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ENVIRONMENTALLY RESPONSIBLE INVESTING

Yes, maybe my subject line is oxymoronic. But bear with me.

Yesterday, I attended a conversation at my university, UNCG, on the topic of environmentally responsible investing. I confess that this isn't a subject I had ever considered, even as I made significant investments of time and money, at home, in an effort to live more sustainably. And yet, if you have a retirement account, it's possible--whatever your personal practices and beliefs--that you're riding your financial future on, say, fossil fuel interests, even as you write letters to your congressional leadership about upholding the Paris Climate Accord.

One of the speakers made a point on this subject that was compelling to me not only as an environmentalist but as a person who would like to eventually retire. To avoid catastrophic planetary warming beyond 2 degrees Celsius, 80% of the known fossil fuel reserves need to stay in the ground. Yet most fossil fuel companies trade on the strength of those known reserves. Investing in those companies, then, means that you're investing in catastrophe. Alternately, you're riding your future on stranded assets.

The talk at UNCG yesterday focused on university endowments and moves toward having them divest from unsustainable energy interests. That definitely interested me, but I went home wondering what was directly within my power. So this morning I called TIAA, my retirement fund manager, to find out what my options are. I learned that TIAA offers a Social Choice Equity Fund, described thusly:

Through a proprietary quantitative model that closely tracks the returns of the Russell 3000 Index, the investment strategy gives special consideration to certain environmental, social, and governance (ESG) criteria and provides broad U.S. equity market exposure while minimizing relative risk versus the benchmark.

More specifically, the strategy uses a detailed optimization process to approximate the overall risk/return characteristics of the Russell 3000. The ESG evaluation process favors companies that are strong stewards of the environment, devoted to serving local communities and society in general, committed to high labor standards for their own employees and those in the supply chain, dedicated to producing high quality and safe products, and managing their companies in an exemplary and ethical manner.

I moved my retirement funds to the Social Choice Equity Fund. It took 5 minutes. This wasn't the most radical move I could make, and my portfolio still includes, no doubt, some companies that aren't exactly environmental stewards--that's most of them, given the structure of capitalism--but it's a move in the right direction.

Consider contacting your own investment manager to explore your options for low-carbon and socially responsible investing.


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