Action > worry
People are worried about climate change. In fact, over 80% of people in America are worried, crossing both Republicans and Democrats. Of course, it’s natural to worry when wildfires are destroying local forests and heat waves and droughts are gripping the country. But worrying won’t get us anywhere, tangible solutions will. And there’s one solution sitting in plain sight that no-one has yet solved: where we put our retirement dollars.
There’s a reason no-one has solved it. It’s thorny, complicated and a hugely ambitious project (more on that later), but when we met Alex we knew we had met the right woman for the job. Ambitious, deeply conviction driven and a measured force of nature - we knew we wanted to support her journey as she set about changing the future of finance for the better.
Money matters
You may be surprised to hear that while 80% of Americans are worried about climate change, 99% of Americans who have retirement savings are actually invested in fossil fuel companies. There’s a paradox here: people are worried about the climate, but actively investing in a future where the climate emergency gets worse. In fact, the average American has a significant $6,000 invested. Why, you might ask? The short answer is: no-one knows it’s happening. 81% of Americans who have retirement savings don’t know they are invested in fossil fuel companies.
But why does it matter for the climate emergency?
There are $35 trillion in assets in retirement savings in the US (as of Q1 2021). Those 99% of Americans investing in fossil fuel companies end up supporting and funding these companies’ growth. But it goes deeper than that: funding fossil fuel companies is also funding fossil fuel lobbyists who have fought tooth and nail to stop climate legislation from being enforced: the very legislation designed to protect us and future generations.
What’s especially interesting is that taking a stand on investing in fossil fuel companies isn’t actually a financial sacrifice for investors. Arguably, it could be even better. Fossil fuel companies have consistently underperformed the market over the past 5, 10, and 30 year time periods, meaning that a move away from fossil fuel investments also promotes positive financial returns for investors.
Enter Sphere
We are proud to have invested in Sphere, a brilliant startup who offer financial products that make it easy for employers to offer fossil-free investment options in employee’s 401(k) plans. In the US, a 401(k) plan is one of the most common US retirement plans offered by employers at some of the biggest tech companies.
Offering fossil-free investment options allows investors to take a stand on climate change, whilst allowing HR managers and their advisors to access impact focused products at reasonable fees. Sphere does this by solving the structural issues that have historically kept these funds out of 401(k)s, which has meant most employees with access to 401(k)’s have not been offered the option to invest in climate-focused funds.
Ambitious problems need ambitious founders
We have been looking at sustainable finance for a while, and it soon became clear that it was an area with the potential for huge impact. We were shocked when we found out how little people knew, and how little control they had over how their retirement savings were being invested. ESG funds are performing increasingly well, and there are more and more corporations actively pledging to take responsibility. We believe that now is the time to finally break the structural barriers that have made it difficult to invest in fossil free alternatives.
We believe that big ambitious bets like this require equally ambitious founders. The founder of Sphere, Alexandra Wright-Gladstein, is a serial entrepreneur who previously founded Ayar Labs - a company that makes data centers and supercomputers more energy efficient by using light to move data between chips. We previously met Alex while she was running Ayar labs, and when we heard she was working on something in green finance we were excited to hear more. Alex is an incredible founder with a true passion for reversing climate change. She has the drive to follow this passion with her actions, and has already proven her ability to attract amazing partners to help fulfil her vision: everyone from sustainable investing veteran Jason Britton of Reflection Asset Management, and BITA custom indexes to creative director Doug Burnett and his award-winning agency Buena. Together, they will work to galvanise the movement and get more Americans talking about how to take action in their companies, offering a solution for them to make an impact with their investments .
What’s ahead
We are delighted to lead Sphere’s $2M seed round alongside some excellent angel investors. Sphere will be partnering with Reflection Asset Management to launch their first product, the Sphere 500 Fossil Free Index Fund (SPFFX), in October 2021 which will be open for professional investors and for 401(k) providers to offer to their employees.
Join the movement here.
Or follow the journey on Twitter here.