August 12, 2021

Are My Retirement Savings Invested in Fossil Fuels?? Help!

by How to Save a Planet

Background show artwork for How to Save a Planet

Look inside your retirement savings and you may find some surprises: oil and gas companies, pipeline operators, utilities with coal-fired power plants. It can feel like no matter what you’re doing to combat climate change in your daily life, your money is retirement savings are working against you. So how do you invest without wrecking the planet? Is there such a thing as green investing? And why isn’t this easier to figure out? This week we ask: What does it mean to try to put your money where your values are?

Guests: Andrea Egan, Leslie Samuelrich, Boris Khentov

Take Action!

  • First, if you do have a retirement account — find out what you’re invested in! You can go to and plug in the names of the funds in your portfolio. They’ll give you a breakdown of the fossil fuel exposure you have right now. 
  • Then: Demand better! If you want to go fossil fuel free and you have a retirement account at work that doesn’t offer good options, tell your HR department that you want climate-friendly or fossil fuel free funds added to your retirement plan. The shareholder advocacy group As You Sow put together a 401(k) Toolkit with advice for getting fossil fuel free options added to your retirement plan, and Green Century also created a handy guide.
  • You can do the same if you have an individual retirement account. Tell your asset manager you want high-quality fossil fuel free investing options. The more they hear from their customers, the more seriously they take these things! 
  • And...keep calling Congress! The Senate is currently debating key climate policies, including a clean electricity standard, which we talked about in our episode, Is Biden’s Jobs Plan a ‘Skinny Green New Deal’? So now is a great time to call your members of Congress and demand serious action on climate change. You can use our tips or check out this handy guide from Fossil Free Media, at They’ve got simple instructions and an easy script to help make your voice heard. 
  • Want to learn more? David Roberts at Volts has a good run-down of what’s being considered in Congress right now.

Check out our Calls to Action archive for all of the actions we've recommended on the show. Send us your ideas or feedback with our Listener Mail Form. Sign up for our newsletter here. And follow us on Twitter and Instagram.

This episode of How to Save a Planet was produced by Rachel Waldholz. The rest of our reporting and producing team includes Kendra Pierre-Louis and Anna Ladd. Our supervising producer is Lauren Silverman. Our editor is Caitlin Kenney. Sound design and mixing by Peter Leonard with original music from Emma Munger and Peter Leonard.

Where to Listen


Dr. Ayana Elizabeth Johnson: Welcome to How to Save a Planet. I'm Dr. Ayana Elizabeth Johnson.

Alex Blumberg: And I'm Alex Blumberg. And this is the show where we talk about what we need to do to address the climate crisis, and how to make those things happen.

Alex: So, Ayana.

Ayana: Alex, yes. Hi.

Alex: I recently had this call with a listener.

Andrea Egan: My name's Andrea, and I'm a software engineer for local government.

Alex: So Andrea Egan, she works for the city of San Francisco. And she explained her conundrum.

Andrea Egan: You know, in my day-to-day life, I make all these decisions kind of based on their impact on the climate. You know, if I'm at the grocery store, I'm like, "Oh, maybe I should buy less meat," or I should take, you know, a bike instead of driving somewhere.

Alex: But, she says, despite everything she does to reduce her climate impact in her daily life, there's this one area where she just can't figure out what to do—her retirement savings. She's got this retirement account, and like a lot of people with retirement accounts, her money is invested in the stock market through index funds, which are these big baskets of stocks of lots of different companies, often including fossil fuel companies.

Andrea Egan: I have my retirement in these total stock market index funds. And presumably, that means that I am invested in these oil and gas companies, and I don't really want to be supporting them.

Alex: Did it feel like your money was sort of working against you a little bit?

Andrea Egan: Yeah, definitely. And you know, it got to a point where I had been investing regularly sort of every month, I had been setting it aside, and then I actually stopped for the past couple of years, because I was like, I don't know that I really want to invest in these companies. I don't know how I feel about this. And, you know, that was a really bad choice for my financial future.

Alex: [laughs] Right!

Andrea Egan: And my retirement, because, you know, you should be investing. The sooner you invest the better. But I just didn't know where to put it. And so I thought, okay, well, I'm just going to let it sit in my savings account now. And so when I wrote to you, that was when I was sort of like, okay, I can't just let this money sit in my savings account anymore. I have to figure out a way to invest and get some level of returns, but not necessarily be supporting these companies that I don't want to support.

Ayana: I find this totally relatable.

Alex: Oh, really?

Ayana: Like, this scenario where you don't want to do any harm, but it's actually really hard to figure out what the good thing to do is, so you do nothing. [laughs]

Alex: Right. And in doing nothing, you're sort of harming yourself.

Ayana: Yeah.

Alex: Yeah, it's a conundrum, right?

Ayana: I mean, I also—as someone who understands a lot of climate facts—I'm like, what is the world even going to be like by the time I'm ready to retire? And, like, will money still exist then and, like, what's the point?

Alex: [laughs]

Ayana: It just raises, like, all of these big questions.

Alex: Right.

Ayana: We are not gonna answer all of those questions on this episode.

Alex: Will money still exist in 2055?

Ayana: TBD.

