241 | Investing in Solving Climate Change with Zach Stein
Our guest this week on the pod is Zach Stein. Zach is the Co-Founder of Carbon Collective, a company that puts your savings to work investing in over 100 companies building climate solutions for the same price you pay for a generic online investment advisor.
Resources mentioned in this episode include:
Interview with Carbon Collective’s Zach Stein on Climate Change Investing
NOTE: While it’s not perfect, we offer this transcription by Otter.ai for those who are hearing impaired or who don’t find listening to a podcast enjoyable or possible.
SPEAKERS
Paul Zelizer, Zach Stein
Paul Zelizer 00:00
Hi, this is Paul here I just want to quickly apologize - something happened with my settings and we didn't pick up on my podcast mic but picked up on my webcam. So the sound on my end … I'm cringing. And this is such an important episode. Please hang in there. Apologies. And now to the episode.
Hi, this is Paul Zelizer, and welcome to another episode of the Awarepreneurs podcast. This podcast is all about the intersection of three things, conscious business, social impact, and awareness practice. Each episode, I do a deep dive interview with a thought leader in this intersection, someone who has market tested experience and is already transforming any law. Before I introduce our topic, and our guest today, I have one request. If you could go over to Apple podcasts or whatever app you're listening to the show, hit the subscribe button to rating and review. It helps tremendously. Today, I'm thrilled to introduce you to Zack Stein. And our topic is Investing in Solving Climate Change. Zach is the co founder of Carbon Collective, a company that puts your savings to work investing in over 100 companies building climate solutions, all for the same price that you pay for a generic online investment advisor. Zach, welcome to the show.
Zach Stein Paul, thanks so much for having me.
Paul Zelizer It's such an honor to have you - you guys are doing awesome work. I can't wait to tell our audience about it.
Zach Stein Thanks, man. Me too.
Paul Zelizer Before we get there - we’re called Awarepreneurs. And one of the ways we like to get to know somebody is to ask you about a wellness or resiliency practice that you personally use to resource yourself for this important work. Yeah, so we were talking about this a little bit earlier, I have doing two pieces of important work right now I have trying to build carbon collective. And lots of good news on that front. And I'm also I think trying to build is not the right way to say it. I am raising a child, I have a seven week old. And so it has definitely been it's our first kid. And so I've taken a major step back from a lot of the resiliency practices I had, you know, some of the things I tried to do during the day is I, you know, lucky enough to be able to work up in our finished attic. And so about once an hour, I go down and look at it, give them a kiss, hold them assess, you know, even if he's like really in a bad place. It's just like, pretty amazing. And then aside from that, like I'm doing my best to get out and jog.
Zach Stein 02:30
Like it's, there's just those days, you have to move my body into that at the end of the day. So like I try to just hold myself to that of exercising at least two times a week, right now. And I was saying before we hit record, yesterday was my birthday. And I was talking to my almost 22 year old and I can't even say child, although technically I guess I'm still there, dad.
Paul Zelizer 02:56
But it just just a deep bow to you and all our listeners who are parents of young kids right now just just feel it's such a sacred time and with COVID and you know, to smaller bubbles, and having a little less humans or a lot less humans around to help care for children is such a good word. Thanks for doing that sacred work. Thanks, man. And happy birthday. Oh, thank you. So this whole thing of investing and solving climate change and having positive impact with our retirement funds and other savings, like give us a backstory like what's been Zach's like trajectory as a professional and a little bit of like, what were you doing before you got this idea called carbon collect? Totally. I've had a very strange career path. I start all the way back. I've known my co founder since we were four years old. We grew up together. So it's been really amazing to get to work on this is our second company, together with someone who's like really a brother. And going back there. My entrepreneurial path began in a very different place than the world of finance, but in the world of sustainability. After graduating from college, I did an urban farming fellowship here in Berkeley, I live in the Bay Area. And that really opened my eyes to the to the world of sustainability and particularly in the ag space and also just like the looming threat of climate change. And through that my first business was with a few of the other fellows. We started a worm composting farm. So we I was literally shoveling shit for Yeah, let's hear it for me.
Zach Stein 04:42
It was a really cool business. We took two free waste products, organic horse manure, but just just horses that were fed organic feed and Apple pulp from a local juicer that was just you know, with Get putting the dump. And we put them and they were thrilled to get rid of them. And we would process them through our worms. And by the end, we would have a bag of compost that I could sell for $20 a gallon. So it was a pretty cool business, it was incredibly labor intensive, which is I think, why you don't see worm composting businesses springing up everywhere. But it was a really enriching and fun experience. It's kind of go ahead side
Paul Zelizer 05:27
note here. I told you this before we record, not commercial at all, but I have to like Rubbermaid totes in my little backyard in my condo, and I compost in my backyard, and I love my words. And I just like when you told me that story before we hit record I just got so I'll work it out such a good conversation because learnership
Zach Stein 05:47
Exactly. Yeah, it's like, it's really fun. It's really satisfying. Yeah, I just like, it's something I really enjoy, like the process of breaking down and decay, but turning into value. And yeah, it's just like, they're, they're kind of cool pets. So as well, I think as you can attest to.
