Climate 21

How Your Investments Can Help Solve Climate Change - A Chat With Carbon Collective Co-Founder Zach Stein

March 16, 2022 Tom Raftery / Zach Stein Season 1 Episode 64
Climate 21
How Your Investments Can Help Solve Climate Change - A Chat With Carbon Collective Co-Founder Zach Stein
Show Notes Transcript

Investment is a hugely important part of the fight against climate change. But where should the money come from?

What if the money we invest for our pensions, life insurance, savings were put towards fighting the climate crisis, while at the same time making a profit for us? Putting our money to work, for good.

That is the thinking behind Carbon Collective - an investment house that invests your money solely in nonfossil fuel-based companies, and with the shares it purchases, becomes an activist investor to pressure companies to work towards reducing their emissions.

keen to know more I invited Carbon Collective Co-Founder Zach Stein on the podcast to tell me all about it.

This was an excellent episode of the podcast and I learned loads as always, and I hope you do too.

If you have any comments/suggestions or questions for the podcast - feel free to leave me a voice message over on my SpeakPipe page, head on over to the Climate 21 Podcast Forum, or just send it to me as a direct message on Twitter/LinkedIn. Audio messages will get played (unless you specifically ask me not to).

And if you want to know more about any of SAP's Sustainability solutions, head on over to www.sap.com/sustainability, and if you liked this show, please don't forget to rate and/or review it. It makes a big difference to help new people discover the show. Thanks.

And remember, stay healthy, stay safe, stay sane!

Music credit - Intro and Outro music for this podcast was composed, played, and produced by my daughter Luna Juniper

Zach Stein:

this is part of the narrative that we need to change, that it is charity to invest in a way that is sustainable. That is just for Greenies like me and potentially you and your listeners who want to say, oh, I just want to feel more comfortable with how my investments are allocated. No, it's actually also a much smarter way to invest

Tom Raftery:

Good morning, good afternoon, or good evening wherever you are in the world. This is the climate 21 podcast. The number one podcast, showcasing best practices and climate emissions reductions. And I'm your host global vice president for SAP, Tom Raftery, climate 21 is the name of an initiative by SAP to allow our customers calculate report and reduce their greenhouse gas emissions. In this climate 21 podcast, I will showcase best practices and thought leadership by SAP, by our customers, by our partners and, by our competitors. If they're game in climate emissions reductions, don't forget to subscribe to this podcast in your podcast app of choice, to be sure you don't miss any episodes. Hi everyone. Welcome to the climate 21 podcast. My name is Tom Raftery with SAP and with me on the show today, I have my special guest Zach, Zach, welcome to the podcast. Would you like to introduce yourself?

Zach Stein:

Thanks so much for having me. Uh, My name is Zach Stein. I am the co-founder of carbon collective I'm based in the bay area in California, and super excited to be on the pod. I have a newborn, so he's 10 weeks old and I got maybe four hours of sleep last night. So, if I you know end up sounding like an idiot on this. you will know why

Tom Raftery:

Okay. Carbon Collective. What is that?

Zach Stein:

So carbon collective is what my co-founder and I started after we could not find a place to invest things like our retirement funds in ways that were aligned with the climate transition. So we make it really simple. To invest things like your retirement fund brokerage accounts trusts. We now also do 401ks for businesses in portfolios that are fully aligned with the climate transition, where everything in it has a clear theory of change. And it also makes sense from an investment perspective.

Tom Raftery:

Okay. Okay. That's great. There's a lot happening in the investment space now. Particularly around ESG, but there's also a lot of greenwashing happening in that space as well. So how do I know that if I invest my money with you, that it's not going to be propping up some kind of greenwashed investment.