Alex: But we are going to try to answer Andrea's question, at least. Because a lot of you have written to us with this same worry, that even though you're taking all this action in your daily lives to combat climate change, the money sitting in your retirement accounts might be undermining those efforts.

Ayana: So today, we're gonna try to help you figure out what do you do with your money if you do not want it to be screwing up the planet? Is there really such a thing as green investing?

Alex: And Ayana?

Ayana: Alex?

Alex: If I could boast for one moment.

Ayana: Just—just one.

Alex: I think I might have been born to answer this question. [laughs]

Ayana: [laughs] This is your jam, in fact.

Alex: It combines my two favorite nerdy loves: the climate and money.

Ayana: I mean, the man whose two—I would hope—most famous podcasts are Planet Money and How to Save a Planet, this is like ...

Alex: The big mash-up.

Ayana: A [bleep] romance.

Alex: [laughs] Also, we should say up front: nothing in this episode constitutes investment advice. But we are gonna talk through this question of green investing—what it is, and how the investing part and the green part can sometimes come into conflict.

Ayana: And then we'll meet some people who are trying to change that, and turn green investing into something that's not just greenwashing, but very, very real. I learned a ton from this episode, excited to share it with you after this break.


Alex: All right. So before we dive into green investing, we just need to talk about investing.

Ayana: Like, the regular stuff.

Alex: The regular stuff.

Ayana: Basics. Give it to me straight, Alex. What are we even talking about?

Alex: [laughs] So investing at its most basic is a way to take any extra money that you're not spending now and try to turn it into more money. So in Andrea's case, and for many of us, that means more money we can use to retire.

Ayana: Yeah. Extra money is like a very weird concept as the starting point.

Alex: Yes. We should say up front, just having this question implies a certain level of good fortune. You're making enough money that you can afford to have some of it left over after your basic needs are met.

Ayana: And right now, a lot of Americans, roughly a quarter of us, don't have any savings set aside for retirement. And, of course, among young people that number is even higher, which makes sense, because we usually don't earn as much when we're young, and we're often in entry-level jobs that don't pay very well. Also, retirement can seem very far away and like something you can plan for later.

Alex: Yes. When I was in my 20s, retirement was just—it was practically sort of impossible to conceive of.

Ayana: Yeah. To be honest, it still kind of is. But, you know, here we are.

Alex: Exactly [laughs]

Ayana: Muddling through.

Alex: Muddling through.

Ayana: But Alex, the premise of this is really simple, right? If we want to retire some day, we're gonna need to have some money.

Alex: Exactly. And historically, the way we got money in retirement was a lot of jobs came with pensions, but that's less and less common.

Ayana: And so today, most of us have to figure on our own how to put away money for retirement. And turns out you can't just put it in a savings account because you need it to grow faster than inflation.

Alex: [laughs] Right. So generally, that means putting your money into some kind of retirement account that is invested in the stock market, or at least partially in the stock market. Now some people have these accounts through work, often those are called 401(k)s.

Ayana: Mm-hmm.

Alex: Some of us have individual ones, those are sometimes called IRAs, or Roth IRAs. IRA stands for "individual retirement account." But the idea is the same: you use these accounts to invest your money to make it grow. But here's a question: how does that money actually grow? What does that even mean to have money grow?

Ayana: The whole thing just seems totally fake to me.

Alex: [laughs]

Ayana: It's like, you know, we print pieces of paper, and now we just, like, move numbers around the cloud? I mean, what even is money?

Alex: [laughs] I mean, don't get me started. Simple question, not a simple answer. But here's how I think about this question of, like, how to get your money to grow anyway. There's basically two ways your money grows: you can buy something that increases in value, or you can lend your money to somebody who says, "I will pay you back with interest over time."

Ayana: Mm-hmm.

Alex: And that's essentially the two things that are happening inside your retirement account.

You're either lending money to somebody who says, "I will pay that money back with, like, a three or four or five percent interest rate over time," or maybe higher. Those are called bonds. Or you're buying something that you hope will increase in value. Some people invest in real estate, but often, the thing you buy is a little piece of a big company—otherwise known as a stock.

Ayana: That's actually kind of cute, Alex, to think of stocks as, like, these little pieces of companies.

Alex: Little teeny, little—little Lego bricks. [laughs]

Ayana: Little snacks. Little company snacks.

Alex: Exactly. But that's exactly what they are! And because the value of those little pieces can go up or down, the most common and widely-accepted piece of advice for everyday people like Andrea is to invest in a really wide variety of companies and sectors.

Ayana: Diversify.

Alex: Diversify.

Ayana: I've heard diversity is a good thing in a lot of contexts.

Alex: [laughs] Exactly, exactly. And when you diversify, you hedge your bets, right? You get the success stories like the Apples or Amazons of the world, and over the long term they will hopefully more than pay for the stocks of the companies that are gonna go out of business, like the or whatever that are also in your portfolio.

Ayana: [laughs]! Always here with the zinger examples.

Alex: [laughs]

Ayana: But, of course, like, if you invest broadly, there could be some bad guys in there.

Alex: Exactly. All right. So Andrea, the listener who emailed us, she did what the research tells you to do, which is to invest in as big and broad a basket of stocks as possible. And she was actually kind enough to let us look inside her investment account.