Paul Zelizer 06:05
And also like in terms of helping the planet like what we throw whatever your apple core your veggies or you know, I make I grow sprouts. And if I didn't, you know, throw that in the trash. If I make too many or just don't get to something, it's really in the trash, the greenhouse effects of our food going into the waste stream and then winding up in a dump is really, really bad. Like, yeah, can go nothing is particularly horrible gas to have more of in our. So anyway, if anybody is like thinking, How do I help, you can do something really simple with growing, you know, your own burns, and composting and not throwing it in there. So a side note, yes,
Zach Stein 06:44
yeah, you get black gold from it. And you do avoid those methane emissions, that this is going down to tagit. But the easiest way for me to kind of think about it is like when food rots and smells really bad, that's like means that it's it's being broken down without oxygen, like a swamp. And that's when it's going to release all of those things. And the food's gonna break down anyways, with worms and with other composting, it's broken down with oxygen. So it's a different type of microbes, and that you don't have that same release of greenhouse gases, but it will still transition back into really healthy soil. So go composter Yeah, okay, let's
Paul Zelizer 07:21
there's we'll get off of the whole compost and worm thing now. But like, so we got to talk about the words, we got to talk about the words,
Zach Stein 07:28
always.
Paul Zelizer 07:31
So after the word business, how did you get into the idea?
Zach Stein 07:35
Yeah. So pressing fast forward a bit, did a startup with James that was in a different space, it was a very tech, heavy play to try and make fish and shrimp farming, far more sustainable. We raised a pretty large seed round led by top VCs here in Silicon Valley. And we just couldn't get the tech over the finish line. And so at the beginning of 2020, James and I, we knew that we wanted to focus directly on climate change. And we didn't set out to build a finance service and product, we knew that we wanted to build better ways that individuals like you and me, could collectivise our climate action, because things like offsets and stuff like that, or even composting doing on your own, like, that's amazing. But it's also like, there's a level of faith that this is making a difference that you have to undertake. And so we ended up interviewing over 120 of our peers and people in our networks to try and understand where their climate anxiety took them and where they got blocked from taking action. And investing was the space that again and again came up where people were saying, what Wall Street is selling me ESG these frameworks, this doesn't just doesn't add up with the world that I see that we need to build in order to solve climate change. And so then we went and, you know, looked at like, what are the plans to solve climate change? How are we going to do this, but the good news is that we can we have basically everything we need to solve climate change, and a lot of it is already a profitable investment today. So it the question is, can we deploy it fast enough. So we saw that investment, it's not the only lens that we should look at climate throw. But it is a really important lens. According to one of our favorite resources, which is project drawdown and their coordination with the Climate Policy Institute. They estimated that in 2019, the world invested about $600 billion into climate solutions. That's awesome. So a huge number $600 billion is a lot of money. For us to be on a path to avoid catastrophic one and a half degrees C plus of warming. The world needs to be invested in more like 50 to $100 billion a year. 5.2 trillion. It's about 9x 9x. Yeah. So that's the mission of what we're trying to fill is how How we in order to do that you have to make climate investing Be Smart Investing. And we think that that is the case, we think that fossil fuels are fundamentally the industry in decline that are being out competed at a market level, and that holding their replacements is what we need to do to help further accelerate climate. And so we build portfolios of how can we do that in such a way, where you're still getting your financial needs met? First, your retirement fund is not charity. So our core portfolios will give you the same risk and reward as a generic index based portfolio. Again, this is back testing it. But it's something that has a clear theory of change of why everything is in it from a climate perspective, in a way that we hope is really simple, and transparent and easy to understand.
Paul Zelizer 10:43
Beautiful. Oh, there's so much what you just said that. So let me just let me just say, notice, listeners, the ongoing commitment to positive change, and particularly that could sounds like the environmental space and climate change, like that's been on your radar for ever. Have you ever done anything that wasn't related? Sounds like it's been a huge part of your journey, having impact in the world. So I just wanted to highlight that. And the other thing that really stood out for me, Zack, is a love when social entrepreneurs do what you did said, Okay, we want to make a difference in the realm of climate change. But you said 120 interviews, did I get that? Right? Correct? Yeah. So you don't deep into like, what's out there? And what's kind of what are some of the options and the problems and the solutions and found Oh, well, that there's a lot of solutions. But we're kind of undercapitalized in some ways to change the trajectory. So, so came from doing some really thoughtful investigations and inquiries with people who are already in the space. And I just want to highlight that and is there anything you could say to some of our social entrepreneur founder listeners about that process? Like, why did you do 120? Interviews? Who did you pick? And what were some of those interviews? Like if somebody did on a do a deep dive like this?
