Apr 21, 2022
Earth Day 2022: How to Celebrate the Planet this Year
You can invest in companies that are prioritizing the climate.
Earth Day, every year on April 22, is a perfect opportunity to do more than recycle.
As we celebrate our planet, you can invest to show you care. You may want to think about where your money goes, and how that affects the environment, especially as climate change becomes a more pressing issue. Companies are facing increasing pressure from governments and consumers to put the wellbeing of the planet at the forefront of their business.
How the government is combating climate change
Most recently, the Securities and Exchanges Commission (SEC) began considering new climate directives for businesses. In March 2022, the SEC proposed new rules that would require public companies to disclose their greenhouse gas emissions and the climate risks to their work. Under the proposal, companies would be required to outline their climate risks, the costs associated with moving away from fossil fuel usage, and the costs to their businesses caused by climate change. Companies also would have to disclose the direct and indirect greenhouse gas emissions that their work creates.
Combating climate change has similarly been central to the Biden administration. In November 2021, the U.S. Environmental Protection Agency (EPA) announced plans to reduce methane production, which is the second-biggest contributor to climate change, behind carbon dioxide. By 2030, President Biden is also hoping to reduce greenhouse gas emissions that cause climate change by 50%. But a divided Congress has expressed some opposition to Biden’s plan.
What companies are doing to address climate change
On a company level, businesses are taking climate change more seriously than ever before. Social media platform Pinterest, for example, announced in April 2022 that it was releasing new guidelines that would remove ads or content that contains misinformation about climate change. Pinterest’s decision followed 2021 commitments from Google and Facebook to crack down on misinformation.
Many companies, such as Levi’s, Costco, BlackRock, Netflix, and others have made promises to cut their carbon emissions. And while some, like Google and Microsoft, have made strides in their emission reductions by pivoting to renewable energy sources like wind and solar, many are reportedly still finding themselves limited in how much they can currently cut emissions. Some companies, like investment firm BlackRock, have been less transparent about how they’re living up to climate pledges. BlackRock, for example, has called on the companies it invests in to remove as much carbon emissions as they add by 2050. Yet BlackRock reportedly hasn’t disclosed whether those companies are planning to hit that goal.
How climate change affects the economy
Scientists have urged immediate action when it comes to climate change. A failure to reverse the effects of climate change could have devastating consequences for the economy, and for humanity, according to those scientists. The Intergovernmental Panel on Climate Change (IPCC) determined in its 2022 report that in order to limit global warming to 1.5°C, global greenhouse gas emissions must peak before 2025, and cut by 43% by 2030. Globally, methane emissions would also need to fall by about a third. While the report found that emissions remain high, their rate of growth has slowed, potentially showing increasing policies aimed at climate change.
The U.S. 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. (The next report is due out in 2023):
- 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.
Investing for the planet
Sustainability—or creating products in a way that doesn’t harm the planet or people—is also a growing 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, according to a 2019 report.
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.