Zach Stein:

Totally. Totally. That's why we started carbon collective is that wall street really wants us to see them as green. But they just can't. They're too invested in the fossil fuel industry. They have too much baggage. BlackRock did this pretty famously recently where there the head of BlackRock, Larry Fink. who in investment circles is very famous for coming out and kind of being ahead of the game and saying that climate was a really big deal. It was an existential crisis and investment, and it had to be a factor in investment decisions. And that BlackRock, the largest asset holder in the world was going to align its decisions around reaching net zero by 2050 long in the future. But again, much better. That was in 2021 in 2022, the Texas teachers pension said uh, to BlackRock, we're going to cut you as our asset managers. If you keep saying this, we're going to divest from fossil fuels talk. And so BlackRock said, oh no, w we of course are going to stay invested with fossil fuels. We are long-term partners of theirs. And that's the world that wall street finds itself between they're straddling. These two worlds and ESG is what is trying to cut the difference. It is an investment in a world that is less bad. It removes the worst of the worst companies, but we found, and this is, we interviewed 120 people and we started carbon collective. And this is very true for us as well, is that ESG wasn't built for us. So it wasn't built for you and me. It was built for institutional fund managers who you know, can pay tens of thousands of dollars to access the raw data. On ESG and then comb through it themselves as well. You and I, we can't do that. It's all based upon proprietary data. So there's no transparency when you go to that BlackRock ESG fund or you go to the Vanguard one, it's using maybe a company like MSCI to do those analytics, those ESG analytics, you can't actually see how those decisions are made and what goes into that. And So you're doing it on faith. You're saying. Like I broadly trust this. You can realistically assume that it is less bad, but that's a really big difference between good. And when it comes to climate, we need investment. We need investment to solve climate change, and we need that investment to actually be aligned with solving climate change. So that's the place that we started with in carbon collective, and then saying, all right, now we need to work backwards to getting to a point where a portfolio makes sense for your entire retirement fund. How do we apply those best investment principles and do that? So how we build our portfolios is pretty simple. We look at the entire stock market, a hundred percent of it. Right now. We just focus on the us about 20% of those companies on the stock market are companies who are dependent upon the long-term use of fossil fuels. So for their core business to succeed over the next 30 years, fossil fuels have to be around and doing well. We divest from those companies. It's not just oil companies, but you know, things like airlines that technology doesn't exist yet to decarbonize them, petrochemical companies, and many more steel cement. We divest from those. We then give their share that 20% to the companies that are building solutions to climate change. And this is a big thing that ESG doesn't do. There was a long time that the largest ESG fund in the world did not have a single, renewable energy company in there. That's crazy.

Tom Raftery:

Yup. Yup.

Zach Stein:

It's this complete mismatch from what we feel as our gut of what ESG is supposed to be, and then what it actually is, and at least a disillusionment. And so we divest that 20% and we give it to the company. So the companies that are most reliant upon the problem. We give that share to the companies that are building solutions to the problem. These other companies that are growing quickly we try to apply the best index-based principles that we can to this. So we're not picking which solar company is going to win. What we do is we start with broad ethical filters. So we look at what is every single publicly traded company that is building a solution to climate change. We use project draw down as our reference. So this is not just solar and wind, but batteries, electric cars capturing methane from landfills, home insulation, building automation, plant-based foods, and many more. So we create that whole list. We then filter out ethically those who make more money from products that are specifically built from the fossil fuel industry. So the example I like to use is GE general electric. They are the largest manufacturer of wind turbines or the second largest in the world, but they make more revenue from natural gas turbines and jet engines, both products that are dependent again on that 30 year long-term use of the fossil of fossil fuels it. And that's what we use. We don't use climate pledges or anything like that, because talk is so cheap in this space. It's all about revenue. Revenue is our best indicator. Your past is your best indicator of what you're going to do in the future. And we update that annually. And so we remove all those who make more money from those products that are built specifically for the fossil fuel industry. And then the remainder, we just weighed by market cap. And that's what we call the climate index at that 20%. And then for the rest of the stock market, in our core portfolios we do some filtering, like we'd pull up, we'd take out private prisons and meat, production companies and tobacco companies. And for both climate, and also just like private prisons are fucking evil. No one should be invested in those. Uh, Is

Tom Raftery:

that's a uniquely us thing, to be honest, I don't know of any of the countries that has private prisons.