Zach Stein 12:03
Yeah, absolutely. I have very clear advice on this subject, which is, if you are an entrepreneur, who is if you want to see should I build this, the number one book you should pick up and read is called the Mom Test, the test, the Mom Test, test, sorry, like Mother, it is the best startup book I've ever read, especially for when you're in a period of product discovery of trying to answer this question of, if I build this, if I invest my time and money in building this, will people find it valuable? Will they use it? Because so often, we try and like, do things that like, Oh, let me build a paper prototype that will simulate it, and then bring it to people and then ask them if they like it. And or like maybe say, like, you know, will you like put your name down on the list? And the problem with that, is that humans, we really like to compliment each other. Like, we don't like to be assholes who would say like, No, this is dumb, I wouldn't do this. And so you can get a lot of false signal from doing that type of thing. And that's initially what we set out to do. We like, had some ideas, we built these prototypes. It was literally our first interview, we did it was with this guy that thought thank him forever, who he was like, Okay, this was like, fine. But you guys absolutely have to read the mock test. And you should completely overhaul this process. And we did. And basically, what it does is it it's called the Mom Test, because it teaches you a process of interviewing, where people won't lie to you. And it's called the Bob test, because you could literally test your mom, who was going to be the most likely person to say like, Oh, of course, this is a great idea, honey, you should build it and get a reasonable estimation on whether she would actually use it or not. And it's all about digging into people's actual past behavior. And so for us trying to understand investing, we were doing this broadly for individual actions on climate, exploring things like, you know, compost Ag, and buying carbon offsets and making choices around clean energy. And one of those categories was investing. And again, and again, the actual evidence that we saw was that people had picked up this problem of investing, they had said, I went to go look at funds, or I went to go look at it, and then I looked under the hood of what was in it. I either held my nose and did it, but I wasn't at all excited about it. Or I stepped back and said, like, this is all greenwash bullshit, like I don't know, I'm just gonna, like put my money in the place that is just going to be less bad. Or just be like, I'm gonna stick it in Vanguard Index funds, even though I don't like it because like, there's no clear alternative for me. It's so it was that it was not the fact that people were like, oh, yeah, like that's a good idea. But they actually invested time. And then they'd gone through that process that indicated to us that there was demand for this type of thing for this problem to be solved. knows that past behavior. So that was the strategy we use to understand what carbon collective could be. From that perspective, we started very broad, but then really narrowed it into finance. And so the Mom Test, I cannot speak more highly about it. It's really short. It's a great audio book. I love audiobooks, the author reads it. It's really It's fantastic.
Paul Zelizer 15:22
Awesome, thank you. I've been in the states a long time and literally never heard that book before. So I am making a note and listeners, I'll put a link in the show notes. Thanks for that research. So you've come up with this idea. And also, let me just say, I've heard this and certainly have experienced this myself. We're here because my brother Big shout out to Craig Belzer. And I've been having some conversations about my investing. My brothers thought about this alive throw, you gotta be taxing. Thank you, Craig. And thank you, when listeners love it when listeners like introduced and, and I'm just like highlighting like, I'm one of those people that like, you know, I know. Yeah, that those kind of like, yeah, it's green. But it's can we be real here? Right? So um, I just want to say I'm I'm very much somebody who's like, started to look more deeply and where I'm investing and haven't been particularly impressed, looking for new ideas. And does this podcast happen? So? Yeah, just a real world example of somebody who's looking like me. And a lot of what's out there is very much greenwashing and not, has not thought deeply about these issues at all. So yeah, just one second that and sat down
Zach Stein 16:33
emotion, right. Yeah. And that's the problem is that Wall Street's business model is like they're they're caught in a classic Innovators Dilemma, where for them to truly embrace what we have to do to solve climate change, embrace climate risk, climate impact and climate opportunity. As like, as companies for BlackRock, your letter fidelity to do that is to reject so much of how they make money today that they take is very tepid half measures towards it. And there's not kind of these clear eyes for it, which kind of leave people like you and me in this lower shipping, like, what, how, where it's very unclear how that fits into it. So our goal, and I'm happy to talk about how we build our portfolios and kind of our methodologies there was how do we cut through the noise and build something, especially focusing on what we see as our world's greatest problem? How do we build something that is fully focused on that?
Paul Zelizer 17:31
Yeah, so they just walk us through and get to what it looks like now, but just walk us through for full disclosure sake, you land on, okay, we're gonna go into the investment space, there's all this greenwashing people are already putting time there, they're holding their nose or like, kind of guess this is what I'm gonna do, but not particularly inspired, certainly, with my experience as an investor. And you say, oh, yeah, we're gonna plant our bike here. And we're gonna launch this thing called carbon collective, like, just give us a little bit of like, what was it? Like, once you decided we're going to go this way? What happened next?
