A California-based robo advisor touting climate-focused 401ks has launched an actively managed exchange-traded fund that invests in publicly traded companies that are dedicated to solving climate change.
The Carbon Collective Climate Solutions U.S. Equity ETF began trading on NASDAQ under the ticker “CCSO” Tuesday, launched by Berkeley-based online investment advisor Carbon Collective Investing, LLC.
“Companies that are directly involved in climate change solutions have become an important area of the marketplace and investors need a pure-play and low-cost way to invest in this space.”
Carbon Collective’s Zach Stein
“Climate change is the most important issue facing the world. We still have time to avoid the worst-case scenarios, but only if we invest capital in climate change solutions that can be adopted and implemented quickly,” said Zach Stein, co-founder and chief investment officer, Carbon Collective. “Companies that are directly involved in climate change solutions have become an important area of the marketplace and investors need a pure-play and low-cost way to invest in this space.”
The fund invests in approximately 200 companies of any size market capitalization within sectors such as clean energy, electrified transportation, efficient buildings, circular economy, sustainable foods, and industrial electrification. Only companies that earn at least 50% of revenue from climate solutions are included in CCSO, which is rebalanced on an annual basis.
A spokesperson for the company told Bloomberg it will be offering CCSO in 401k accounts, but not immediately. Small employers like DroneSeed, a reforestation company, and Cerno, a lighting company use Carbon Collective 401ks.
Bringing its climate-focused portfolios to 401ks is a significant part of the company’s master plan. “It’s crazy to us that there aren’t good climate-friendly 401k options for climate-focused non-profits and startups,” the company’s website states. “This leaves them investing their own and their employees’ money in fossil fuel companies through their 401ks.”
Carbon Collective said it conducts extensive searches to identify companies that are building solutions within the aforementioned sectors using a variety of sources including public filings, Internet searches, cross referencing applicable indices, and publicly available market research as well as through relevant industry/sector news or blogs and independent third-party sources such as Project Drawdown and the International Energy Agency.
More investment in climate-focused companies allows their climate technologies to become more widely adopted and enables investors to participate in the solution for climate change.
“There are hundreds of companies, both well-known and under-the-radar, that are dedicated to fixing climate change,” said James Regulinski, co-founder, Carbon Collective. “Our fund aims to give investors exposure to these companies in one place. Climate change solutions is an asset class and we’re excited to help investors gain exposure to this important and rewarding space.”
Toroso Investments, LLC serves as investment adviser to the fund and Carbon Collective as its sub-adviser.
The Carbon Collective Climate Solutions U.S. Equity ETF is launching at a time when there has been considerable recent backlash against ESG investing, and even the launch of a new ETF that is focused on fossil fuels providers. The Strive US Energy ETF (DRLL) has grown to about $327 million in assets since its early August launch.
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