A Carbon Collective Future
Investing our way out of climate change
We Speak With Our Money
Whether you’re a capitalist or a socialist, we can all agree that where the money goes in our society matters. We speak with our dollars to show what we value.
Unfortunately, climate change is being significantly underfunded even when we value addressing it.
Consumers and investors care about their dollars being used to address climate change. This is leading to companies and investment funds adapting to meet their demand.
From wall street to the private markets, people and organizations want to ensure they are doing well, by also doing good for the environment.
Even with the demand to improve our environment, billions of dollars are passively invested into index funds, the S&P 500, and other investing vehicles that are contributing directly to climate change.
Carbon Collective is an early stage startup helping move capital in the stock market towards climate solutions. By doing this, they will generate great returns for investors, support the development of novel green technologies and infrastructure, all while addressing climate change in the process.
Climate Solutions Need to Be Better
Carbon Collective is building the first comprehensive wealth management platform to generate great investor returns, while also using their capital to invest in a green economy.
I want to share a brief anecdote about investing in the green economy to help us get in the right framework for thinking about what Carbon Collective will need to achieve in order to succeed:
My friend Zander has an electric vehicle charging company called Xeal.
I asked him, “do a lot of people feel inspired to support Xeal in helping to move our cars to electric and address climate change?”
Zander said, “to a certain extent, people really do care about solving climate change. But whether you like it or not, the consumer wants the sustainable technology to also be better than the status quo. They won’t necessarily make the investment, if it hurts them in the process…”
People don’t invest in Tesla stock or buy a Tesla just because Tesla is addressing climate change. People are invested in Tesla because it is a superior technology across every metric AND it addresses climate change.
In the years ahead, I believe many green technologies will not just address climate change, but these technologies will also perform better across every metric becoming the best option for the consumer, businesses, investment funds, and the world.
Currently, Capital is Being Invested into Companies Fueling Climate Change
Capital in U.S. stock market is currently being invested into companies that generate average returns for investors, but contribute to carbon emissions in a substantial way.
It may come as no surprise, but some sectors of the stock market are far more pollutive than others.
The Utilities, Materials, Energy, and Industrials sectors account for ~80% of the total emissions of companies on the New York Stock Exchange.
Carbon Collective is facilitating the divestment from these companies fueling climate change and reinvesting in the companies solving climate change and pressuring the rest to decarbonize.
The Carbon Collective Offering
Carbon Collective is a platform that can be used as your broker account, IRA and 401(k). They essentially function as a traditional robot-advisor and charge similar fees.
Their investment portfolios generate as good or better investment returns compared to the average portfolio.
In the image below, you can see the Carbon Collective investment portfolio generates better returns compared to the Benchmark for the All Green and Most Bold options that I selected.
Another portfolio simulator is below for your reference. This time with Core (low-carbon economy) and Moderately Bold portfolio.
People want to invest their money into climate solutions, but it’s difficult for asset managers to deliver meaningful returns to their clients AND demonstrate the positive climate impact their investment is having.
This is the unique offering of Carbon Collective. They are making it easier to show returns and the climate impact of your investment.
To bring it all together:
Consumers, companies, and investors want to invest in climate solutions to address climate change.
Climate change investments can lead to better technologies and greater investment returns.
Our capital in the stock market needs help moving from companies fueling climate change toward those addressing it.
Carbon Collective has built a tool to help move capital from companies fueling climate change toward the companies addressing climate change.
How does Carbon Collective get implemented?
All of this sounds great, but how does the world actually move toward a future where Carbon Collective is used.
Moving your money from one account to another can be a big pain. It can be such a pain, that people may rather stay invested in oil companies than spend time out of their lives to reallocate their capital to green funds in a new account.
There are also many different brokers accounts that currently exist. It may feel overwhelming to add another broker account into the world. And there are already climate index funds that allow people to invest into the green economy from their current broker account. Investing from your current broker into the green economy seems a lot easier than opening up a new broker account.
My biggest concern is the need for an entirely new platform. Is there a way that Carbon Collective can sell B2B and be directly integrated into large 401(k) plans for companies? Particularly, the green companies that may want to offer this to their employees?
Is this something financial advisors will buy access to for their clients? This will allow the client to maintain their current broker account, but get insights from Carbon Collective about investment opportunities and their climate impact on the world.
For me, it’s understanding how Carbon Collective can be implemented in a frictionless way that integrates within our current system. It’s also understanding a go-to-market plan for getting the green companies onboarded for their 401(k)’s with Carbon Collective. A robust early adoption strategy will be critical to validate the platform and reach scale.
Looking Ahead
Ultimately Carbon Collective will need to find ways that it can be differentiated and provide value to the wealth management ecosystem for both current wealth managers and companies that have wealth management plans such as 401 (k).
Creating green portfolios, green ETFs and tracking climate impact are all offerings that can provide value to wealth managers and investors.
I will be curious to see how they can establish partnerships to get their approach in the hands of the most amount of people as fast as possible.