Ayana: Whoa! That's very intimate.

Alex: I know. Our listeners really trust us. So her retirement account is called a Roth IRA, and it's with a company called Vanguard. Vanguard is this really big asset manager, basically a company that handles your investments for you.

Alex: So this is your ...

Andrea Egan: This is my Vanguard page.

Alex: This is your Vanguard account. Right. Okay. It's such an alphabet soup. Oh my God!

Andrea Egan: Yeah. So this is my Roth IRA. And right now I have VFIAX, VFTAX and VMMXX.

Ayana: There's just so many letters! [laughs]

Alex: So right away, we're just, like, deep in acronym land here. [laughs]

Ayana: Yeah. Like, ease us into this, would ya?

Alex: [laughs] So the VFIAX, that sort of acronym?

Ayana: Uh-huh.

Alex: Is what's called an index fund, okay?

Ayana: Okay.

Alex: And basically, this fund takes money from a bunch of people like Andrea, and uses that money to buy shares of a whole bunch of companies. In this case, the fund is following an index—hence the name—called the S&P 500, which is basically a list of the 500 biggest publicly-traded companies in the United States. So this fund owns shares of almost all the companies on that list. And by the way, when we say Andrea "owns" fossil fuel companies, this is what we mean. She owns shares of a fund that owns shares of those fossil fuel companies. So it's a little bit indirect.

Ayana: And so this is what you're talking about when you say a broad, diverse portfolio. It owns shares in all these companies.

Alex: Yeah. It's saying, "I'm not gonna choose among these 500, I'm just gonna own pieces of all of them." And that's good because it's broad, but also a fund like this is cheap. And that's in part because it's so simple—you're just buying stocks on this list. You aren't paying someone to try and pick and choose which are the best stocks to buy. And this is the other big piece of investing advice you usually hear: keep your management fees low.

Alex: Because over time, higher management fees can really eat into your returns, even if they're only a few tenths of a percentage point higher. Studies have shown that broad, low-fee funds that aren't paying managers to pick and choose stocks—these are called passively-managed funds—these funds offer more consistent returns over time than actively managed funds where you are paying someone to try to beat the overall market.

Alex: So basically, the strategy is don't spend money trying to pick and choose, just keep it cheap, hold everything, and bet that the economy will grow, and therefore your investments will grow with it.

Ayana: Whether or not constant and indefinite growth of economies is desirable for the planet will have to be another episode. [laughs]

Alex: [laughs] We are not gonna reassess our entire economic system at this very moment.

Ayana: For now, I will sort of like, allow this particular line of thinking to proceed.

Alex: And we're gonna just work with what we have right now, which is our listener Andrea wanting to save for retirement and also save the planet at the same time. So she's following the best advice. She's got a low-cost, broadly-based index fund where most of her money is. And to find out what fossil fuel companies she might own in this index fund, we went to a site called Fossil Free Funds. It's run by an investor advocacy group called As You Sow.

Ayana: Mm-hmm.

Alex: So we entered the name of Andrea's Vanguard fund into this Fossil Free Funds website.

Ayana: Uh-huh.

Alex: To try to get an answer to, like, what exactly is her fossil fuel exposure?

Ayana: Mm.

Alex: What's that Vanguard one? What's the—give me the letters again.

Andrea Egan: VFIAX. So I'll put that in. That's the S&P 500 fund.

Alex: Okay. Vandex 500 Index Admiral.

Andrea Egan: Mm-hmm. That comes up as a fossil fuel grade of D.

Alex: Whoa!

Ayana: That's a bad grade.

Andrea Egan: So that seems not very good.

Alex: [laughs] Yeah, it doesn't.

Andrea Egan: If you click in, it sort of breaks it down by carbon reserves.

Alex: It's got some coal industry holdings—not very much. It's got, like, a lot in the oil and gas industry, almost three percent. And then it's got a bunch of coal-fired utilities and fossil-fired utilities, which I'm assuming are natural gas power plants, and utilities that own them. This is the conundrum, right? Like, if we own these companies in our portfolios, we are, in some sense, sort of complicit. But at the same time, you need your money to grow. So what do you wish could happen, I guess?

Andrea Egan: Yeah. I mean, I guess I wish that this would pull up and it would be like, "Okay, three percent, you know, solar-powered utilities, and one percent wind! And, look at this, you know, new great company! Or, 40 percent trees that are just gonna grow and be there, and somehow make me money by existing." Which is a little unrealistic. So yeah, I guess what I'm interested in practically is, are there other funds that also have low fees, but maybe aren't so heavily invested in fossil fuels, or aren't invested in them at all?

Alex: So there you have it.

Ayana: Yeah.

Alex: Our homework assignment from Andrea. She wants a broad, low-cost investing option that also doesn't help contribute to destroying the planet.

Ayana: I mean, don't we all?

Alex: So we take homework seriously here on this podcast.

Ayana: [laughs] Yeah, Andrea was like, "Who are the dorkiest people who might actually answer my email, and go all in on this with me?"

Alex: So we called up some folks to find out: is there a way to invest your money so that it grows, but isn't propping up the fossil fuel economy?

