Putting Your Money Where Your Mouth Is

Welcome to the Strawman, the daily climate newsletter that’s like the cool teacher that plays movies in the classroom - except we got memes instead!

Today we’re diving into the world where retail investing meets climate and sustainability.

Whose fault is it?

Identifying responsibility in tackling climate change is a tough challenge. While some campaigners stress that we need to focus on corporates (like the 100 energy companies that have been responsible for 71% of historical emissions) others argue that their emissions are driven by consumer demand.

One thing’s clear, if we’re going to fight climate change we’ve all got to play a part and make some sacrifices. Except paper straws. Literally any other material would work better.

Why your investments matter

In a 2022 report, Standard Chartered found that a whooping $8.2 trillion of retail wealth could be funnelled into sustainable investments by 2030. Even today, 40% of retail investors consider carbon emissions as a top investment priority. Huh, looks like the people do care about climate change.

At the same time, it’s unclear that much of this interest is translating to real investments. So why don’t more people put their money where their mouth is? Almost 50% of retail investors felt that climate investments are inaccessible, higher risk, and harder to understand. The reality is, there’s a lot of education to be done before we really start making a dent.

Retail investors are like me and my diet. I say I want to be healthy. I say I want to hit the gym. End of the day? Best believe I’m eating that large Domino’s pizza on the couch. Yikes.

Corporates coming full circle

Multiple startups are focused on helping retail investors to access ESG stocks and assets but many of them aren’t doing so well. Take Clim8 for example which has raised £12m to date. Just last week they announced that they’re shuttering their doors after 4 years of operations citing an inability to grow as fast as needed. Meanwhile retail investors continue to pile in to meme stocks - maybe the climate space needs its own? GME? more like ESG amirite.

This hasn’t stopped others from leaning into ever-increasing retail interest. Take Schroders for example, who launched Climate+ yesterday. This long-term fund is set to invest in ESG assets and facilitate direct investment as well as onboard pensions funds. But with a name like that, they’re not getting any prizes for creativity. Let’s hope the portfolio’s better than their marketing.

The question remains, can we get retail investors to act like they say they will? It’s likely that we’ll still see more and more retail focused climate fintechs ranging from neobanks to investment platforms but it’s key they get their messaging right. They should give the Strawman a call.

‘til next time,

The Strawman