Zach Stein 18:06
Yeah. So when we decided to go that way, it then was, okay, can we build portfolios that, again, meet those crucial needs, that are those crucial financial needs? Because again, your retirement fund is not charity. It is key that that is it is aligned with your financial security that is priority? So can we both hold that and have a very clear thesis around why everything is in this portfolio. And we not having backgrounds in Wall Street, we kind of weren't burdened by that legacy of thought and thinking. And that enabled us to build what I think was pretty comprehensive portfolios that meet those goals. And so we built those, we continued mob testing them as we got, you know, kind of better, a better and more certain of what this was. And then we said, okay, like, we are getting ready to launch this. And we are fortunate and living. This is kind of another lesson from our first startup, which was very tech heavy. We said, Okay, let's make it let's build the business here first. And then if there's good enough tech, let's use that. And then backfill with the rest. And so we were able to launch on a third party platform with it. We didn't have to do any building, have any mechanisms for buying and selling and stuff like that we got let that rely on other experts who built that we got to focus on how are we how are we actually going deep on constructing this, how are we building the supporting materials so that you can really understand what's in there, you could be excited about it. You could not know what's coming as well. It did start to build up that ecosystem, that engine in the narratives around it because the narratives around sustainable investing what's coming out in Wall Street it that also needs to change. So that's how we got started, we ended up raising a pre seed round. In February of 2021. This was kind of a range of climate investors, FinTech investors standard just like, like, precede VCs, we are like wrapping up raising a seed round right now, which is awesome to continue to follow our fuel our growth, with like strong participation from those investors in and it's been members members who have, you know, connections and are working in the VC community, I've kind of brought this and led that. So it's been really cool to see that happen, kind of internally from what we've built. And also just kind of the to see also the validation for the voice that we're bringing to this space.
Paul Zelizer 20:50
And when When was it that you guys actually launched was
Zach Stein 20:53
2020, we launched in November of 2020, was only formally launched the service our robo advisor, we then launched, we also offer green 401k. services for our small businesses. This is often like mission driven startups, who they only have their only options are to invest in standard index funds. And that is goes counter to their mission. So we believe that you should have options. So we have the standard index funds for the employees who would want that. We also have a series of ethical and then climate focused retirement date portfolios that employees can choose from, as well. And we're seeing nice uptick in that as well. So we launched the 401k program in September of 2021.
Paul Zelizer 21:40
So let's do that. When we come back, I want to hear like what it looks like now, what some of the growing edges are with some of the new initiatives are, before we do that, I just want to take a quick break and hear word from our sponsor, do you have a business that's about making the world a better place, and you want it to grow both in terms of your impact, helping more people and your income? If so, I'd like to talk to you about some research that scientists tell us actually lead to humans achieving their goal, whether it's wellness and getting more fit, or growing your business Scientists tell us that the single biggest predictor of whether we actually achieve our goals or not, is something called social support. Think about a 12 step program. Right? Other people who you're on a journey with highs and lows today was a really good day today. It was really hard day. Here's some tips and suggestions, right? Same thing is true with our business. But we're partners has a community like this over 270 members, really generous and skilled social entrepreneurs who are really familiar with the highs and the lows of the journey, and can help with very concrete suggestions. Can you take a look at my sales pitch? Can you help me think about my pricing? Need a lawyer who can only think about trademark, all who understand your kind of business, you can find out more at a word printers.com forward slash community. And thank you to everybody in the AWARE printers community who sponsors this podcast. So in the second part of the show, is that we like to joke about putting on our entrepreneurial classes and like let's get a little more granular. So what is carbon collective look like? Right now? How many companies are you know, in your fund? How many people are using it, etc.
Zach Stein 23:20
So we have about 300 members who have money with us, our average account size is about $52,000. And so this was a really key hypothesis for us. Which was, would people treat this like it's like a place to put their IRA? Or would they treat it like climate charity, because we've seen in the past attempts at having like green investing platforms where you could invest in a handful of green companies. But what we found is that people don't really know how to fit that into their broader financial picture. And so they would treat it like climate charity and be like, yeah, I could throw grand on that. But like my IRA is going to be with Vanguard. We feel like we have started to crack that code in having that high account size. We're having clients who are, you know, have been with us for six months and are saying, Hey, okay, now I'm ready to bring over serious six figure serious seven figure accounts over to and with that, and that's been really vindicating of what we're doing. And we're also seeing our 401k program also really start to heat up with a strong pipeline, we're just, you understand this and launching something new. There's only so much bandwidth you have. So that's an area that we haven't been touching as much. And we're really excited to dive in much, much deeper and create far more awareness around this because we know it's a pain point for so many founders and business owners to have that are mission driven. And we think that we can be helpful in a way where you basically pay the same as you would for those generic options. So to us, it's a pretty big no brainer.
