How to Claim a Greener Investment for Your Retirement Account
Just a few years ago, if you wanted your investment to be even remotely environmentally friendly, you had to choose from a limited set of funds offered by the investment firm holding your retirement savings.
But these companies are beginning to realize that the environment is a priority for their customers and that offering sustainable investment options should be the focus.
Investment firm BlackRock announced this week that it will incorporate climate change into its investment strategy, including “ending investments that pose a high risk to sustainability,” CEO Larry Fink said in a letter .
Starting this year, the company will be offering what it calls sustainable versions of its “flagship portfolio” that leverage environmental, social and governance (ESG) factors, not just growth. Thermal coal is an industry that BlackRock will ditch, especially companies that generate more than a quarter of their revenue from it. In addition, by the end of the year, investors will be able to see the sustainability risks of their BlackRock mutual funds. In addition, the company will double the number of its options on ESG ETFs.
The bottom line for the average investor is that you can choose a passive investment option, such as a date-bound fund that does not include fossil fuel companies at all.
One step the firm wo n’t take is to ditch fossil fuel companies altogether; The New York Times notes that BlackRock is one of the largest investors in the world’s fossil fuel company.
In recent years, the firm has been criticized by those who believed it should do more to ensure sustainability through investment. BlackRock is the world’s largest asset manager, and his announcement could open the door for firms that have not yet made a significant effort to change their strategy towards protecting the environment, not just profit.
But until this fundamental shift encompasses most investment firms, you need to seek and select investment options that match your desire to invest in companies that are not actively destroying the planet.
If your investment portfolio is managed by a firm that is not as transparent as BlackRock plans to become, you can visit Fossil Free Funds to find sustainable funds to choose from right now.
Try searching for Fossil Free Funds for Fidelity, Vanguard or Schwab to get a quick look at some of your options. Each foundation has a letter rating, a carbon footprint rating, and a fossil fuel percentage.
Don’t see enough options that worry you? It might be worth contacting your portfolio manager to (politely) change demand. As Fink said in his letter to corporate clients, “Climate change is almost always the top concern that clients around the world raise with BlackRock.”