Ayana: And the first person we called is a woman named Leslie Samuelrich. She heads up a company called Green Century Capital Management.

Leslie Samuelrich: Green Century is a mutual fund company. We've been around for 30 years, and our mission is to invest in environmentally-sustainable leaders, best-in-class companies and generally, companies that are not in the worst industries, which include fossil fuels for us.

Alex: [laughs]

Leslie Samuelrich: And then, as part of our approach, we do something called shareholder advocacy, which is working with companies to make them better.

Ayana: So you're like the OG of green investing mutual funds.

Leslie Samuelrich: What's OG?

Ayana: Original gangster? [laughs]

Leslie Samuelrich: I try to be hip, but I'm so not. I'm sorry. [laughs]

Alex: So Green Century. Mutual fund company. That means that they sell funds similar to the ones in Andrea's account. Basically, they put together these baskets of stocks that then regular people like Andrea can invest in.

Ayana: And as Leslie explained, they have a specific mission, right? They were founded back in the early-'90s by a group of environmental and public health nonprofits.

Alex: Not your typical mutual fund founders. And their idea was, let's create a way for people to invest without compromising their values, and then let's use the profits from this socially-conscious investing to help support our work as environmental and public health nonprofits.

Leslie says the idea for all of this started around Earth Day 1990.

Leslie Samuelrich: People wanted to do more, and there was a real emphasis on what individually they could do. And people were recycling and riding their bikes and, you know, trying to turn off the water between brushing their teeth. But sort of there was a firewall between what people would do every day and what they did with their money. And they didn't mean to put that wall up, but investing can be confusing to start with. People are a little afraid of it. And they just thought, "Well, I can do all these things in my personal life, but I just need to put my money over here to be saved for retirement or to save for my kid's college." And it's really an artificial wall. So we started Green Century as a way for everyday people to save for the future, feel better about it and keep their money out of the most dangerous industries.

Alex: And so Green Century set out to steer clear of companies they consider bad actors. And they do this in part by filtering out companies based on what's called their ESG ratings.

Ayana: And this part I have heard of. ESG stands for "Environmental, social, and governance" criteria. And the idea is that companies are ranked by how well, for instance, they manage their environmental impact. But it's really important to point out that these ESG ratings can be extremely subjective, because there aren't great standards governing what counts as environmentally- or socially-responsible activities. So different ratings companies make up their own definitions, and I guess the polite way to say it would be, there's a lot of wiggle room.

Alex: Yeah. And so Green Century goes a step further: they screen out entire industries that they believe are harmful. Things like tobacco, guns and fossil fuels.

Leslie Samuelrich: From the get-go, our funds don't invest in oil, coal or gas companies, from exploration, extraction, processing, refining, or transmitting—which means pipelines.

Alex: Mm-hmm.

Leslie Samuelrich: So we just cut those off from the beginning, so that Green Century is fossil fuel free.

Alex: And this strategy of cutting out fossil fuels entirely? It's called divestment. As in, the opposite of investment. And it's one answer to our question: what is green investing? Green Century's answer is, in part, divest from fossil fuels. Leslie says they were inspired in this by the larger fossil fuel divestment movement.

Ayana: And this movement was launched about 10 years ago, when climate advocates started calling on big investors like pension funds and universities to take their money out of companies that held large fossil fuel reserves. And what advocates were arguing was that if fossil fuel companies continued with business as usual, if they just developed all of the oil and gas resources they already had, we would lose any chance of avoiding catastrophic levels of global warming. So morally, we need to call them out.

Alex: And financially, these activists also argued, these companies just aren't good investments, because their whole business model depends on burning reserves that we know we need to stop burning if we're gonna limit climate change. So they argued we need to keep these reserves in the ground, keep it in the ground. Leslie remembers going to some early protests about this.

Leslie Samuelrich: I thought that when we first went to the Keep It In the Ground rallies that we saw something that other firms hadn't seen yet. And I said over and over to our team, "This is a moment. It might be a movement, but at least it's a moment."

Ayana: Yeah.

Leslie Samuelrich: "And we need to act quickly to tell people about this because in a second, all our competitors are going to be fossil-fuel free." It makes so much sense.

Ayana: You were like, "We have the competitive advantage but, like, who knows how long this will last? Like, other people are gonna figure out that divesting is a good idea financially, and then we've got nothing special."

Leslie Samuelrich: Right. And we really believed in it too.

Alex: Right. [laughs]

Leslie Samuelrich: You know? Like, we really think that fossil fuel companies are the largest driver of climate change, and they need to either stop doing what they're doing or transition or go out of business. Like, that's it. Not tomorrow, but long-term. And so it was a work of joy to just talk about fossil fuel divestment, really.

Alex: So fossil fuel divestment, that meets one of the three criteria our listener Andrea laid out. But remember, she had two other things she wanted. She also wanted funds that were broad and that were low-fee.

Ayana: And Green Century's funds, by definition, aren't as broad as a total stock market index fund, because they're screening out whole industries.

