Create Real World Impact with Your Investments
May 9, 2022
3-5 minutes reading time
The kind of change that comes with climate change
2021 was a landmark year for climate action, culminated by a global wave of net-zero pledges stemming from the UN’s Global Climate Change Conference (aka COP26).
And why not? Not to sound like a broken record, and we hope we’re already “preaching to the converted” so to speak, but the time to act is now.
Each year we see increasing natural disasters attributed to climate change - and last year was no different. In Canada alone, we saw the deadliest heat wave in history that claimed the lives of 570 people, not to mention floods in the Pacific Northwest (BC) that wiped out homes, farms, and the livelihood of families.
If we continue at our current pace of global greenhouse gas (GHG or CO2e) emissions, climate disasters are only going to get worse. Insurance giant Swiss Re estimates that at our current pace, climate change could cost the global economy $23 trillion by 2050 - that’s over 14 times the size of the entire Canadian economy!
According to McKinsey, to avoid the most dangerous and irreversible effects of climate change, global warming needs to be limited to 1.5oC above pre-industrial levels by 2100, which means cutting global carbon emissions to net zero by 2050.
What can we do?
Okay, enough scary numbers. We all know we need to act - and governments and policymakers have long sounded the horn on this issue. But one burning question that we find often goes undiscussed is: what does climate action actually look like for the average consumer? For those of us who share the concern around climate change, what can an individual actually do to make a difference?
According to Hotorcool.org, a public interest think tank, the biggest consumer drivers of CO2e emissions are:
And as consumers, here are some ways we can potentially lower our carbon footprint:
- Taking the bus instead of driving will save on average 2.2 tonnes of CO2e per year (assuming a 32km roundtrip commute)
- Powering your home via solar panels will save on average 3.8 tonnes of CO2e per year
- Deciding to go vegan will save on average 3.3 tonnes of CO2e per year
But, none of these lifestyle changes come even close to the positive impact you can make by simply aligning your investment dollars with climate action.
Introducing: OneVest’s Climate Impact Portfolio
OneVest has carefully curated a suite of diversified, multi-asset portfolios that consist entirely of environmental, social, and governance (ESG) integrated investments, which are broadly diversified across global markets, complemented by impact investments, which include innovative asset classes such as impact equities, green bonds, as well as carbon credits.
While other wealth managers are just starting to roll out specific asset classes - like green bonds - you get that and much more with OneVest’s Climate Impact Portfolio.
Wait, what’s the difference between ESG investing and impact investing?
Whereas ESG tends to focus more on risks (minimizing negative impact) associated with environmental, social, and governance (ESG) factors, Impact Investing intentionally seeks positive changes to specific ESG factors. Whereas ESG is a broad-based framework that can be applied to all companies, impact investing tends to focus on companies in particular industries. While ESG will often compare relative scores between industry peers, impact investing focuses on absolute, measurable change. The differences are important but can sometimes be subtle:
From an ESG lens, one may observe that Car Company A has a lower carbon intensity (scope 1+2 CO2e emissions) than Car Company B in their production processes, and therefore, all else equal, Company A is the better investment. However from an impact lens, one may want to invest in Car Company C instead, because Car Companies A and B still rely on internal combustion engines while Car Company C is in the business of electric vehicles (EVs) - a source of clean energy that avoids burning fossil fuels entirely and therefore contributes to negative scope 3 CO2e emissions and a negative carbon footprint (scope 1+2+3) as a whole.
ESG investing is about getting companies to be better actors (i.e. Car Company A vs. B) while raising the bar for entire industries as a whole. However in the context of climate action, ESG investing alone won’t be enough for the world to achieve net-zero by 2050.
On the other hand, impact investing is about steering capital towards innovative industry segments (i.e. Car Company C) whose business models and products create positive upstream and downstream effects. In the context of climate action, it’s often about creating negative carbon capture or innovations to accelerate our transition away from carbon-based sources of energy.
From an investment lens though, both are critical to bringing an optimal balance between return, risk, and impact.
Yes, we can! (make a difference)
So how large of an impact can consumers make with their investments? Well the good news is, you don’t have to be super wealthy to make a difference.
According to StatsCan, the average Canadian household has approximately $126,000 in financial assets. In a OneVest Climate Impact Portfolio, that amount invested will help create a positive impact of anywhere from 115-175 tonnes of CO2e footprint reduction per year, depending on your risk profile. That’s more than 50x the impact of taking the bus instead of driving, and 30x the impact of switching your home power or diet just by investing intentionally.
And that’s not all. OneVest’s Climate Impact Portfolio also holds to the following environmental, social, and governance (ESG) standards:
1. A minimum 50% carbon intensity reduction compared to a conventional portfolio, as defined by scope 1+2 CO2e emissions
2. Alignment with the following United Nations Sustainable Development Goals:
- #7 - Affordable & Clean Energy
- #9 - Industry, Innovation & Infrastructure
- #11 - Sustainable Cities & Communities
- #12 - Responsible Consumption & Production
- #13 - Climate Action
3. No investments in any of the following:
- Companies in violation of the United Nations Global Compact Principles
- Companies with very severe controversies
- Companies in the business of controversial weapons1 or tobacco2
- Companies whose primary revenue comes from the ownership, extraction, distribution and/or sales of fossil fuels
Now that’s real impact.
Greenwashing is one of the worst things happening in the investment industry right now. With the launch of our Climate Impact portfolio, OneVest commits to full transparency with our ESG and Impact reporting, empowering everyday investors to be able to make a measurable positive impact with their investment dollars. The stats above are as of inception, and we will update those numbers annually at a minimum.
We proudly and confidently say that no other wealth manager in Canada, digital or traditional, offers anything remotely close to this exciting and unique opportunity for investors to make money while making an impact.
Interested in offering unique portfolio solutions like Responsible Investing or alternative investments to your customers? We can build it. Get started with OneVest today!