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Your 401K Could Help Save the Planet, with Alex Wright-Gladstein CEO and Founder of Sphere



Welcome to another episode of the Solar Podcast. Today, Dave is joined by Alex Wright Gladstein, founder and CEO of Sphere. Join us as Alex discusses the importance of climate friendly investing, shares insights on the fossil fuel industry's resistance to sustainable 401 KS, and explains how individuals can take action to align their values with their investment. Let's get started on the solar podcast.

00:34 Dave Anderson I'd like to welcome everyone back to the Solar Podcast. I'm Dave Anderson, your host. I'm thrilled to have with us today Alex Wright Gladstein. She's a serial entrepreneur. She has a focus on renewable and sustainability. This is something she's had a lifelong passion about. I've actually had the wonderful opportunity of listening to many of the different things that she's published on the Internet. So I would strongly suggest all of our listeners, after this video, after this podcast, to go and listen to other things that she's recorded in the past. She's a real fantastic authority on all things sustainability and renewable power, as well as just general ESG initiatives. Alex, welcome to the podcast.

01:08 Alex Write-Gladstein Thanks so much for having me, Dave. I'm really excited to be here.

01:11 Dave Anderson Well, Alex, I'd love for our listeners if you wouldn't mind, obviously I just hit some of the high points. If you wouldn't mind giving us a little bit of a background on your history, both your educational history as well as your professional endeavors that you've been working on over the last decade. I'm sure our listeners would love to hear about it.

01:28 Alex Write-Gladstein Sure. So I've been passionate about trying to prevent and turn around climate change really my whole life. I decided early on that if I could be a serial entrepreneur, helping get technologies out of labs that would have an impact on climate that could be worthwhile. And so I went to MIT for an MBA, really as an excuse to meet people across campus inventing things, which was amazing. There are over 300 labs at MIT that do energy related research and I got to meet a lot of the people in those labs. And I met my co founders for my first startup while I was there. They had just invented the first ever processor to communicate using light. And we worked together to spin that technology out. And the company is called IR Labs, and we make data centers and supercomputers more energy efficient by using light to move data between chips.

02:18 Alex Write-Gladstein And we've grown that company now to where we have customers like intel and Nvidia. And while running that company, I came up across this issue when we started offering a 401K retirement plan to our employees where I wanted a climate friendly investment option in the lineup. And so I asked our providers for one. And long story short, it took over three years and a lot of persistence to get a single climate friendly investment option in the plan. And I started questioning why is it so hard to do climate friendly investing in 401 KS. There are plenty of climate friendly options to invest in outside of 401 KS. Why can't I get them in our four hundred and one k? And I talked to a lot of people in the industry and ended up learning there are a lot of reasons it's hard, but none of them are insurmountable.

03:07 Alex Write-Gladstein And I decided to start sphere to try to make it easy for everyone to invest in a climate friendly way in their retirement plans.

03:14 Dave Anderson So when you first started asking those questions of these investment companies and thanks for that background, by the way, but when you first started asking these questions, building a 401K plan for your employees, when you were at IR Labs, what were the sort of responses? Was it as though they were hearing the question for the first time when you first started inquiring?

03:32 Alex Write-Gladstein It was a lot of the time the answer was just, oh, interesting, let us look into that, we'll get back to you. And so there was a lot of delay just from that type of response. And at first were a small company and a pooled plan with other employers, and so it didn't feel like we had too much sway. But as we grew, we started having our own plan with our own devoted 401K advisors. A 401K advisor is like a financial advisor, but they advise a company on what funds to put in a 401K lineup. And even they were saying, oh, let us look into that, and taking time and more time. And then when I started getting options offered, oftentimes they were ESG options labeled ESG. They thought of them as ESG. First of all, I personally didn't even know what ESG meant at the time.

04:20 Alex Write-Gladstein We started offering a 401K plan back in 2017. I had never even heard the term, I had to look it up. Okay. Environmental, social, and governance investing. I see why they would think that's related to climate change. But then I would go and plug the ticker into this website called Fossilfreefunds.org, and you type a ticker of any fund in there and it'll tell you how heavily invested it is in fossil fuel companies. And a lot of the options they were giving me were very heavily invested in fossil fuel companies. And I realized, wait a second, I don't really know what ESG is, but I don't think it means climate friendly. This doesn't meet what I'm looking for. I need other options. That's why this kept extending and taking longer.