Alex: And Green Century isn't what you'd call low-fee, either. Part of the reason is they're pretty small. They manage about $1 billion, which I know sounds like a lot. But compare that with Vanguard, which manages $7.5 trillion. And when you manage trillions, a tiny percentage management fee will cover your costs. Plus, Vanguard is owned by its customers, and has made super low fees one of its major calling cards. Green Century, though, because they don't manage that much, they charge a higher management fee.

Ayana: And they're also working with these big, publicly-traded companies to try to get them to change their behavior. They're doing something called shareholder engagement, which takes a bunch of capacity, it's expensive.

Alex: And remember this term: "shareholder engagement," because we're gonna come back to that later. But the point for now is that Green Century's funds end up costing more—something around one percent of assets under management instead of .04 percent in the fund Andrea currently has, her Vanguard fund. And in investing, that difference can really add up over time.

Ayana: So we asked Leslie about this.

Alex: Do you think, if you were to talk to somebody and they were like, "My number one option, I need to make as much money for retirement as possible." Would you say, "Yes, come into our fund?" Or is that not the fund for that person?

Ayana: Or is it even close?

Leslie Samuelrich: These are really good questions. The questions you're asking me are like, no one should answer anyway for any fund that yes, you should come to my fund because you will make the most money. Because first of all, their compliance officer would absolutely not let this be published.

Alex: [laughs] You're legally prohibited from saying that: "I guarantee you, you will make money with us!"

Ayana: Yeah.

Leslie Samuelrich: Right! And it's like a snake oil salesman kind of thing.

Alex: Yes.

Leslie Samuelrich: So I would say, if the thing you're concerned most about is fees, then you're going to have to wait a while to get the kind of options that Green Century has at the fee breaks and prices that Vanguard and State Street and Fidelity offer. That is just the reality of scale and our economy. But if you want to save for your retirement, think that environmentally-destructive industries run more risks in terms of an investment, and you want to avoid those potential risks, and you want your values to be reflected, then Green Century might be the place for you.

Alex: In essence, Leslie's arguing that companies that are thinking about climate, and in general, companies that score high on ESG metrics, are actually managing their risks well, which means they're poised to do better in the long run. Now there's been a bunch of research on how ESG investing compares with more traditional investing, and it's hard to draw clear conclusions. Some studies have found that ESG investors paid a penalty for investing less broadly. Other recent research has found ESG investing—and especially investing that takes climate into account—can do as well or even better than traditional investing. But again, ESG ratings are pretty subjective, and so this stuff is really hard to study.

Ayana: And this is why you always hear that disclaimer: past performance is no guarantee of future returns, right?

Alex: Right, exactly. Right. So that is Green Century, one of the OGs of green investing. And their approach is total divestment plus shareholder engagement—which we'll come back to later—and helping to fund a bunch of health and environmental non-profits. And the trade-off for all that is they're more expensive. And that may be a trade-off you're okay with. But if not, we have been seeing more and more options that try to do parts of what Green Century is doing, but cheaper. In fact, Andrea already has some of her money in one of these funds: the VFTAX fund, which sharp-eared listeners might have heard her mention earlier in the episode. VFTAX is the Vanguard social index fund. It's a low-fee index fund that screens out industries like alcohol and tobacco and also fossil fuels.

Ayana: And their filter isn't as intense as the approach taken by Leslie and Green Century, but this is a simpler investment option, which also means they're cheaper.

Alex: And more companies are now offering funds like this. Their fees are usually still not as low as the completely undivested S&P 500 fund that Andrea has a lot of her money in, but as a way to partially divest your portfolio, these funds can be an option—especially if you're investing through your company's 401(k), which often means you have limited choices for what you can actually invest in. You might find an index fund that isn't totally divested, but includes way less exposure to fossil fuels. How much less fossil fuels? That is something that you're gonna have to dive into. What do they mean by "fossil fuel free?" It can mean lots of different things. And that brings us to this point: wading through all these different definitions and funds, it can be really overwhelming. Couldn't it be just a little easier? Well as it happens, Ayana, you know someone who's trying to help with that.

Ayana: I know a guy! I've literally been waiting my whole life to be able to say that [laughs]

Alex: [laughs] A money guy who became a climate guy, who is trying to reshape the financial industry from the inside.

Ayana: And as a little teaser, his story involves Jane Fonda and a very special jumpsuit, which is—all that's coming up after the break.


Alex: All right. Welcome back. In the first half of this episode, we spoke with our listener, Andrea Egan, and with Leslie Samuelrich of Green Century Capital Management about green investing. And we learned that there's a variety of green investing options, but they all come with different definitions of what green investing even means, and different trade-offs, and sorting through it all can be a bit confusing. And so in this half, we're talking to someone who's trying to make it all a little bit easier. Trying to take climate investing mainstream. A person who's actually a good friend of yours, Ayana.

Ayana: Mm-hmm.

Alex: In fact, I believe you're the reason he started to focus on climate change in the first place.

Ayana: I'm happy to take some credit for that. [laughs] He is a dear friend. His name is Boris Khentov, and I've known him for years. He's now the Senior Vice President of Operations and Sustainable Investing at a company called Betterment, which is—well, let's let him explain it.

Boris Khentov: Betterment is an online financial advisor. We're a money manager. We help people save for retirement, and to reach their various financial goals. We help them invest. We've got about 600,000 customers, and something around $28 or $29 billion under management for those customers. And we've been at it for about a decade.

