Be kind to Mother Earth, and she will be kind to you.
That’s one of the key messages for Earth Day, which happens every year on April 22.
This year, Earth Day arrives as world economies start to emerge from the Covid-19 pandemic, thanks in part to increased vaccination. Over the last year, the world saw the largest drop in carbon emissions ever recorded, as people spent more time inside. While returning to normal means enjoying the planet we call home, it also means an increase in the activities that contribute to climate change.
Climate change is an urgent issue, not just for consumers but for companies and industries, as global warming appears to threaten the planet, and the ability to do business.
Exxon, for one, has proposed creating a for-profit business of capturing the carbon emissions from companies and storing them underground. The $100 billion project would, however, require Congress to pass a tax on carbon emissions. Meanwhile, in his last letter to investors as CEO of Amazon, Jeff Bezos outlined Amazon’s climate pledge, which includes operating solely on renewable energy by 2025.
The International Energy Agency (IEA), found in its most recent annual energy report that while demand for energy has dipped as a result of the pandemic, it predicts a return to pre-pandemic levels of consumption by 2023. The report also suggested that CO₂ emissions won’t surpass 2019 levels until 2027, provided that use of renewable resources continues to grow.
The IEA, an intergovernmental consortium of 30 countries devoted to developing clean and sustainable energy, also found that by 2025, renewable sources of energy such as wind, solar, and hydropower could meet 80% of the electricity demand, while the use of coal—a key source of planet warming carbon and carbon dioxide—declines.
Even the federal government has warned that with the current pace of global warming, the ability to conduct business may be jeopardized. Every four years, the National Oceanic and Atmospheric Administration, a division of the U.S. Department of Commerce, produces something called the National Climate Assessment study.
Among other things, here’s what the most recent report found in 2018:
- By 2050, the average annual temperature of the U.S. could increase by 2.3 degrees.
- The U.S. economy could shrink as much as 10% by the end of the century, losing hundreds of billions of dollars in national and overseas trade, not to mention health costs and disaster relief. Farming and other agriculture will be harmed, through the declining health of livestock, reduced crop yields, and threats to food security, among other things.
- Aging national infrastructure could be further harmed by extreme weather such as flooding, heat waves, and wildfires, leading to threats to the economy, national security, and human health.
“Without substantial and sustained global mitigation and regional adaptation efforts, climate change is expected to cause growing losses to American infrastructure and property and impede the rate of economic growth over this century,” the report says.
There are ways to invest in sustainable businesses hoping to have a positive impact on the planet, however.
ESG and SRI investing
Sustainability—or creating products in a way that doesn’t harm the planet or people—is even a business niche. Numerous funds rate businesses on something called environmental, social, and governance (ESG) and socially responsible investing (SRI). The Sustainability Accounting Standards Board (SASB) provides standards by which ESG investments can be measured. As of July, 2020, the global value of sustainable investments totaled more than $40 trillion.
An investment’s ESG or SRI rating might take into account how companies treat their employees, how ethically they treat people in their supply chains, and the environmental impact of the company. So an ESG or SRI fund could include tech companies striving to reduce their carbon footprints by using alternative energy sources, companies in other sectors working to provide clean water to people who don’t have it, and more.
In contrast, an ESG or SRI fund might exclude companies that produce fossil fuels that contribute to global warming, or ones whose supply chains may include laborers who work in substandard conditions.
Corporations could increasingly feel pressure to reduce their environmental impact as countries develop plans for “green economies.” A green economy is one that prioritizes reducing carbon emissions to combat climate change, while also creating growth and job opportunities. In the U.S., approximately 9.5 million people are employed by the green economy, which generates $1.3 trillion in revenue each year. The Biden administration, meanwhile, has made commitments to addressing climate change.
You can find out more about ESG investing here.
As you celebrate Earth Day, remember that you can invest in stocks and exchange-traded funds (ETFs) that include companies that are fighting climate change by reducing their carbon footprints or providing clean energy. You can find the environmentally-minded ETFs that Stash offers under “MIssions and Causes.“ Remember all investing involves risk, and you can lose money in the market. Stash urges investors to follow the Stash Way, which encourages diversification, regular investing, and investing for the long term.