Zach Stein:

it's true? Disgusting. It is contemporary slavery. And so we, and none of our clients should be making any dividends from that labor. But the rest of that economy of the publicly traded companies, they don't depend upon fossil fuels for their core business over the next 30 years, they might use them today. So Coca-Cola might use natural gas to generate electricity or gasoline in its delivery trucks, but that's actually a technology that can be replaced. And parts of it process. So that's where we, as shareholders want to engage with that and say, how can we get you to move as quickly as possible in that transition? We're not going to an oil company and saying, Hey, you need to become a solar company. That's really hard. There's a lot of reasons why we don't think that'll work. We can get into that. We're just say, Hey, let's do the keep doing the same thing. Let's just change how it is powered. Let's change how it's transported. Let's maybe change how you're spending your lobbying dollars. So that's our methodology. And then we publish everything as transparently as we can. So that climate index that I talked about, you can go on our website and see every single company that made it and why in there's a writeup of it. And then every company that didn't make it, who made it through the first filter, but then it was removed. It's a level of transparency that I don't think has ever been done in this industry.

Tom Raftery:

Okay. The hope is that that engenders trust and gets people to join your fund?

Zach Stein:

Yeah, What we found is that there's a couple things that engenders trust like, look we are new. we don't have the luxury of being Vanguard, who people trust. They might not trust them ethically, but they certainly trust them financially. We have some ethical trust, but it's not financial trust. It's saying like, who is carbon collective? And why should I trust you with my money? That's the question of the phase of our business that we're in and we have to get over. So we uh, kind of three things that we need to do. One is transparency. Of really showing everything that's in here. Two, is we need to be real humans behind us. When you sign up to carbon collective, you get a personalized video from one of our team members welcoming you. And saying thank you for joining the collective. And also say we're here for any questions that you have. You can always access us. In the startup world we think about the cost of acquiring customer a lot. And what we believe at carbon collective is that you can, you, we should spend as much of that cost as possible, actually helping you, not on Facebook ads or Google ads or something like that. But how are we actually building a relationship with a real person that you feel comfortable with? Because let's be honest, once you move your money. And you make that transition. You don't touch it that often you don't interact that much. So it's a lot of that interaction is upfront. So let's invest in building that relationship. And the third part is our investment philosophy itself of we, aren't trying to say that we are doing all types of trading and trying to get ahead of the market. We tried to make it really clear what we build and that it's based on index trace principles. Imagine if an index fund was built for the world where we solve climate change, that's what we're trying to do. We're not trying to pick winners and losers in here. We're just trying to apply broad ethical filters that anyone can understand to this market and show all of our work in that process.

Tom Raftery:

Okay. Cool. Nice. To two questions arise based on the two examples you gave. So you mentioned you review your portfolio every year. So does that mean that if, for example, to your point about GM, if they started making more from their wind turbine manufacturing than they did from their gas turbine, that you would reconsider them?

Number one and number two:

about the Coca-Cola example and them switching, from gas power, if that's what they're doing to renewables, if they haven't already how do you affect that change?

Zach Stein:

Great question. So for number one, yes. That's the whole point of some of the power of the climate index of saying we, things change things on the ground, changes that's part, and that's part of why, what you're paying for. With carbon collective. And that fee is that ongoing management and updating, and that responsiveness to what has changed. Otherwise we could just publish a list and say, go do it. And yeah, should G E reached that point where it is now making more from its wind turbine distance. Then yes, they would meet criteria for inclusion and we'd bring back then it, if it switches again, then they would be excluded from this and again, in the larger we get, the more that those decisions we can generate press around. From that, that, that is part of that goal of how we can impact that. I can not wait for the day when we get to say that one of the fossil fuel majors gets meets criteria for inclusion in the climate index. We are incredibly far from that. Despite what fossil fuel companies might want you to think. I'll give you an example that really stood out to me, BP which is maybe the most forward. And it's talk about climate change. It is being sued Right now by a group in the UK for false advertising that in 2019, they ran all these ads around how they were leading and investing in this transition show the electric car chargers, like beautiful parts of rural UK. There were sheep and things like that. And they said that when it looking at the, that talk. Matched with what BP is actually spending its money on. 96 pounds out of every 100 that BP is spending money on is in oil. Yes. Only four are in and anything that's like renewable or green or some other type of alternative fuel.

Tom Raftery:

I'm surprised it's as high as four.

