Sustainable investing
 and our theory of change

Right now it's too hard to be a smart investor who cares about climate change. You often have to choose between your ethical values and your financial returns. Green funds without fossil fuels are expensive and lack diversity. ESG funds are less expensive, but they're generally just "less bad." They have plenty of fossil fuel companies and no outsized investment in companies building climate solutions.

Our first step at Carbon Collective was to build a new kind of robo-advisor, one that's 100% focused on climate impact. We want to remove every reason to say "no" to sustainable investing. We have no minimums, the same fees, similar diversification, similar (and maybe better) performance, and super clear impact—divest from fossil fuel-reliant industries, reinvest in companies building solutions, and hold the rest so we can pressure them to decarbonize faster.

Next, we plan to bring our climate-focused portfolios to other areas of investing: first, 401(k)'s. It's crazy to us that there aren't good climate-friendly 401(k) options for climate-focused non-profits and startups. This leaves them investing their own and their employees' money in fossil fuel companies through their 401(k)'s. If you're an employer looking for a green 401(k) option, check out our service.

Another area where great options don't yet exist is climate-focused giving aggregators. We believe there's a big pool of donations waiting to find the most impactful climate-projects. Donor Advised Funds (DAFs) are great because you get a tax deduction this year, but your charitable dollars can appreciate in value over time. Imagine a DAF where the community finds the most impactful non-profits and all donors can upvote which 5 charities the fund donates to this quarter. And/or a fund that gives zero-interest loans that make adopting solar in low-income communities, capping old oil wells, or replanting degraded land an economic no-brainer.

When we say impact investing, we mean that someone advocates on your behalf to push a company you're invested in to change. Impact investing exists today, but it's primarily something only the very wealthy can afford, which means not that many people do it. Mutual funds from companies like Calvert and Parnassus often have high minimums and are usually very expensive to own, often with >1% a year in fees. And while they do pressure company boards, it's across a range of issues, not just climate.

We believe the way to dramatically scale impact investing and the power of our shares is to first, make it a smart investment (low fees, broadly diversified) and second, just focus on one theme, which in our case, is climate.

To get there, we'll take our existing portfolios and make them easy and affordable to buy anywhere (Robinhood, Guideline 401(k)s, Schwab, etc.) by turning them into ETFs: the Climate Index and the Low-Carbon Economy. We'll be able to give our ETFs a head-start by using the assets under management in our non-taxable accounts (IRAs, 401(k)'s, and DAFs), so they can get the necessary trading liquidity quickly. Don't worry, this won't impact your fees or impose any tax burden on our members. You'll just go from holding 200+ stocks and ETFs in your IRA to just our two stock ETFs

Our goal with these ETFs is to dramatically expand our outreach capabilities so folks can not only pressure endowments, pension funds, etc. to move away from fossil fuels but towards real climate impact.

We are proud to have achieved the first step of this part of our plan with the Carbon Collective Climate Solutions U.S. Equity ETF, CCSO.

Once we launch our ETFs, individuals and institutions will be able to easily invest in low-fee, diversified stock portfolios that are 100% focused on driving tangible climate impact from publicly traded companies. With each new investor who joins, we'll add a new voice that can pressure brands and more shares that we can use to vote on our climate resolutions. Thus we will have started an early network effect.

A network effect occurs when a product or service gets better with each additional person who starts using it (social media is a great example). The most interesting part of a network effect is their style of growth: exponential. That's exactly the type of growth we need to unlock to make the changes we need to see by 2030 to avoid catastrophic warming and be on a path to a stable climate.

Here's how we do it. With every shareholder resolution win we get from influencing companies, we put our Collective in a strong position to generate positive press about our accomplishment. Such press enables us to expand our reach and bring on new members and investors who didn't know about Carbon Collective. As we grow, we'll be in an even better position to pressure companies with an even louder voices and great number of shares backing them up. Thus our growing upward spiral of impact leads to greater exposure, which in turn, leads to greater impact.