05:01 Dave Anderson Yeah, so many questions I could ask you about that. In fact, we've had guests on in the past that have talked about how generally, and I would say this is a good thing generally, companies are starting to broadcast and proclaim their ESG goals and their governance goals that they have, their sustainability goals, their social goals that they have. And I think that generally that's a great thing. It's a great thing. It's transparent to the public. It's a great thing in terms of people are now being morally conscious, not just trying to talk about things like revenues and profits, which are important in the private sector and in the public sector, obviously, but they're talking about things that matter outside of just revenue and profit, which is good. And previous guests we'd had on had talked about that 97% of all of the S and P 500 actually have ESG stated ESG goals and sustainable goals.

05:48 Dave Anderson And again, I would say that generally I would say that's a great thing. But that being said, it's pretty difficult to there's no regulation on how you state what your ESG goals are. So what are the sorts of specific things that were red flags for you as you started to look at building a portfolio or things that were top of your mind as you were thinking about what does it really mean to invest in companies that are climate friendly?

06:12 Alex Write-Gladstein Yeah, that's right. So most companies these days are reporting something related to ESG and really it's a framework for companies to be able to share what they're doing in the environmental, social and governance areas. And asset managers think of ESG as really another way to assess risks. Asset managers are always assessing risks of potential companies they could invest in and environmental risks are risks like any other, as are social risks and governance risks. And so the asset management industry tends to think of ESG as a way to make better financial decisions on what companies will provide better returns. And that doesn't mean that they're investing in companies that will address climate change. Right. It's just a very different thing though. I agree. It's very important. And when I was looking for a climate friendly investment option, it took me some time to really define what I meant by that.

07:12 Alex Write-Gladstein

I knew it didn't mean investing in the status quo. Continuing to invest in the fossil fuel companies that have been really stalling progress on climate policies and really addressing climate change that just didn't feel like the right type. Of investment for a company that I had helped found to try to address climate change and where I knew a lot of our employees really care about climate change. And so when I started really thinking about it, I realized, okay, not investing in fossil fuel companies is important. And I realized when I started looking at the data, it's important not only for moral values reasons, but because fossil fuel companies have actually been underperforming the market at large going back decades. If you look at the S and P 500 index and compare it to S and P's SPX energy index and the way they define the energy sector is fossil fuel companies.

08:08 Alex Write-Gladstein And so just removing the fossil fuel companies from the S and P 500, you compare the performance going back a decade or more, the returns are better in the X energy index than they are in the more broad SP 500 index that includes fossil fuels. There's also data showing that the fossil fuel industry has been very volatile. Looking at the S and P report on the volatility of each sector in the economy, the energy sector is the most volatile at about 20% compared to the S and P 500 on average at 12%. And so it's a risky investment. It's an investment that hasn't been providing great returns and from a purely financial reason, you would probably be well served to want to not invest in that industry. And that was realizing there was that data made me realize, okay, most of our employees don't want to be investing for a moral reason, but on top of that, it hasn't been providing good returns in the past.

09:11 Alex Write-Gladstein We should have this option for employees. And that's really what drove me to start sphere. The other area where we can have a huge impact, where most people don't really think about it, is in voting our shares. So even if you're not investing in fossil fuel companies, you're still investing hopefully across a large swath of the economy in your retirement investments because you want to be well diversified. That's how you really protect against risk. And what that means is you have the right to vote your shares at some of the biggest companies in the economy. And shareholder votes have a really big impact on how companies behave. Now most people don't realize we have that power to vote our shares. And that's because the asset management firms that run the mutual funds that are in 401 KS are voting on our behalf. They're not asking us our opinion, they're just voting on our behalf.

09:59 Alex Write-Gladstein And most of the time they vote however the board recommends they vote. And what that means in practice is they're voting to maintain the status quo. They're voting against every shareholder proposal having to do with climate change. I shouldn't say every, but the vast majority of shareholder proposals having to do with climate change, whether it be oh, shareholders propose that a company start measuring its emissions or shareholders propose that a company take a look at its 401K plan and figure out whether there are any climate friendly investment options in it. Again and again, big asset management firms are voting against those shareholder proposals, even though we, the actual shareholders, would probably vote for those things and think that they are in the best interest of the company. Especially when we're thinking about the long term financial returns of companies and really setting them up for success in a changing world.

10:49 Alex Write-Gladstein And so voting shares for climate action and not investing in the worst offenders I e. The fossil fuel companies are really the two simple things that I look for in a climate friendly fund.