Zach Stein:

Exactly. Exactly. So there's a huge amount of greenwashing in that. Okay. But that is a rabbit hole that I'm going to pull us back out of and get back to your main point. So yes, we do update that. And then w how do you impact change with Coca-Cola and drive that? There's a couple of ways, but the main one that I'll talk about is voting you as a shareholder in a company, you have a say on that company's direction and companies listen to it. They the stock market is a weird form of democracy. It's our Uber capitalist democracy. And what we've seen, how we've seen this tool largely applied in the climate space is to fossil fuel companies. I don't know if you're familiar or your listeners with engine number one. There are San Francisco

Tom Raftery:

black Wednesday. Yeah.

Zach Stein:

Yes.

Tom Raftery:

So I am but for people who are listening, who might not be go on...

Zach Stein:

Yeah. So there are a San Francisco based hedge fund who bought a lot of ExxonMobil in the coronavirus crash when it was very cheap. And with having 0.02% of the company, we're able to build a coalition of investors, including some of the biggest asset holders, BlackRock Vanguard to vote three board members onto ExxonMobil's board. That we're more climate aware than ExxonMobil's ya know drill baby drill traditional board members. And it shocked the world. It was an amazing David and Goliath story. And they showed what small investors can do. And and it's something that's really inspiring from what they've done. Unfortunately, we at carbon collective believe that focusing that type of effort on fossil fuel companies is actually a waste because getting one company to shift, even if it's possible, which it's likely not, or very challenging with an ExxonMobil. Someone else is just going to buy those assets. They're going to buy the rights to drill in that area. And they're in so long as there's demand for that. They're going to pump that. That's just the way our world works now. So we shouldn't actually try and get fossil fuel companies to voluntarily construct supply right now, instead as shareholders who care about climate, we should focus on demand and we should pick the lowest hanging fruit possible. And a lot of this is going to be from companies who really care about consumer sentiment. What do people like you? And I think about them, they invest billions of dollars a year in super bowl ads and things like that. Tried to make us have positive associations with that. That actually puts a lot of power into our hands as individuals, both as consumers and also as their shareholders and especially as a collective of their shareholders to put forth shareholder resolutions. For a much more meaningful climate action. And for us, that's not oh, well you, you know, agree to some distant longterm, like 2050 net zero thing. It's like that the executive team is going to be long gone by then. That's a super easy thing for them to say yes to. It's instead now what's in the next 3, 5, 7 years. And what just makes sense across the board for companies like switches to renewable energy, installing battery backups, switching to electric fleets, all of these have very strong economic arguments to them. Given that, these large companies can be really slow moving beasts because they're so big. They need some prodding to do the smart decision. And that's really where we can see ourselves coming in. And that's how we decrease demand for fossil fuels. The only way we get ExxonMobil to change its business is we have to change. We have to make oil, a bad business to be in.

Tom Raftery:

Alright. Nice. Yeah. Yeah. So, I mean, Engine number one, managed to buy, as you said, 0.2% of Exxon and, affected change that way. However, long-term however long-term useful. That will be given your point about, it being so hard to change them. So what kind of muscle does the carbon collective have? Can you say what size your fund is? I don't know if that's proprietary or, is that something you're free to talk about?

Zach Stein:

It's public. We are a small and fierce and have big plans. So we went from at the beginning of 2021 having about a million dollars that we were managing till we have almost 20 now. We've been able to do this, have relatively low marketing spend. And we have a trajectory to increasing that pretty significantly, which we're really excited about? And what's been really amazing for us to see. It's been a couple of things. This is me putting on my CEO hat. Is people really stick with us. So when people come over with us, they also, they will not only not leave, but actually you start bringing in like, oh, I have this IRA for, at Wells Fargo and this other one at fidelity, Let's bring them over and consolidate. So that's been really amazing to see. And this has been through some really turbulent times in the market. Those who have been watching. Fossil fuels had its best year in 10 years in 2021. The year we got started it's our, luckily our investors really understand the long-term play. And from a financial perspective, why investing in this way is likely much smarter. And so that's been really cool to see. With there's a few ways that we get to create change in Carbon Collective. One, as I said, is voting. We get to vote in coalition with others and we get to set ourselves up to lead in coalition to put those shareholder resolutions forward. You don't need a huge amount of shares to do that. You need to have owned $15,000 of stock in a company for a year to put forth a shareholder resolution or $2,000 for three years. For it. We are already crossed that threshold with a lot of the companies that we're invested in. And so that there's a lot that we could do and start building those relationships. One of the main ways that we are looking to generate change here, and this is the most opaque but I think potentially the most powerful is that of narrative. Narrative is really powerful in the stock market. When we pay for the stock market, we often imagined it's like a bunch of computers doing like computery things, places, it just being like, oh yeah. Like, Oh, this company had its quarterly report and the computers are like, it's better you should buy more of this stock that things like that. And that's somewhat true. There is algorithmic based investing. But it's still largely human. And humans are beautifully, wonderfully biased. We have tons of cognitive biases. We are not rational thinkers. We are not computers. And so we bring that into our investment decision and we don't invest in a vacuum. The stock market is very influenced by the narratives of investors broadly and fossil fuels have had a really powerful narrative going in their favor for decades, that they are a really important part. They're a necessary evil in a long-term investment portfolio. Because that they are often could be countercyclical to the rest of the market. So when the rest of the market goes up, it goes down over the past 30 years. Since the year I was born in 1989, that's just not been the case. A if you had divested the S and P 500 from fossil fuels, you would have done better over that time period. Yeah this is during a time what's crazy is that the thing happened that investment professionals say it's oh, this is why you need it. Where during the 2000. So from 2000, the beginning of 2000, January 1st to the end of the 2010s that during that decade, the S and P 500 was basically flat. Yeah. The tech bubble at the beginning that you had the rest of the economic crisis, the recession in 2008. Fossil fuels the index and the U S or the other hand was like up 350% over that period.

Tom Raftery:

Okay.

Zach Stein:

And so you had the thing where the S and P 500, it didn't do well. And the countercyclical nature of fossil fuels in spite of that, you still would have been better off divesting when we zoom out to this longer time period, this is part of the narrative that we need to change, that it is charity to invest in a way that is sustainable. That is just for Greenies like me and potentially you and your listeners who want to say, oh, I just want to feel more comfortable with how my investments are allocated. No, it's actually also a much smarter way to invest.

Tom Raftery:

Okay.

Zach Stein:

another fact. Yeah. Yeah. Ah ask me the follow-up.

Tom Raftery:

So how can I tell, I mean, is there a way that I can see if I have.

Zach Stein:

Yeah,

Tom Raftery:

$10,000 in 2000 and I invested it with you versus investing it in Exxon or and other fossil fuel group of stocks and shares that there a way I can compare and contrast.

Zach Stein:

we don't have tools all the way back to 2000, but we are building more tools for exactly that like those just really interesting things that are, you know, comparison and you can click around for that, our exact education. We go back to 2015. And if any of your listeners want to email me and say, Hey, I'd like a deeper comparison that goes back. We could build that. It put that together. We have data that what I talked about that 1989 this was data that was put forth by the Boston consulting group. This is Jeremy Grantham. I was very famous investor. They went to go look back. He, he is, He is very prominent as an investor, kind of ringing the alarm bell of climate change of being like climate risk is the thing that we need to be paying attention to here. And he's known for calling out bubbles in particular. And that was his data of going back and then it ran for up until 2017. And then we also added from 2017, basically to the present that you would have been much better off divesting from fossil fuels in, in seeing that what, and then what we could do looking ahead, because that's the looking back question. Th the past is the best predictor of the future. What we look ahead, we believe that we're in a pretty significant technological transition right now. A lot of people in us included use the analogy of the horse and buggy to the automobile of where we're in right now, where there, when it comes to generating electricity and when it comes to moving us around, there's just better technologies here that don't use fossil fuel. So in the us 56% of the oil that is consumed in the us goes into cars and trucks. So this is light duty about, 36% is at light duty vehicles. So this is like cars and trucks like mine and yours. And then the rest of that is in like medium and heavy duty vehicles, like long haul trucking and stuff like that. Over half of the oil.

Tom Raftery:

Yeah. Yeah

Zach Stein:

Uh, that is, That is consumed and electric cars are just better. They are faster. They're roomier, or they are safer. They are more powerful. They have way more features. They last four times as long, they are cheaper to own over their lifetimes, and they're going to be cheaper to own upfront in the next five years.

Tom Raftery:

Yeah.

