Big Decisions

Worried your 401(k) is fueling climate change?

3 tips to make sure your investments are also fighting climate change

Have a 401(k), savings, or checking account? Congratulations! You are now a shareholder of oil and gas companies. OK, just kidding, that's not exactly how it works, but your money isn't just sitting around twiddling its thumbs. It gets invested in a lot of different ways, including with companies responsible for climate change. You might end up owning stocks in coal, oil, or gas companies through your retirement account and, if you're banking with certain banks, they could be using your money to help finance oil or gas pipelines.


Why does it matter? We all know climate change is already happening. We are feeling the impact on our health today from extreme heat to worsening allergy seasons to the food on our plates. You can use your money to help the transition away from climate-damaging fossil fuels into clean energy that is healthier for you, your kids, and your communities. And, it's easy to do.

Here are 3 steps you can take to use your money to do good for the planet and your finances.

Step 1. Know what you own.

Fossil fuel companies like Exxon and Shell have known for decades that burning fossil fuels cause climate change and have spent those same decades sowing climate change doubt and keeping the fossil fuels flowing. And, although they have started to invest in clean energy solutions like solar and wind, they have also invested trillions of dollars in future fossil fuel projects from coal mines to pipelines and have fought against better fuel economy standards and clean air standards that protect human health. But despite all this, the world is shifting away from fossil fuels. Every nation on the planet, except the United States, has agreed to the 2015 Paris Climate Agreement. Through this agreement, the world has pledged to reduce carbon emissions to limit global warming to 1.5C in order to protect island nations from sea level rise.

Global climate action spells financial trouble for fossil fuel companies. Renewable energy, like wind and solar, are now cheaper to install than new coal plants, and they're almost as cheap as natural gas. More car companies are committed to replacing gasoline-fueled cars with electric vehicles. For coal, oil, and gas companies that means they are worth more today than they will be when you cash out your 401(k). Economists are so worried about the carbon bubble bursting that they think it could spark the next global financial crisis.

So, how can you find out if you have fossil fuel company investments? You can call and ask your financial advisor or investment company. If they don't know or aren't sure, ask them to check and get back to you. Fossil Free Funds is a great search platform that looks at the climate impact of popular mutual funds and shows you if your money is being invested in fossil fuel companies, or companies with high carbon footprints. You can use their step-by-step guide to learn the climate impact of your investment portfolio or find fossil free options. Knowledge is power!

2. Divest from fossil fuel companies. Invest in climate solutions.

Around the world, nearly 900 institutions from universities to pension funds worth over $6 trillion have committed to pull their money from coal, tar sands, oil, and gas companies because they no longer want to be investing in climate change. With the help of celebrities like Leonardo DiCaprio and Adrien Grenier, the global fossil fuel divestment movement has called attention to climate change and the need to move beyond fossil fuels, but as it turns out, it's also been doing a lot of good for investment portfolios. Industry and governments need to invest $90 trillion toward sustainable development over the next 15 years in order to keep to the Paris Climate Agreement, and that's a huge investment opportunity. The Clean200™ is a list of the 200 largest companies worldwide ranked by their total clean energy revenues, including revenue associated with energy efficiency themes. In the first year and a half since the Clean200 list was launched, Clean200 companies generated a total return of 32.1%. That's almost double the 15.7% return compared to its fossil fuel benchmark - the S&P 1200 Global Energy Index.

You can use Fossil Free Funds and the Clean200™ lists to find fossil free investment options or to start a conversation with your financial advisor about helping you choose investment options that cut climate change out of your investments. Green Century Funds offers fossil free mutual funds and has a helpful Guide to Fossil Fuel Free Investing and other resources to help you along your way to a fossil free future. If your 401(k) or employer-sponsored retirement company doesn't have fossil free options, ask them to add some! Millennials are leading the way on socially responsible investing and fundamentally transforming the way companies do business by demanding more ethical options, for our health and the health of the planet.

3. Switch your bank.

Many banks, like Chase and Bank of America, are providing finance for projects like the Dakota Access pipeline and tar sands development that are polluting our air and water, and ensuring decades of future carbon emissions from burning fossil fuels. As an alternative,you can open an account with a local credit union or community bank. You can often get the same services at a local bank that most bigger banks provide, plus local banks and credit unions do more to invest in their communities. On average, small and medium banks provide more than half of the lending to local small businesses in your town or city than big banks. So, when you visit your local health food store or bakery, chances are they got their start with a loan from a local bank. Green America has an easy 10-step guide to making the switch to a smaller bank and a directory to find an alternative near you!

Additional actions you can take:

Now that you have taken steps to get fossil fuel money out of your wallet, help us build a healthy, fossil free world. Join 350.org to bring the global movement to every city and town for a fast and just transition to renewable energy for all, stop and ban all new fossil fuel projects, and cut off the social license and finance for fossil fuels. Join (or start!) a campaign at www.gofossilfree.org

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