 covers direct emissions from sources owned or controlled by a company. Scope 2 covers a company’s emissions from purchased electricity, steam, heat and cooling. Scope 3 covers all indirect emissions in a company’s value chain. Scope 3 includes investments and lending, which is important when looking at banks and what they are financing.
Many companies try to assess how they are doing by tracking key metrics in the areas of environmental, social, and governance, leading to the creation of ESG ratings. There are companies that create these ratings off of data disclosed by organizations, each slightly different based on their methodology. Most of the time you see these ratings talked about in the world of investing. Often, ESG ratings are tracking how a company is doing based on ESG factors, and not on the impact that company has on those areas. It’s more to see which companies will win out against their peers in the long term. For example, with oil companies - many have environmental ratings in the 80 out of 100, despite the impact of their work. This is why you can’t take an ESG fund at face value. Some funds contain oil companies in their holding because they have high ESG scores, but these are definitely not the same as climate impact. Taking it one step further to banks, you’ll see a similar story, but it’s not as obvious as oil companies.
Where do we see these attempts to “seem greener” without making real change play out today?
Elizabeth: In banking, Wells Fargo shared photos of people at a clean up event on Earth Day with the messaging that “we encourage you to get involved and be part of the change because the risk of inaction is too great to ignore”. In reality, their fossil fuel financing has increased from $36 billion in 2016 to $46 billion in 2021. Wells Fargo is not alone in this, as many banks invest heavily in oil. JPMorgan has been a leading funder of fossil fuels for the past six years, totalling $382 billion dollars.
There are also financial products that look green but are greenwashing. The personal finance company Aspiration pushes the messaging that “clean rich is the new filthy rich”, saying you can “spend, save, and invest while fighting climate change” but there is no validation to their claims that trees have been planted from their activities.
On a non-financial consumer level, if you told Amazon’s Alexa to plant a tree on Earth Day, she did, but it was with your money. Meanwhile, Amazon is a major carbon emitter due to their shipping and logistics, with a footprint that increased between 2019 and 2020.
What are some ways we can leverage our personal financial decisions to make a change, especially in support of the climate?
Elizabeth: GreenPortfolio is building a ratings system to help you understand what your money is up to and eliminate these barriers and save you a ton of time, but for now, I can provide some tips to help you with your research.When evaluating banks for climate impact, look for the bank’s level of fossil fuel financing and disclosures about climate positive investment. You can also check out GreenPortfolio’s recommendations for climate-first banks like Clean Energy Credit Union and Atmos. When looking for climate-friendly investments, read annual and impact reports to determine how assets are screened for inclusion, check for fossil fuel investment in a fund’s prospectus, and scrutinize ESG funds. If you don’t want to manage this on your own, choose a robo-advisor like Carbon Collective.GreenPortfolio also has a guide with helpful tips on where to start greening your finances!
Thank you for joining us, is there anything we can be on the lookout for from GreenPortfolio?
Elizabeth: We’ll be adding more reviews of banking options along with alternative investment options like crowd investing to our website in the upcoming weeks so I would encourage you to follow us on instagram @greenportfolio_ and sign up for our newsletter!
What I’m most excited about right now is we’re currently testing out the prototype of our app with people who are interested in greening their finances! Seeing people interact with our product and provide feedback has been so integral to our process - we’re looking to add more people to our list of potential users! You can sign up here and we’re planning on a beta launch in the fall.
Elizabeth Landau is the Co-Founder and COO of GreenPortfolio. She has 10+ years of leadership experience at both Fortune 500 companies like BASF and Anheuser Busch and startups. She started her career in chemical engineering after earning her degree from the University of Pennsylvania, but quickly realized she wanted to apply her problem solving skills in a business setting. She's focused on brand management, innovation, and go-to-market strategy and earned an M.B.A. from the NYU Stern School of Business. She's now an entrepreneur who has linked her personal interest in fighting climate change with her work at GreenPortfolio.
You can find her on LinkedIn and Twitter.
GreenPortfolio helps you make financial choices that are good for the planet. They score your investments and bank accounts for climate impact so you know where you stand – as a backer of fossil fuels or as an investor in a clean energy future. Are your banking and investment choices climate aligned? Sign up to test their product and find out!
You can find them on their website, Instagram and Twitter.