Zach Stein:

So would you, and this is a guy just zooming all the way out. Would you rather hold in a fund that you're planning to hold for the next 30 years, a fund that is holding fossil fuels, who half of oil companies, business is potentially going to be replaced in the U S with a different technology. Or would you want to own that, young and fast-growing technology itself and ride the way up with that transition? That's part of that narrative that we get to come out and frankly, like part of me being on here and podcasts like this and expanding that reach and getting to tell those stories, because it's a story that wall street is a little too focused on the 90 day cycle.

Tom Raftery:

Yeah.

Zach Stein:

To be able to tell, but us coming from this climate first place, we actually can be in that position to tell it and help bring along and help bring you along and help you feel confident that this investing in this way is not only the right thing to do of how to generate as much impact as we can from this pool from this action, this lever that you have to pull. But also is very likely to smart thing to do as well.

Tom Raftery:

Yeah. I mean, To your point to, to your points, I guess the first one is this was a long weekend here in Spain, where I live and, we are a single car family, and our car is a fully electric car and we went away for the weekend. And we went to a lovely place in the south of Spain called Las Alpujarras And it was fantastic. We drove there in the EV. It was let's see, 340 kilometers away. Didn't have to stop. Got there on a full charge having charged the car off the solar panels before leaving. So essentially free to get there. The hotel we stayed in had a free charger for the use of the guests, two of them. In fact obviously we only needed one. We were the only EV there. So we had our choice. So the days that we were there, we'd wake up in the morning to a full tank and drive around zero cost to us full, free tank every morning. When you wake up, how cool is that? And then we drove back just the day before yesterday. We drove back on Sunday evening, again, full tank before we left free, got back here, plugged in when we got here and it was full again Monday morning, just at almost zero cost to us, you know, phenomenal. And as you said, great car to drive the whole thing. So that's.

Zach Stein:

And what happened while you were there? What were gas prices?

Tom Raftery:

Uh, I have no idea I haven't checked, but I, I suspect the whole thing. This is March 1st. We're recording this. I we're in the middle of the Ukraine, Russia war. I expect that's hit gas prices. Last time I checked, they were around a one Euro. 31 Euro, 40 per liter. You know how that translates in the last car I had that in, it had an internal combustion engine. It was a Toyota Prius, which kind of will tell you my, my priorities right there. And that used to get f You know, ive or six liters per hundred kilometers. So if we say five liters per hundred kilometers by one Euro, 30 per liter, that's what's that 7 57 euros, 50 per a hundred kilometers. I'm crap at maths, but it's around that anyway. And in the car that I have, it's a Volkswagen ID four it's averaging around 19 kilowatt hours per a hundred kilometers. And if I were to fill it off the grid, a kilowatt hour here costs 9 cent per kilowatt hour. So yeah. Yeah. So 9 cent per kilowatt hour by a full tank is 77 kilowatt hours. So what's that's

Zach Stein:

It's the same, basically the same that you would have paid for six liters of gas. Yeah. Yeah. That's wild. Yeah. Yeah. That's part of what has been one of the silver linings with this insane crisis in Ukraine of, it's just showing again, a fact that we all know, but energy independence is really important and. The only way to actually get that is to generate that energy at home. And that's going to be through wind solar. We have to find better ways of storing it within things like batteries and stuff like that. But there's a lot of potential, so and, and you said you had a second point.

Tom Raftery:

And so the second point that occurs to me is. This may be super obvious or it certainly would be to a lot of people who've listened to this podcast. Cause I bang on about it enough. And it goes back to what you were saying. It's that with the. Stated aims of the EU getting to 55% emissions reductions by 2030, the Biden administration wanting to get to 52% reductions by 2030 China saying they want their emissions to peak by 2030, and they want to get to 40% renewables by 2030. And everyone wanted to get to near net zero by 2050 or 2060. In China's case, it means. We are in far massive change, and there's going to need to be enormous investments in the climate space for the next seven years to get to 2030. And then that will be the low hanging fruit. So even greater investment, again, out to 2050. So I think anyone who's investing in anything other than climate related funds right now. Is insane because the market is just going to explode and I hesitate to use the word explode with anything that has batteries in it, but you know what I'm saying? It, I mean, anything that is fossil fuels and run away from because we have to get away from those, if we don't we're dead anyway. Then it's a waste of investment either way. And we, there's going to be enormous growth in the climate space. So why wouldn't you put your money there?