Paul Zelizer 24:54
And if you were gonna, like what was it like because you guys did something really interesting Stepping into a space that wasn't your, you know, I'm thinking of a recent interview we did, were one of the co founders of a tech financial platform was it had fun, and had very real like, had had a traditional background in finance, to then bring into the disruptive thing that they love you, that wasn't your case. So anything you can say, for our listeners who are like, Okay, I identified something, and I want to actually do the research of where there's an opportunity to both really make a difference in the impact area want to have, and make a good living, you guys landed in finance, in a model that you didn't have a lot of background, anything you could say about what that part
Zach Stein 25:44
of that journey was like? Totally. So yeah, James, and I don't come from this background, we come from kind of the startup entrepreneurial mindset. And I think it's in having that and applying that and having tools like the Mom Test, we believe that it's given us a level of understanding and empathy of what people like you and me are actually looking for. When you're investing, you want something that you can feel pride in doing something you want, you want a group that you can trust. And we've been really burnt by greenwashing by Wall Street, in that. And so that's what we saw that we needed to build. We also do that, like we are experts in this space, we you know, don't have 20 years of experience on Wall Street. So how do we make sure that people are feel that we build portfolios that fill that fulfill that fiduciary duty. This is where we're taking the pages out of the you know, the best methodologies of how to invest as an individual in a set it and forget it way, it's index Based Investing, you're not trying to beat the market, you're just trying to match it with low fees in a Senate and forget an approach. That's what we've built. Our goal is how do we create portfolios that are like an index portfolio, but for the world where we solve climate change, and so we're not picking which solar company is going to win or lose, we invest in all of them, and weight them by the market cap, it is our job to create kind of these broad ethical categories. And then let the quote algorithm like the the larger sequence, say which companies are going to be in and excluded, I think we have a level of transparency that you won't see anywhere else, because the existing infrastructure for how to make ethical decisions and investing. It's called ESG, are all put forth by data companies who their business model is to sell that data. So it's all behind paywalls. So if MSCI is giving Exxon Mobil a triple B, and Sustainalytics is giving it a triple A or Triple C, there's no way for you to see what actually goes behind that you're basically being told, just trust us that this, you know, one company is more ethical than another. And you're like, what? How do I see that. So in our climate index, for example, which is the complete collection of every single publicly traded company on US markets, that is building a solution to climate change. So this is more than just solar and wind, it's batteries. It's home insulation, it's automation, it's LEDs, it is capturing methane from landfills, speaking of methane, it is that complete collection. And we exclude the companies who make more revenue from products that are specifically built for the fossil fuel industry. We use revenue, we don't use pledges or claims because it's so toxic, so cheap in this space, we use your last year's revenue as your indicator of the future direction of your company. So we not only published that full list where you could see everything that made it through. But we also show you everything that didn't. And exactly why who are the companies that are building a solution to climate change, that didn't make it onto the climate index? And why was that? I think that that adds a level of transparency that you haven't seen, we then also made sure that we had the right advisors who do have that 20 years of experience to come in and make sure that these strategies are fully sound and hitting what we need to. If you go onto our website, you can see we try and make this all very upfront. You can see all the back testing of our portfolios, the full strategies, all the statistics, comparing to the generic, the appropriate generic benchmarks. So it's kind of for us, it's that combination of saying, we're not trying to say that, hey, we're going to buy and sell stocks and beat the market. It's saying you, you have been told that index space investing is a really smart way to invest. That's true. Let's not try and break that mold. Let's just try to apply that to the world will resolve climate change and maximize as much impact as we can. And in doing so, let's make every decision that we are making in that process as transparent as possible. So that if you were to go through and build the portfolios yourself using the same decision matrix, you would get to the same output of what we did that is ultimately our goal.
Paul Zelizer 30:00
I love that transparencies act. That's, that's gorgeous. And I think it is you're talking about the greenwashing. Like, almost the only level of corporate BS, can we call it that? I'll call it that I'll go out on a limb that feels similar is like the sort of positioning and the whatever around like Black Lives Matter and investing in AI, like greenwashing and VR, they're the two places, I've seen these outrageous, not that it's not anywhere else, but it's particularly heinous. And when it comes to these spaces, just like we're doing all these amazing things around Dei, or around, you know, climate change, I mean, you look at the actual numbers, it is so uninspiring. And so just against everything, all the rhetoric, and I think you've really got your finger on something, just the amount of frustration and even bordering on anger, it is anger, I'm pissed at people who I came up with some language now. Like when somebody pitches me, I said, Look, to be on this podcast, there's a look, we're not interested in people who put green lipstick on a pig and tell me you have a sustainable solution. Right? Like, go somewhere else. Right? Like, and, and just, you can hear that there's a certain amount of charge. And I'm not I'm not ashamed of that charge. I'm a little like, fuck you. Right? Like no, like, we're about to head off an ecological clip. And you're telling a narrative because you think it's going to get you money? Yeah, there's a co op thing in Arizona. So I just share that to just say like I so when I say appreciate it, I appreciate it with a nuance of what you just described how transparent and how granular you're being about what that transparency looks like in a space where there's so much green lipstick on a pig. Is that Is that fair to say?