11:01 Dave Anderson So you had a fairly traditional background, maybe not with the same sort of like passions meaning that you've always been passionate about sustainability generally, but obviously you went to a blue chip college and got your MBA, started a very successful company in IR Labs, and then your passions really drove you to start moving over to Sphere. Oftentimes. Some of the most interesting stories when I talk to entrepreneurs is, how did the name Sphere come to be? Where did the name Sphere even originate from?

11:28 Alex Write-Gladstein Well, I am excited to have the excuse to tell you about our chief creative officer because it 100% came from him. His name's Doug Burnett, and he was the first person I called when I was thinking about starting Sphere. And I told him, look, I know the issue of 401 KS is really boring. People's eyes glaze over when you say the word four hundred and one k, and it's a mix of it's boring, it sounds boring, but also it's slightly intimidating. A lot of people don't know that much about finance and haven't put the time in to really figure out how they should be investing their money. So they're like, I'll save it for another day. So 401 KS as a whole not the most riveting thing to talk about, but most people don't realize that they can have a massive impact on the climate through their 401 KS.

12:12 Alex Write-Gladstein And when I told him about this, and I asked him, do you think we could really build this social movement where people start caring and asking for this type of thing? And the reason I was asking him was because he comes from a big ad agency background. He was at one of the top four ad agencies. He had worked on massive accounts like Coca Cola and Samsung with huge success on these advertising campaigns he had done. He had then left to start an agency that just works for social good. And he had worked on projects where he had gotten over a billion eyes on a campaign without paying a single dollar for an ad. He's just an incredible creative mind. And I realized that if we're really going to create change in the world of 401, we're going to have to really grow a social movement where people, everyday people, are asking for change, and that change will come from the bottoms up.

13:04 Alex Write-Gladstein And he's the person who I know who knows best how to spread the word about any topic, especially topics for good. So that's why I called him up. I said, what do you think 401K is climate? And he said, I think there's a huge amount of potential here. And I was going to call it what was I going to call it? I was going to call it something like fossil free 401 KS or something really boring. And he's like, you cannot call it that. He did an entire assessment. He presented a deck, he did a pitch deck on what we should call this, and it was probably 100 slides long with all kinds of different options and ideas, and Sphere was in there and I loved it. I loved that it can mean two things. It can mean a lot of things. But the two things that came to mind for me were our planet, the planet that we want to protect, but also our sphere of influence, our own sphere of people who are close to us.

13:56 Alex Write-Gladstein And in the world of 401 KS, it's very true that we can actually have an outsized impact on moving huge amounts of money out of the fossil fuel industry or voting a lot of shares in these shareholder proposals just within our own spheres of influence. Especially if you work at a big company and you can be one of the people that convinces your benefits team to offer a climate friendly option in your company's plan and then help spread the word within your company that this option is now available. Once people find out, they're usually very excited to partake in this. And so I love that dual meaning of Sphere of influence and Sphere our planet.


14:34 Dave Anderson Yeah, I love that too. That is great and often all too common. The entrepreneur's best idea for a name is something that's very descriptive about what they're going to do, like Fossil Free Fund or something like that. But Sphere is really a brand, and I think it does encapsulate the things that you purport to be passionate about, which is exciting as well. Maybe you can give me just a little bit more of an overview. What precisely is Sphere's role in building a 401K? Or in terms of what it does for businesses, for companies, for individuals, as it relates to 401 KS, not just on the fund building side, but what is Sphere's ultimate place in that entire arena?

15:19 Alex Write-Gladstein Yeah, so we have two products, and we'll be growing this as needed to really support this movement. But one product is called the Atmosphere, and we have an enterprise version of this tool that is really designed to help sustainability teams understand what the emissions are from their 401 KS and how to reduce those emissions. And the reason for building this is I talked to a lot of sustainability managers about this issue of 401 KS, and every time I brought it up, they would say, yes, I agree with you. This is such an important issue. I wish I could work on this. And I realized, why don't sustainability teams think this is part of their job? They're very busy making sure that their suppliers in Asia put solar panels on their factories, but they're not spending time trying to green their 401 KS. Why is that?