Zach Stein:

Absolutely. Yeah. What you've hit upon is a potential kind of logical path to make this type of investment decision. Which is the only way that we're going to have a livable world that I want to retire into is for us to decarbonize on basically the rate that you described. So therefore of course I should align my investments with that world because if we don't have that, then it might just not matter.

Tom Raftery:

Exactly.

Zach Stein:

And that's a really scary thing to say. And it's also like, as someone who is a, you know, investment company, that's trying to get you excited about investing. I sometimes have some trepidation of that. But I, think it's also important as an investment manager who is focused on climate to really face what the alternative, what failure looks like in climate action in that it has. Unbelievably terrifying th that, that, that is in what that world is. I go back and forth of like how much I could face it versus how much I just need to ignore it and put my head down and keep going. Things you probably saw the latest IPC report, which is just, I absolute kick in the pants really

Tom Raftery:

I'm a, I'm a scientist, I'm a graduate scientist name on a couple of papers, all that kind of thing, but that's a long time ago. I switched into technology back in own 95. And I know from my time in science, that scientists speak that. Very conservatively. And then when you see the report that came out, we were talking about the sixth report that came out on the 27th of February, 2022. When you see the language in that, and you think to yourself, this is scientists being unbelievably conservative, and then having their unbelievably conservative talk watered down, because it had to be agreed by politicians before it could be published and you read it and you go, despite those two filters, this is still incredibly alarming. Holy crap. We really need to go. I mean, At least it did say there's still a window of time. It wasn't, oh, we're a, we're all doomed. It did say, there's still a narrow window of time in which thing we can turn things around.

Zach Stein:

Yes. Yes. There, we always have to hold onto hope. For other otherwise it's, somewhat futile with the work that we're doing, if that's the case. But I think it is also really important to have those times where we do face at I wrote, wrapped up a big piece of content. That's coming out soon called the ultimate guide to sustainable investing. And there's two articles that I wrote. One is highlighting something that's not talked about enough in climate, which is the world where we solve climate change is just a better world than today. And it's not because like we avoid climate change. I mean, Obviously that is, or we avoid the worst effects of climate change. But it's like, no, then just if we magically switched everything today, our world would be safer. It would be cleaner. It would be healthier. It w we would have like, there'd be fewer Putins. There's a lot of ways it would be better. But then the flip side of that was really going down the rabbit hole. And this is, one of those students it's incredibly challenging to do with a 10 week old of what does a three degree world look like and how devastating.

Tom Raftery:

yeah,

Zach Stein:

Is that it happened how much suffering could we be in for that? And so that's, I don't mean to bring us fully down, but I do think it is something that is really important for any one in this space. I think we all go through those times of really just looking directly at the sun.

Tom Raftery:

Yeah. I know. I, I think your point about, Putin on the other Petro states and how they're propping up regimes that wouldn't otherwise last, just because they've got fossil fuels in abundance, that the idea of taking away their power and democratizing their states by taking away their source of income. It's just, it's really important. But as well, I think something that a lot of people forget. Bizarrely is that something like 8.7 million people die every year as a direct result of the burning of fossil fuels. So if we stop that, I mean, that's more than died per year from COVID, And we can stop it just by stopping burning fossil fuels.

Zach Stein:

And this is part of, what's hard with, you know, humans are just conservative by nature. We don't like change and fossil fuels. They've been a part of our lives that are part of urbanization and they've invested a huge amount of money and making it seem like they are normal.

Tom Raftery:

Yeah.

Zach Stein:

And what this is. I as a part of this piece, I just, you know, going down sub fossil fuels disinformation campaigns that they've been running and one was here in the U S there's a lot of more progressive cities are banning the use of a new natural gas. And new construction. So not old construction. No, one's gonna come rip out your stove, but if you're gonna build a new house, it needs to have induction stoves. There's no natural gas piping going in there, heat pumps, et cetera. And the fossil fuel industry is paying people impersonators on next door, which is an app for like neighborhoods to talk about the often, we'll talk about cat burglars and things like that to come in and and, you know, raise concern and sow false alarm. About this to say I don't want anyone taking my stove.

