When we started looking into the most climate-friendly ways to invest in the stock market, we really wanted to like Aspiration’s “Redwood” mutual fund: REDWX.
Their website is beautiful and the way they describe their mission seems aligned with ours: help people move their money away from places that are making climate change worse to where it can help make it better.
The Aspiration Redwood Fund’s website tells us to “Invest in What Matters” and that companies “Battling Climate Change” have performed better over time.
Sounds awesome. So what’s in the fund? Here’s their latest filing with the SEC about their holdings from 03/31/20. The SEC doc is kinda hard to read, so we exported the data into an Airtable:
Did you find the companies “Battling Climate Change?”
Neither could we. REDWX has no renewable energy companies. No energy efficiency companies. No electric car companies. No battery companies.
We constructed a list of the 113 publicly traded companies solving climate change. Our list and REDWX have only one overlapping company: LKQ.
LKQ is a cool company. They are one of the largest auto parts recyclers in the world. They help the auto industry operate in a more circular fashion. We included them because industrial recycling and circular economies are one of the Drawdown Solutions.
Nor could we find many companies we felt particularly inspired to “invest in what matters.” From Visa to Costco to Best Buy to Disney, REDWX is mainly built of companies who are not terrible for climate change, but aren’t great either.
But some companies stand out as notably not sustainable.
- Reynolds Consumer Products. They make aluminum foil (Reynolds Wrap) and Solo Cups
- Royal Carribean Cruises. The cruise industry is not known as particularly sustainable. And Royal Carribean isn’t even at the top of the list. They got a “D” from Friends of the Earth, with an “F” for air pollution.
- Berkshire Hathaway. Berkshire Hathaway is a holding company that owns multiple fossil fuel companies. REDWX explicitly says it has no fossil fuel companies! Argh!
For a “green fund” that doesn’t even include Beyond Meat, we are left asking ourselves “where’s the beef?” Until Aspiration starts matching its rhetoric with its funds holdings, we advise you to stay well clear of REDWX.
There are good climate-friendly ways to invest in the stock market. For example, for renewable see our full guide to renewable energy stocks.
Why greenwashing hurts the movement against climate change
The reason we started Carbon Collective was because of our disillusionment from offerings like Aspiration’s REDWX.
We are really scared about climate change. If you’re reading this, you probably are too. We want to find the best ways we can each individually take action because together we can shift the trajectory of our planet towards a stable climate.
It is deeply frustrating to see these strong emotions get taken advantage of by something like REDWX. There aren’t yet that many people who are prioritizing climate change in their investing. If you are one of them and you choose to invest in REDWX, that’s money that could be invested somewhere else that could have a real impact.
And if you are like us and went on the journey from excitement to disappointment with REDWX, it might have led you to feeling apathetic. You say to yourself: if Aspiration’s fund doesn’t actually have an impact, then who could?
Such apathy raises the burden of proof for real solutions to convince people to use them. Fool me once… You get it.
So, Aspiration, as one climate activist to another, please overhaul REDWX. We need to all be working in lock-step together or, at the very least, pointed in the same direction.
About Carbon Collective
Right now it feels like you either have to choose between being a smart investor or supporting companies driving real climate impact. We wanted to do both.
Building a diversified investment fund built around solving climate change is hard but not impossible. We did it (see how).
Our diversified stock and bond portfolios invest you in over 80% of the stock market (1,500 stocks). They give greater weight to the companies solving climate change while broadly exposing you to the companies in the market who do not rely upon fossil fuels for their core business. You pay the same price as a generic online investment advisor like Betterment or Wealthfront.
Unlike REDWX, Carbon Collective is not a fund, but an investment advisor. We place you in one of our comprehensive, climate-friendly portfolios based around your goals and desire for risk. Check out our simulated historical performance, low fees, and industry-leading carbon footprint.