Zach Stein 31:53
It is absolutely fair to say, Yeah, I got chills, like in hearing you talk about that, because you completely hit it is infuriating. I will happily go to that place of rage. The level of money that to be made by talking on these issues is staggering. And talk is so cheap. This is why we only base our decisions for who makes into the climate index based upon revenue. Because you can't hide that. And the on the dr. D i front, one of the most infuriating things was the output of kind of the rise of corporate action in response to Black Lives Matter. I don't know if you saw this study, one that I saw was that $250 billion were pledged by corporations around dei issues in response to Black Lives Matter, the murder of George Floyd and the other many others. As of I think was like six months ago, only 250 No, it was like $50 million. It was
Paul Zelizer 32:57
5% 5% is what I heard about that noise of actual, like, money changed hands for these, you know, supposedly big initiatives that these companies are now motivated to make it was less than 5%, where cash actually got the lists.
Zach Stein 33:14
And and this is what really influenced part of our voting strategy of what, what that showed us is that corporations, especially brands, are very susceptible to public pressure. And so much of their value is in protecting the value of that brand. Taken Coca Cola, for example, so much out there value is how you and I feel about coke. It's a negative consumer sentiment, and we really don't like the word consumer. But that's how, you know we are seen in that light is really impactful to them and their bottom line. For those types of brands, they really care. That is a leverage point that we as quote consumers can use to push, what we then also need is you need a seat at the table. This is what the BLM Movement didn't have. They weren't, you know, large shareholders in these companies in a position to put forth shareholder resolutions to enforce them and spread them to hold that accountability for the follow through on the talk. So this one kind of inspires what is our voting strategy? And what we do we don't believe that it makes sense to pressure Exxon Mobil to change for a few reasons. One, they don't give a shit about what you and I think about them, they already know we hate them. So that consumer sentiment, it they already know it's totally negative. There's no redemption there. So we don't have any leverage there. So when we're trying to pressure Exxon Mobil to voluntarily decrease its supply of oil production. We think that that is an incredibly hard road to go when there is demand when they have customers that are waiting, and that CEO has to go in front of their investors and 90 Days and show why their core drivers of business are, have gotten more profitable and only will be come more so in the next 90 days, that's a really hard ask to make. Where we should focus out on that energy then is we have to decrease the demand for fossil fuels. Because even and we're seeing this in the fossil, the divestment movement. Even if we're able to convince a Chevron, to divest from some of its fossil fuel assets, they're just selling it to a private party, someone else that's less closely regulated is buying them and using them, they are you know, clouding up those tar sands, etc. So we have to decrease the demand for fossil fuels. And that we can do by focusing on the Coca Cola of the world because they care about what we think. And they can sell me a brown, sugary, bubbly liquid in the world where we solve climate change. With that's powered with 100% renewable energy that is transported on 100% electrified fleet that was sourced from a watershed that instead of being abused as being protected, that whose lobbying dollars are being spent to advance the aims of decarbonisation, these are all things that investors can pressure the company to do that don't say, you have to fundamentally change your core business. So that's why we think that that's where we need to apply and take that page of what was BLM, really successful in doing on the corporate side. But make sure that we also have our being in that position for follow through. For those where we think that we can extract the most change from
Paul Zelizer 36:31
that. Listeners, some of you know I live in New Mexico, a little story from the frontlines in New Mexico, for those of you who don't know about our economy, are heavily heavily dependent on the oil and natural gas industry. Yep, huge deposits. Based on our relatively small population, there's only like 2.5 million people in the entire state, and the massive deposits of oil and gas, and the student population of the University of New Mexico, a couple miles from my house here now, but creaky students organized and said, Look, you know, UNM is one of the largest employers in the state, if not the largest employer. And, you know, we took a look at where you're investing your money, and it was in a huge amount of oil and gas. And there's all this stuff that UNM is saying about, you know who it is, as a flagship university, and you know, who we are in New Mexico, New Mexico is known as the first majority minority, I hate that language. But that's how you majority minority state. In other words, we have more people of color here in New Mexico proportionately than any other state in the country. And, you know, we know that climate change disproportionately impacts poor communities of color, etc, etc, the students made this fabulous case that UNM should divest from the fossil fuel industry with its retirement, Fox is the largest employer in the state, and they want. And I tell that story to just say, like, very smart activist students have said the same thing, like, we're not going to go to the companies and say, you guys should stop like getting oil and gas out of the ground in New Mexico, because that's just not going to happen. But we can change. So they pivoted, where money was getting invested and very similar aligned with what you're talking about. So we're gonna take it from oil and gas, right? When we take the largest pool of retirement funds in the state and put it into sustainable and other things that are more aligned with the stated values of the organizations, the students and the faculty organized to pivot those dollars and now was with very much in line with what you're talking about, we're not going to go head to head with them. We're just going to take our money and invest in this other way. And I hear you saying, Here's a vehicle to help people who are think that way. Like, let's, the way we move the needle fast enough, is to significantly resource the solutions we already have. But we're just under capitalizing that doctor to say that,
Zach Stein 38:59
it's totally fair to say that's beautiful. Yeah. I mean, one of the other resources that New Mexico has is sunshine.
Paul Zelizer 39:06
We have a lot of it. 320 days I love here and living here 320 days a year. I believe we have full sunshine here in Albuquerque, right? Yeah. You can't make solar work here. Come on. Yeah.