Alex: So Betterment is a company where you can go and set up an investing portfolio.

Ayana: It was founded in 2008 as an alternative to traditional financial and investment managers. And Betterment says the idea is to democratize investment advice.

Alex: And a big part of its business is what's called a robo advisor. So basically, you go online and you fill out a series of questions, and then Betterment has these algorithms that pick out investments to match your financial goals and your timeline and your risk tolerance. So for example, if you're like, I need this money in five years, it might put you in investments that are sort of safer. And if you're like, I need this money in 25 years, then maybe it'll put you in, like, slightly riskier, but higher yield investments. The idea is that the algorithm is doing what a financial advisor would do, but much cheaper.

Ayana: And a couple of years ago, Boris started noticing something—a specific trend around their socially responsible portfolio. So this was their version of an ESG fund.

Alex: And Betterment had created this socially responsible portfolio because in their surveys of their users, their users said they wanted something like that. But, Boris says, when their users were actually on the platform enrolling and choosing where to put their money, they didn't opt for this ESG portfolio as much as Betterment expected.

Ayana: This sounds kind of like my Netflix queue. It's like so many environmental documentaries that I just never watch. [laughs]

Boris Khentov: The conventional wisdom in the industry has long been, well, this is just one of those things that people say they want, but then when push comes to shove, they don't. And we saw some evidence that, while that is probably a bit cynical, it did appear to be the case in 2017 and 2018, and even heading into 2019 that, for whatever reason, the adoption just didn't quite match the consumer enthusiasm via surveys or some such.

Alex: So Boris was there puzzling over this mismatch between what his users said they wanted and where they were actually putting their money. And then in early 2020, he was introduced to another data point.

Ayana: Uh-huh.

Alex: Actually, you introduced him, Ayana.

Ayana: I took Boris Khentov, my fin-tech friend, to a climate protest.

Alex: [laughs]

Ayana: I mean, friends take friends to climate protests, right? We all—we all know this?

Alex: Right. This was a Fire Drill Fridays protest, right?

Ayana: Mm-hmm.

Alex: Organized by Greenpeace and Jane Fonda in DC.

Ayana: And you had to wear red. Everyone was supposed to wear red. [laughs]

Boris Khentov: Exactly. You had to wear red. And I remember every week had a theme, and one of the themes was the role of financial services institutions in the climate crisis. And Ayana sent me that link and she was like, "Do you want to join me?" And I thought, "Well, ugh, protests. I don't know. I don't do that. But also, I do work at a financial services institution, like it or not, I'm a money guy. So shouldn't I go kind of just do a little bit of research on the ground and see what people are saying? So I went.

Ayana: Also, it was just like a fun friend adventure.

Boris Khentov: Yeah, I think first and foremost it was that, exactly. I did get a photo with Jane Fonda, you know, wearing all red.

Ayana: Boris wore a red jumpsuit. It was pretty amazing. With a fanny pack. It was a whole look.

Alex: We'll need that for the Instagram of this episode.

Boris Khentov: You got it.

Ayana: We've got photos.

Alex: Okay, good. [laughs]

Ayana: There were a bunch of high-profile speakers at this protest, including Bill McKibben and Naomi Klein, and celebrities like Jane Fonda and Joaquin Phoenix. And they were all talking about divesting.

Alex: And then there was Boris, an actual industry insider at the helm of one of these financial firms that's being called upon to divest.

Boris Khentov: All I heard everywhere was, well, divestment, divestment, divestment. We must divest from this. This is how you do it. You know, force the institutions to divest. And I just remember thinking okay, divestment, it's not that simple. It's not that simple. It's not that simple.

Alex: And why was it—and why is it not that simple?

Boris Khentov: Well I mean, you know, I would say probably from a, I don't know, an academic perspective, an economist perspective, divestment is about diverting capital away from an activity that you want to see less of, to the point where that activity is no longer financially sustainable. But that isn't necessarily going to deprive those companies of funding.

Alex: Right.

Boris Khentov: Because of the way the market tends to correct in this really almost savage way where the fewer people want to invest in an activity, as long as that activity remains legal and profitable, somebody will fund it, and they will make more money because of your refusal to do so.

Alex: So let's break down what Boris is saying here because this is important. So far, we've talked about green investing primarily as divestment—pulling money out of fossil fuel companies. And one theory of why divestment is good is that the more people refuse to invest in these fossil fuel companies or lend them money, the cost of doing business for them will go up and up and eventually force them to stop.

Ayana: Right. In theory. But what Boris is saying is that it doesn't always necessarily work out that way in practice. First of all, divestment only has a negative impact on these companies if a huge amount of money is divested. So lots of people or lots of institutions changing where they're investing their money.

Alex: Right. And then second, even if a whole bunch of people decided to sell a bunch of fossil fuel company stock, if that fossil fuel company is still operating profitably and digging up fossil fuels and selling them and the world is still buying them, then a bunch of other people would look and say, "Look, here's this super profitable fossil fuel company, and its stock is super cheap!"

Ayana: What a deal!

