INTRODUCTION

You’re about to take a quick course on one of the least talked about, most impactful climate problems today. If you wanna save for retirement, ninety-nine percent of Americans have no choice but to invest in fossil fuel companies. My name is Alex Wright Gladstein. I’m an MIT grad and the co-founder of a climate tech company valued over a billion dollars. I was shocked that even as CEO, after years of pushing for it, I couldn’t get a climate-friendly option on my own company’s 401K, and it turns out I wasn’t alone. Employees at some of the biggest companies in the world, including Google and Microsoft, have been asking for climate-friendly options for years. I learned a ton over the past four years about how to make it easier for everyone than it was for me, and I left my startup to focus all of my time to fix this huge problem.

Over the next few minutes, I’m gonna walk you through three short sections. First, how we got here. Second, what is climate-friendly investing? And third, and most importantly, what you can do right now in your life and where you work. So let’s get started.

SECTION 1: HOW WE GOT HERE

How did we get here? Well, there’s this narrative that’s been around for decades saying that you have to choose between planet and profits. But most people don’t know that fossil fuel companies have actually been the most volatile and one of the worst-performing sector of the US economy over the past ten, fifteen, and twenty years. Fossil fuel companies have been working hard to convince you that you have to choose between investing to make money and investing to help the planet, but it makes sense that they’ve been in decline. Electric cars are popular. The combination of solar, wind, and batteries is less expensive than fossil fuels for power generation. Investing in a fossil fuel company now can be compared to investing in the horse and buggy industry a hundred years ago when automobiles were on the rise.

But when it comes to saving for retirement, it can be especially hard to avoid fossil fuels. In a 401K plan, your employer offers just a handful of investment options, so you can’t move your money wherever you want. On top of that, there are a ton of lawsuits in the world of 401Ks. They typically fall into two categories: there’s the excessive fee lawsuit and the underperformance lawsuit. Climate-friendly funds have mostly been expensive and actively managed, so they look risky to 401K fiduciaries who are trying to avoid those lawsuits. With any actively managed fund, you pay a premium, and sometimes it outperforms, but sometimes it underperforms. The only thing you know for sure is that it won’t track the market because it’s not an index fund.

401K fiduciaries like to make sure that employees invest in a well-diversified portfolio. That’s why most retirement plans have everyone investing in every industry across the board, including the fossil fuel industry. By not letting employees concentrate risk in one industry, like the technology industry or the consumer discretionary goods industry, they can lower the chances of people losing what they’ve saved if one industry performs badly.

401K advisors help companies decide which handful of fund options to offer their employees, but most 401K advisors haven’t seen the long-term performance trends of the fossil fuel industry. You’d think they would already know this information, but it’s just not the kind of thing the financial news usually reports on. They focus on short-term performance. When oil prices skyrocket, and so the fossil fuel industry has a short period of good performance, they report on that, but they don’t report on it the following year when the oil industry loses all the gains it made the prior year.

It’s the job of 401K advisors to help companies avoid 401K lawsuits, so they tend to move slowly and cautiously, but they care about offering smart investment options, and they really care about keeping their customers happy. So if an HR department asks their 401K advisor for a fossil-free fund on the plan, they’ll often add one.

SECTION 2: WHAT IS CLIMATE-FRIENDLY INVESTING?

So let’s go into section two: how climate-friendly investing actually works. Well, there’s a growing shift toward climate-friendly investing that’s starting to catch hold. The Harvard endowment stopped investing in fossil fuels. So did the Church of England, and so did the Rockefeller Brothers Fund, which is run by the descendants of the founder of Standard Oil, which has turned into Exxon and Chevron today. So if these wealthy people who have made all their wealth off of fossil fuels have gotten out of it, they must see that the writing is on the wall. The fossil fuel industry is just in decline.

So how can the rest of us follow their lead? Well, let me start by explaining what we mean by climate-friendly investing. There are two types of climate-friendly investing. The first is funds that only invest in things like solar, wind, and alternative energy companies, but these are concentrated, so they can carry a higher risk. They’re not diversified. They also tend to be pretty expensive. The second type is funds that invest broadly and just take out the biggest climate offenders. This helps investors avoid the risk of investing in one industry that may not perform well.