Zach Stein 39:17
So imagine if the the money that that is, you know, being put into that fossil fuel industry there is instead being built into transmission, electricity transmission, because New Mexico should be exporting solar to Chicago, you should be heating homes in the middle of winter, and the jobs and the resources, the money that that's going to take there, that's going to be really, really impactful. So it's not just the oil and gas in the ground that you guys have as a resource. It's just how do we tap into that? And that's where it comes to. It's an investment problem. Obviously, there's like things of government pressure and things like that, but it's the more investment you get behind something, the more likely it is to happen. They like it, especially in our it's like using the corrupt world that we have like The more investment that goes into climate change solutions, probably the more lobbying dollars that are also going into that as well. There's some just like necessary working with this system that we have on the timeline that we have, that we have to go with. So that story is really inspiring. And it's exactly what we need to see more of.
Paul Zelizer 40:18
So you're pretty young. I mean, you guys are like 1820 months old, right? This isn't like a 20 year, you've done so much in this time. But like, if you look ahead, what do you see in the next couple of years for carbon planning?
Zach Stein 40:30
Yeah, we have a pretty aggressive product trajectory of what we're trying to build. We on the service front, so right now we have a robo advisor. So this is where people like you and me, we can invest our IRAs, we can rollover, old 401 K's you can deposit cash and open a brokerage account. We have safety net accounts. So we kind of take care of individuals like us, we have our 401k program for startups, mission driven companies, we're really excited to add a couple of things to that layer. college funds, this is an area that a lot of people will put money, that it's there's not really ethical investing options, and the technology is coming to enable investors like us to build those options. And just like I have a seven week old, I want Caleb's college fund, to be invested in a world that he's not having to deal with escalating catastrophic climate change. That is a very clear, no brainer for me. So that's one piece that we're going to be adding the other that we're really interested in, are donor advised funds it, these are vehicles that get set up by Wealth Advisors, often to help like wealthy people have more tax efficient strategies based upon how they donate, you can donate, let's say, if someone's going to come into a big, a lot of stock, if they were to sell that stock, they would have a very high tax burden. And so they'll often donate it into a donor advised fund, which allows it to continue growing in value to be donated. But you get to take those tax savings over the next 10 years whenever you want. So there's a lot of smart financial reasons to do it. The problem is that, like so there are a lot of money has gone into them. For that reason, there's a lot of abandoned donor advised funds that aren't really doing anything they're not actually really being donated are actually going to help that's a lot of capital that we can get onto the side here. And what we're really excited to do is how can we get that money invested in underfunded climate solutions, the ones that aren't in the climate index that aren't being funded by publicly traded companies are built by those. That's a really exciting thing for what we want to build on that there. At the same time, what we're starting to build now is our family of funds. So right now, the only way for you to work with us, is to come and be a member with us, we still think that's the best way you're going to get the best service, we are real people, we answer questions, we care about this as much as you do, that we we need to expand this pie bigger. So we're in the process of making it so that each of the pieces of our portfolios, where we divest from fossil fuels, and the companies that are dependent upon the long term use of fossil fuels, so it's about 20% of our core portfolios. It's about 20% of the stock markets, we cut those out, we then reinvest that money into the climate index. These are the companies that are building the solutions that are building the things that replace the need for fossil fuels. And then we broadly hold the rest of the economy with some changes on the rest of the stock market. Because those are the Coca Colas, those are the companies where we can apply our pressure to go faster, because they don't need to change their core business in order to fit in a way that's decarbonized. They just have to change how their core businesses power, how its transported, how they're interacting with the broader ecosystem, it's a much easier to ask. So each of those pieces you should be able to buy outside of carbon collective. So we're going to be building that family of funds, which is going to set up we think for some really exciting things and put the students New Mexico, it UNM to not just say, hey, let's divest from fossil fuels, but also say, let's invest in the companies in the solutions, and also invest in pressuring the rest of the economy to move as quickly as possible to adopt those solutions. We need better places of where for divested money to go. And that's what we've tried to want to we want to open up more broadly. And what Mark Bell bank
Paul Zelizer 44:32
so is that good Bumble? That's from say, Wow, this all sounds good, but I know that some financial investment opportunities have basic minimum. So like on two levels as an individual, I'm saying this great. I think I might be interested in getting involved but I'm not sure if I have enough money to get it. So on the individual level and also like in the 401k in the organizational you know, a lot of impact organizations. We're not Coca Cola, we don't have hundreds and hundreds of 1000s all around the world, right? So on those two levels, both for the individual and somebody who's a leader in an organization who I'd love to be doing this in this way, but do we have enough to, you know, get their interest? Can Can we participate at the level that we're at right now?