16:07 Alex Write-Gladstein And I realized it's because the gold standard guideline on how people should be measuring their emissions for their companies. The guidelines about sustainability teams to understand how to measure emissions. It comes from something called the greenhouse Gas protocol. That's what defined what you may have heard of as scope one, scope two, scope three emissions. And scope one is the emissions from a company's own operations, scope two is the emissions from electricity generated for the company's operations. And then scope three is everything else, which generally can be bucketed into emissions from suppliers when making products for the company and emissions from customers who are using the product or end of use of the product. And right now, the financial supply chain is not included in the greenhouse gas protocol definition of suppliers. And so 401 KS are not included. And that is looking very likely to change because the greenhouse gas protocol is going through an update right now and a lot of people are talking about the financial supply chain, and that includes 401 KS.

17:13 Alex Write-Gladstein So it's looking very likely that two years from now, greenhouse gas protocol will include 401 KS, and everyone will start needing to measure that. And it turns out people will probably start paying a lot of attention to it. Because Mercer came out with a study this past September that measured the emissions from big companies 401 KS. They were looking at S and P 500 type companies, and on average, they found those emissions were 33 times higher than the company's scope one and two emissions combined. So massive hidden emissions from 401K plans. And this atmosphere enterprise platform is designed to help sustainability teams get out ahead of this greenhouse gas protocol update and not only measure those emissions for their own company, but also understand how to reduce those emissions. So model, what would be the emissions from our 401k plan if were to swap this fund for that one?

18:09 Alex Write-Gladstein And then also understand how do we engage with our benefits team, with our 401k committee? Help them understand. What is the language of 401 KS? And how do they have a constructive conversation with the key decision makers in their company on 401 KS to be able to bring about change and reduce those emissions? We also have a free version of that tool called the atmosphere starter, and that lets anyone type in the name of any company in the country and look up how much of that company's 401K is invested in fossil fuel companies. So just a simple way to figure out the impact you can have by encouraging your companies to start offering green options in your plan. And then we have a fund product. And before I talk about that, I should say that nothing I'm saying here is investment advice and you should always talk to an investment advisor before making investment decisions.

19:00 Alex Write-Gladstein And this fund is called the Sphere 500 Climate Fund, and it's designed to be really the easy button for benefits teams that are looking to add a climate friendly option to their plan. I realized when I was looking for a climate friendly fund for the IR labs plan, part of why it was so hard was because there weren't really climate friendly funds that were designed with 401 KS in mind. They tend to be designed for more wealthy investors. They tend to have high fees. In the world of 401 KS, there are lawsuits all the time for having funds that are too expensive in 401K lineups. So no wonder the 401K community is shying away from these expensive climate friendly funds. So we launched the Sphere 500 Climate Fund to just check all the boxes of what 401K fiduciaries look for when it comes to low fees and good performance compared to benchmarks.

19:50 Alex Write-Gladstein Just make it an easy yes for them to be able to add something to their plan.

19:55 Dave Anderson So I would imagine that the first check for any company that gets added into or any equity that gets added into the fund is first of all, its stated sustainability objectives and goals. How does the fund measure those? What methodology is being used to first sort of screen companies based on whether or not they meet the minimum impact or they meet the minimum requirements to be considered as part of being placed into the fund.

20:24 Alex Write-Gladstein We don't even use that type of assessment at all.


20:29 Dave Anderson Okay.

20:30 Alex Write-Gladstein The climate friendly funds that existed before we created the Sphere 500 Fund tend to take that approach where they're assessing all the companies in the economy and trying to find the best ones to invest in when it comes to all these climate friendly or ESG measures. That's an expensive way to run a fund. It takes a lot of research, a lot of active management, and that is why those funds tend to be pretty expensive. And so we decided to start a fund that's run an entirely different way and it's in an automated way. It's an index fund and it has a couple very simple rules. The first rule is take the top 500 biggest companies in the US. Economy. So this is very similar to the S and P 500 index fund, right? It's the top 500 US companies by market capitalization. Number two, remove the fossil fuel companies from that list.

21:21 Alex Write-Gladstein We also have a few other screens, so lead contributors to Deforestation, we get our screens from a nonprofit called as you. Sow they're actually the nonprofit that runs the website I mentioned at the start called Fossilfreefunds.org, the one that was really useful to me as I was trying to figure out how are these funds invested? And I went to the head of that nonprofit when I was thinking about starting this and I asked him, instead of me having to employ people to do research to define what is a fossil fuel company, what should we be excluding? Would you be okay with using your research so we can offer a really inexpensive fund and not have to employ these people? And he said, of course, let's do it. They're very aligned in trying to get green options offered in 401 KS. And so we use their screens entirely.