Alex: Right! Because all these people just sold it for some reason, I'm gonna buy it, because I don't care. So that's sort of the problem in practice with divestment as a tool for changing company behavior.

Boris Khentov: The only way to make that activity go away is to make it illegal, or unprofitable.

Alex: Right.

Boris Khentov: And divestment is very powerful because it helps pass laws. It's a symbolic gesture that changes the public discourse.

Alex: Right.

Boris Khentov: That allows for bold legislation that will make the activity either illegal or unprofitable or somewhere, some combination of the two.

Ayana: Basically, Boris is saying that divestment at its most powerful is a political tool. So a divestment campaign raises awareness about companies are acting in a way that threatens our futures, that is unjust, and that kind of awareness is key to driving political change, like new laws or regulations that would limit future extraction of fossil fuels. And to be clear, this is also what activists and people like Leslie at Green Century are arguing. A big goal of the divestment movement is to revoke fossil fuel companies' "social license" to operate—in other words, to make them pariahs.

Alex: But as a financial tool, says Boris, divestment is a really blunt instrument. There's a long distance between what you buy and sell in your individual investment portfolio, and any impact that may have on a company's decision-making.

Ayana: Plus—to continue to speak for Boris—he's worried about the exact thing we talked about above, which is that as you start to take whole industries out of your portfolio, in other words, you're investing less more narrowly, that can be a riskier option when your goal is to maximize your returns.

Alex: But at this protest, Boris also realized this is something that people are passionate about. They want to invest in a climate-friendly way. And so how can we make that possible for them, while also making it simpler and keeping it lower-cost?

Boris Khentov: I kind of came back and I said, "Why don't we—the word 'climate,' what's up with that? Why are we not talking about the climate when we're talking about values-driven investing?" And then I set our team to the challenge of trying to figure out, well, what would a climate portfolio even look like, specifically climate?

Alex: And eventually, Boris and his team came up with a three-part approach. First part: they do invest in some funds that cut out fossil fuel companies. These are similar to some of those low-cost funds we mentioned earlier that don't have as stringent a screen as Green Century but do limit fossil fuel exposure. Second, Boris and his team also identified a group of investment vehicles called low carbon funds. And these are funds that are designed—in theory, at least—to reward the companies with the lowest carbon footprint in each sector.

Ayana: Right. So which auto companies have the lowest emissions per car they produce for example, and which fashion companies have the lowest emissions, say, per shirt they produce.

Boris Khentov: You can rank every single company in the world by how much in carbon emissions they produce per, say, a million dollars of revenue. And that's kind of like a really elegant way of thinking about things, because that effectively makes every single company in every single sector accountable. And it's not just about knocking out a few things, because the rest of the economy should not be let off the hook, right? Because you really need to look at this from the perspective of what is the actual result you're trying to drive? You're trying to reduce the carbon footprint. So every industry needs to be ranked and measured. And as a result, you wind up with still a highly diversified portfolio with very, very little tracking error to just buying the entire economy, but you actually are meaningfully applying a dynamic that rewards those who are better than their peers, regardless of their peer group.

Ayana: And finally, Boris and his team identified a few funds that invest directly in things like green bonds, which fund things like renewable energy infrastructure.

Alex: So those are the three prongs. They put them all together in something called Betterment's Climate Impact Portfolio. And so if you join Betterment and choose to put your money into this portfolio, your money will be invested across these various funds that Boris and his team selected: the fossil free funds, the low carbon funds and the green investing funds.

Ayana: And it's actually been really exciting to be able to watch Boris go through this process as a friend of his. Like, I get the texts as he's figuring out all these options and ways to offer these investment opportunities to his customers. But also, I know that he'll be the first to admit that this whole thing is very much a work in progress.

Alex: In fact, Boris would say that that's a key selling point. As more options come on the market, his team is constantly tweaking their system. And in fact, they recently added a fourth prong to their climate impact portfolio, and that fourth prong, we are gonna talk about in an upcoming episode. And in terms of what our listener Andrea is looking for, there are some pros and cons to the Betterment approach. First of all, the Climate Impact Portfolio is not fully divested from fossil fuels. Those low carbon funds we talked about—prong two—they weight the best performers in every sector, including the oil and gas sector.

Ayana: And these low carbon funds are not based on perfect data, because we don't right now have great information around how much carbon individual companies in different sectors are emitting. And it can be hard to compare one company's carbon emissions against those of its competitors.

Alex: And green bonds, that third prong, it's still a relatively new sector. Regulations haven't really caught up, so it can be hard to tell what you're getting, what exactly is green about the bonds and whether they're actually funding real climate-friendly projects. Plus, while Betterment's portfolio is cheaper than, say, Green Century, it is still not as cheap as investing in the basic, vanilla, S&P 500 undivested index fund. The all-in fees for the Climate Impact Portfolio can be around 0.45 percent versus, again, 0.04 percent if you're just putting your money directly into the cheapest S&P 500-style fund.

Ayana: So to answer Andrea's question: is there a simple, low fee way to fully steer clear of fossil fuel exposure in your investments? And the answer is: sort of. We're getting there.