Zach Stein 45:13
Totally. So this is part of our theory of change, that the moment that you start putting financial barriers to saying yes to sustainable investing is the moment that you cap your impact. So we've taken from a very pragmatic approach, that you need to be able to join a place like carbon collective, in a way where you don't feel like you're sacrificing financially. So you're pay the same fees. There's no minimums to what we have, we have clients who have $10 on the platform, they also have clients who start with $10, and have 10s of 1000s of dollars on the platform now, and again, you can get if you're looking for a strategy that is going to be similar to a standard based index fund, you can get that one with a similar backtested. Risk and reward for our 401 Ks, it's very similar, you're gonna pay basically the same as you would, if you're in the 401k market, as a company, but I say, Hey, we're like, you know, 12 people, we're getting steadier cash flow, we want to offer this as a benefit. If you're at that stage of a company where you're looking around anyways, for it, we are a very viable option. We are less expensive than some and a little bit more expensive than others, we're kind of fall into the middle of that. But we're very much in the range of like, what you would pay for the generic 401k provider that might integrate directly with your payroll or something, and are the software providers that we use for the 401k providers will integrate fully with your payroll. And so once it's set up, it all runs automatically. So you're not adding like a new HR layer, or things like that, that you have to run continuously. So it's again, it's all in this goal of saying if we are to get the amount of capital that we need, allocated towards climate action, it has to be a smart investment. So we very much have our eyes very clearly on that.
Paul Zelizer 47:00
That's fabulous. Can I love how inclusive your business model is? Thanks for thinking about that. It's one of our core values here. And we're Thank you. Awesome. I can hang out with you all day that you've been thinking about this, you're doing fabulous work, but you're a busy guy. And our listeners are busy too. If there was something as we start to wind, well, let me just back up, say, listeners, there will be links to as many of the things that are so many of the Mom Test and carbon collected website and some of the specific products that they offer. So I'll put links, but don't worry, you can find Zach and his team. Aside from here's how you find us, which we'll take care of in the show notes. If there was something that you want to leave our listeners with, as we start to wind down either like something we haven't mentioned on this topic that feels really important, or something you want to share with them as impact entrepreneurs in a really point in time, what a piece of wisdom for them. What would that be?
Zach Stein 47:55
Yeah, a number of things come to mind here. I think what I'm going to focus on is sharing what is the role of individuals in solving climate change? We think a lot about this. And there's a lot of people who are saying, like I am one person, fossil fuel companies have told me that my carbon footprint is super important. And like, fuck that, like it's their fault. It's major corporations, its governments. And it's like, that's true. And what we haven't heard is, what is a theory of change, that changes that status quo. That is not the a collective of individual actions put together. When you make a different choice at the grocery store, that is an individual action, the collection of those changes what's on those grocery store shelves over time. So I think that is a place to leave of, you know, if someone has a contrary opinion, that's something that we're always really interested in. But it's kind of our blends of pushing back of saying like, Where does the individual belong of this, and we believe it's in a strong place of intention. So where should that intention go? Because it can be really overwhelming. Climate change is really overwhelming. We are just individual people, how do we fit into this global economy and do this? Where we say to start, is, how can you pick up the big pieces of your life? The big meaty problems? How are you transporting yourself? How are you generating the electricity for your home? You know, where are you using fossil fuels in your life? Where are you banking? Where is your money setting and investing? These are all hard problems. But there are also things that if you pick it up, and you solve it, you don't have to think about it again. I just got an induction stove. In my house. I have a new board. gas stoves are really bad for air quality. I don't have to think about the carbon footprint of my induction stove ever again. It's running off of renewable electricity. I'm doing that is a one time decision that I no longer have to think about. It is different than like, should I bike to work or drive to work today? How can you build your life in such a way that usually get to live in a way that is aligned with solving climate change. That is, I think, where I would leave it. And I think as a business owner, it's where what are the gears and guts of your business? Where are you banking? This is a question that a lot of people have, where are the good places to do business banking? Where are your clients? 401k is who are your credit cards? With? What are you doing in terms of travel and playing travel? Can you limit that further? What are those signals to the market that you're sending? That's what I'd say, pick it up. Put a lot of effort into it. And then you get to put it down. And just keep running your business or running your life.
Paul Zelizer 50:39
It has been fabulous to have you on the show today. Thanks so much.
Zach Stein 50:42
Thank you so much for having me, Paul, super appreciate all the work that you and the AWARE pesto.
Paul Zelizer 50:48
So before we sign off again, remember, all the links will be in the show notes. Please could tell your friends about carbon collective and the awesome work that they're doing. Whether it's to invest your individual funds, retirement funds, and or if you are somebody you know, this is the leader of an impact organization. Let's get those retirement funds in the hands of people who think like Zack and his team. Thanks, folks. A quick reminder, like this episode. Thanks, crag. We love listener suggested topics and gas people who listen, you know, the kinds of stories we'd love to amplify. So if you have an idea, please go to the enterpreneurs website. Look at our contact page. We have our criteria right there. There's three of them. We try to make a really simple, here's what we're looking for. If you read those and you got an ideas, check, check, check, send it on in we'd love to hear from you. For now, I just want to say thank you so much for listening. Please take really good care in these intense times. And thank you for all the positive impact that you're working for in our world.