Tom Raftery:

no, my God. Oh my God.

Zach Stein:

It's there's things that are really heartening right now. Like for example, Germany in the green party saying we actually are going to embrace nuclear and coming away from that stance there's evidence that Putin paid. This is, long ago, but in the fossil fuel industry was actually funneling money to anti nuclear campaign. In Poland, in Germany, which makes a lot of sense. It's, if you use a lot of fossil fuels, I have a pet conspiracy theory. Can I share It for a second? It's like one of those where it's probably not that crazy. So in the U S there's been this big campaign against coal it, and which is great. Coal is horrible. It's horrible for human health is horrible for climate. But we're also now just seeing how bad natural gas is for climate, especially with methane emissions. I have a conspiracy theory that the fossil fuel industry or the oil industry in particular big oil helped fuel the anti-coal campaign

Tom Raftery:

It could

Zach Stein:

it with natural gas, because Exxon doesn't really own coal fields, but they have a lot of natural gas. So of course, they're going to want to say, yeah. let's just label natural gas is sustainable and the bridge fuel.

Tom Raftery:

Let's first of all, not call it meta and let's call it naturally. That branding right there was phenomenal. And I was called, it has gone out of the American system. We've seen a huge increase in the burning of methane,

Zach Stein:

Yup,

Tom Raftery:

not to call it natural, I

Zach Stein:

yup. Yup. Yup. A greenhouse gas that is 30 times worse than carbon dioxide. So that's what I have no idea if that's true, but It would not shock me. in the slightest if It was.

Tom Raftery:

considering all the other stuff that's happened in the space. Zack, look, we're coming to the end of the podcast now is, is there any question I haven't asked you that you wish I had or any aspect of this that we haven't brought up that you think that's important for people to be aware of?

Zach Stein:

generally like to end up with this, which is how has an individual, should you think about climate change and what you should do. And we often. I think that as individuals, like what, w what is your impact of your climate action? We often think oh, if I don't buy a steak. There'll be one fewer stakes. No, like that cow is already dead and all of that, it works in step functions and we have to actually think mathematically of what is the potential impact of that action and then the likelihood of it happening. If you're the last, if you were the person who the airline said, all right, we're now going to cancel this route because we had one, we just didn't have enough people. There is that person. That is how you have crime inaction there. Fake, there is an element of. In it, of what it can be. And the big places to have actions are the big places in your life that the one-time decisions, how you drive, how you get electricity and where you put your money, because you don't have brain space everyday to always be thinking about this. So that's where you should start.

Tom Raftery:

Very good. Very good. No, it makes a lot of sense. Cool. , Zach, that's been great. If people want to know more about yourself, Zach Stein about the carbon collective or about any of the things we talked about on the podcast today, where would you have me direct them?

Zach Stein:

Carbon collective.co.

Tom Raftery:

Simple as that super. Okay. Easy peasy. What about those articles that you said you were writing? Will it be there as well? On carbon collective.co?

Zach Stein:

Yeah, we're trying to have them come out in April, along with earth day. It's also financial planning month. So yeah, the ultimate guide to sustainable investing, it's going to be really cool. We're going to have tables that show all of the different sustainable portfolio options that you can get from the key providers. What percent of them is fossil fuels? The spoiler. It is a surprisingly high amount. What percent is invested in climate solutions? So what are the different performance criteria for them? So it's again, part of our goal of. How are we bringing as much transparency to this space? So you can make an informed decision.

Tom Raftery:

Okay. And just for clarity as well for now, you're just available to investors in the U S.

Zach Stein:

We are going to be launching our first ETF this year. And that is if you can buy things that are traded on U S markets, then you'll be able to buy our ETF with that. And it's going to be the climate index, which is that filter of companies, those that are building solutions to climate change. And that's the first of our family of funds. So more will be coming.

Tom Raftery:

Okay. Super Zach, thanks a million for coming on the podcast today.

Zach Stein:

This was so fun. Thanks so much for having me.

Tom Raftery:

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about climate 21, feel free to drop me an email to Tom dot Raftery at SAP.com or connect with me on LinkedIn or Twitter. If you liked the show, please don't forget to subscribe to it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks, catch you all next time.