Alex: [laughs] There are some different options to choose from, and all of them have pros and cons that might or might not make them the right investment option for you. So bottom line is, if you are looking to make your retirement investing more green, you have to do your research. You have to look deeply at who the fund invests in, what the fees are, and how much money they've made historically.

Ayana: So if you were listening to this episode hoping for a very easy one-click answer at the end of it, I'm so sorry to disappoint you. [laughs] It's still a little complicated. There aren't, like, heaps of perfect options out there that you're missing. This does take a little bit of effort on the part of the investor still right now.

Alex: But there's an argument that, at the end of the day, when it comes to actually changing companies' behavior, or changing the wider economy, how your money is invested—whether it's fully divested or partially divested—it matters a lot less than something else: how your money votes.

Ayana: And this brings us back to the term we mentioned earlier: shareholder engagement.

Alex: Shareholder engagement!

Ayana: So what is this? It goes back to the original concept of what it means to buy stock in a company. You are literally buying a small piece of ownership by having shares, and shareholders get to have a say in how companies are run.

Alex: Shareholders like Green Century. So remember, Green Century, it's small by Wall Street standards, but they own enough shares of the companies they're invested in, that when they reach out to those companies, there's a good chance the company is gonna take that call or listen.

Alex: Can you talk a little bit more about those engagement campaigns?

Ayana: Yeah.

Alex: What does that look like? Do you go to offices? How do you do it?

Ayana: Do you hop into their Instagram DMs and ask them to do better? Like, what's the process?

Leslie Samuelrich: Yeah, we do that. Or just, like, text them usually. And say, "Hey."

Ayana: "Bro, this is not good enough."

Leslie Samuelrich: Right.

Alex: "Climate change!" Scaredy face emoji.

Ayana: [laughs]

Leslie Samuelrich: We're not usually texting companies, but what we—we send them a letter. We outline our concerns. We ask to talk with them. And then it varies company by company. Every single one is different. And it's fascinating. Some agree to a meeting, you know, within a month, and then we talk, and we end up getting an agreement with them, you know, six months later. Others never respond. In which case, then we file a shareholder resolution.

Alex: And so a shareholder resolution is a group of shareholders getting together and saying, "Company, we don't think you're doing it right. We think we have a better way, and we are gonna get all the shareholders to vote on our way."

Ayana: And those shareholder resolutions? Green Century has used them to do things like getting companies to reduce deforestation and use less virgin plastic. And in the last couple of years, something really exciting has started to happen, which is that shareholders are getting together and they're demanding change from fossil fuel companies—and they're actually winning.

[NEWS CLIP: Activist investor Engine No. 1 dealt a major blow to Exxon Mobil.]

Alex: And we're gonna tell that story—of these shareholders taking on one of the world's biggest fossil fuel companies and winning—in two weeks.

Ayana: Cliffhanger!

Alex: Exactly!

Ayana: Stay tuned.

Alex: But in the meantime, what's our takeaway for listeners this week?

Ayana: So the takeaway for listeners this week, given everything we've learned: first, if you do have a retirement account, find out what you're investing in. What is in your portfolio? You can go to, and they will give you a breakdown of the fossil fuel exposure that you have right now in your investments.

Alex: If you don't like what you find, you can try to switch into something you're more comfortable with. But before you do that, do your research. What companies specifically are the funds invested in? What are the fees? What are the returns? How much money have they made historically? You need to add it all up.

Ayana: So given the caveat that Alex just offered, one thing is clear: this is still not as easy as it should be. There should be more and better options for people who want to invest without destroying the planet. So that's our other call to action: demand better!

Alex: Yeah. If you have a retirement account through your company, and you don't see any good options there, tell your HR department you want climate-friendly or fossil-free funds in your retirement account. Both Green Century and the organization As You Sow—they're the ones that make the Fossil Free Funds site—they have guides for asking for better fossil-free investing options. We will link to those guides in our show notes and in our newsletter.

Ayana: And if you don't have a retirement account through your employer, and you invest instead through an individual retirement account, you can do what I actually did a few months ago, which is tell the person at your bank or your asset manager that you want better options, too. And sometimes they might actually have some to give you. So big investment firms like Vanguard and BlackRock are huge, true, but the more they hear from their customers, the more seriously they take this stuff, because they actually want your business. So try it out. Give them a call.

Alex: And if you do, please let us know how it goes. We would love to hear from you. You can send us a voice memo through our listener mail form. It's at

Ayana: Roll the credits.

Alex: Here we go!

Ayana: How to Save a Planet is a Spotify original podcast and Gimlet production. It's hosted by me, Dr. Ayana Elizabeth Johnson.

Alex: And me, Alex Blumberg. This episode was produced by Rachel Waldholz. Our reporters and producers are Kendra Pierre-Louis and Anna Ladd.

Ayana: Our supervising producer is Lauren Silverman. Our editor is Caitlin Kenney.

Alex: Sound design and mixing by Peter Leonard, with original music by Emma Munger and Peter Leonard.

Ayana: Our fact-checker this episode is Claudia Geib.

Alex: Special thanks to Justin Guay and Bryant Urstadt. Also to Myriam Fallon, Jackie Cook, Elizabeth Stuart, Phuong Luong and Steven Feit.

Ayana: Thank you for listening. We'll see you next week.

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