But it’s not just about who you’re investing in. A lot of people don’t realize this, but if you have any investments, you have the power to influence how lots of the biggest companies in the world behave. You are a shareholder, and shareholders hire and fire the board. The board hires and fires the CEO, and there are oftentimes shareholder proposals at big companies that every shareholder gets a chance to vote on. This is called proxy voting, and each year, big companies usually have a few proxy votes specifically focused on climate.

So you can influence things like whether a company reports its emissions or whether it sets targets to reduce those emissions, and other climate initiatives, like whether they electrify their fleets or install solar. Often, we don’t realize that we have this power because we’re not asked how we want to vote. We invest through funds, the fund managers vote on our behalf, and they’re not asking our opinions….Right now, most retirement plans don’t offer any funds that vote in favor of climate change-related shareholder proposals. Most funds in 401Ks automatically vote however company management or boards recommend. That means they have voted against most shareholder proposals having to do with climate change.

So the key takeaways are, if you wanna invest in a climate-friendly way, don’t invest in fossil fuels, and make sure you can vote for the planet with your shares.

SECTION 3: WHAT YOU CAN DO RIGHT NOW

So let’s get started on section three: what you can do right now. This is what you can do to actually make this happen. Well, it’s easy to feel overwhelmed or even insignificant when it comes to fighting for the planet. What can little old me do? But getting your money out of fossil fuels is actually one of the biggest ways to help the planet. You’re probably already paying attention to how you recycle or what products you buy. You can make this a part of what you do.

Unlike four years ago, when I was so frustrated as CEO trying to get a climate-friendly option in my 401K, today, it doesn’t have to be so hard. I founded a company that focuses 100% on solving this problem. It’s called Sphere, and we launched a fund called the Sphere 500 Climate Fund. It invests in the top 500 US companies, minus fossil fuels, and it votes in favor of shareholder proposals having to do with climate change, which we’ve found can help set up companies for long-term financial success, too.

It’s built specifically to check all the boxes that 401K advisors look for. It costs eight times less than the average climate-friendly fund, so employers don’t have to worry as much about those excessive fee lawsuits, and you don’t have to choose between investing in a climate-friendly fund versus in an affordable fund. By excluding fossil fuels, it can help investors avoid the long-term underperformance of that industry, and it’s available on every major investment platform, like Fidelity, Schwab, and Vanguard, so your employer doesn’t have to switch 401K providers to make this option available.

So if you’re ready to make change happen, consider the Sphere 500 Climate Fund. To move the money that you control, like in an IRA or brokerage account, click the link in the description below to get started. Anyone can invest in this fund. Opening a first-time account or moving money you already have invested on a brokerage platform is easy.

Next, rally your company to get it on their 401K. You can do that by sending an email to HR to let them know you’d like this in your retirement plan, and you can talk to your coworkers, make your voice heard. We hear time and time again from HR managers that if they see demand, they’re willing to respond.

CONCLUSION

So what have we talked about? Well, we talked about how we got here, how fossil fuels are the worst-performing sector of the economy, and how you don’t have to choose between strong returns and a livable planet, because climate-friendly investing can be less risky and less expensive than other types of investing.

And we’ve learned how getting your own money and your company’s 401K out of fossil fuels can be one of the most impactful things you can do for the planet. So much climate action feels overwhelming, but this is one thing you can do that may not cost more than what you’re already doing, and that can have a bigger impact than buying an electric car or installing solar panels on your house.

And if you don’t stop at moving your own money, but you make this option available to every one of your colleagues, too, you can move millions or even billions of dollars into funds that nudge huge corporations towards a safe, livable future.

My team is happy to help. You can always reach out to us at hello@oursphere.org, or set up a time to talk to us below. We’ve helped hundreds of people move their personal investments, and we’ve helped employees get our fund on hundreds of retirement plans.

This is something that is truly in your hands, a simple action you can take that can have a big impact, both within your sphere of influence and in the world, because money talks. Make yours shout for the planet. Join us.

Before investing in the Sphere 500 Climate Fund (“the Sphere 500”), carefully consider the fund’s investment objectives, risks, charges and expenses. To obtain a prospectus or summary prospectus which contains this and other information, please visit https://oursphere.org/fund or talk to your financial advisor. Read it carefully before investing.