22:09 Alex Write-Gladstein And that means all we do is those two steps. Top 500 us. Companies, remove those companies that fall into those screens, and we're left with about 415 companies right now. So about 85 companies are screened. None of them are in the top ten of the S and P 500. And so that means that a large part of our investment, because our fund is market capitalization weighted, that means because Apple is bigger than Tesla, for example, we would invest more in the one that is a bigger company based on their market capitalization. And that's the same as the S and P 500. So it turns out the performance of this fund is extremely similar to the S and P 500. Going back over the ten year back test of the index that we did to calculate how this strategy would have performed if it had existed over the past ten years, we found that it had 99% correlation to the S and P 500.

23:09 Alex Write-Gladstein And that's fantastic when you're talking to 401K advisors because they're familiar with the S and P 500, and it doesn't feel like a risk to invest in something that has such similar performance to the S and P 500. Then we also vote our shares in those 415 companies that we do invest in, and we use a shareholder voting service provided by that same nonprofit as you, sow it's called as You Vote. And so anytime there's a shareholder proposal having to do with climate change, as you vote, is voting on our behalf in favor of those proposals? As long as they've done the assessment that, yes, this makes financial sense for this company, and we think that they will do better financially if they set themselves up for success and address the risks associated with climate change.

23:57 Dave Anderson I love that. And in some ways it just goes to show you that sometimes simple approaches are really the most effective. And I agree with you, keeping something where it's fee friendly and low fees is a critical part of any sort of fund performance. So help me understand who are your ideal customers, both for the product one, the first product, as well as the second product? Who are the people that your company is most likely to work with at.

24:21 Alex Write-Gladstein Sphere for the first product, the Atmosphere Enterprise, we're working with sustainability teams at companies. So these are the teams that are already working on reducing the emissions of companies, and they're starting to realize the impact that their 401K plans have. And so we're working with them to help them reduce those emissions. And for the fund product right now, we've had a lot of success with smaller companies, especially mission aligned companies, like my first company, for example, Climate Tech. Companies that care about climate change have employees that really care about this. And either their leadership or just a random employee on staff brings up the idea of adding this to their lineup. And because they're so aligned, it's kind of a no brainer, especially because that whole check the box thing we need to grow the assets under management in the fund before it starts being able to be considered for bigger 401K plans.

25:22 Alex Write-Gladstein Ultimately, we want this fund to be offered on the biggest 401k plans at companies like Microsoft and Apple and Google, where they have tens of billions of dollars invested in each one of those 401k plans, and where they also have employees who've been asking their benefits teams for climate friendly investment options on those plans for years, going back to 2016. At some of these companies, they've been asking for climate friendly options and not getting them. So ultimately our goal is to grow the assets under management in this fund so that it's big enough that it can be considered to be added at some of these biggest 401K plans in the country.

26:03 Dave Anderson

I think your strategy today of being able to just invest in the largest market cap companies that are not participating in deforestation, deforestization and fossil fuels generally, as well as the other criteria that you guys have added, makes a ton of sense and probably doesn't impact the overall performance of the companies in which you're investing in the short run. But as you grow and as you get into the tens of billions of dollars, how do you start to think about that? Because now all of a sudden it becomes a needle mover with those companies that you're investing in. Or maybe that's your stated I mean that, I guess is your stated goal, right? You're trying to support those sorts of industries but that does change the investment profile or the investment the return profile potentially. And how is your company starting to think about that as you're trying to grow your assets under management and how you might address that challenge that might be in front of the company in years to come?

26:55 Alex Write-Gladstein Well, that is exactly our goal. We want to have tens of billions. Hell, we think there should be trillions of dollars that are voting shares for climate action because over 80% of Americans are worried about climate change and over 50% of Americans think climate change should be the number one top priority of the president in Congress. Those numbers are huge and those numbers aren't being reflected right now in how shares are being voted. So our goal is to get as many shares invested through our mutual fund as opposed to other asset management firms that are not voting this way, that are voting to maintain the status quo because we're running out of time on climate change. And as far as financial performance goes, really the goal is to continue to support the growth of companies that have the potential to have a positive impact on climate and to influence how they behave so they improve their impact on climate every year.

27:47 Alex Write-Gladstein And yes, to negatively impact the companies that are the worst offenders when it comes to. Climate change. So we do hope to have a negative impact on the share price of fossil fuel companies. We also think that fossil fuel company share prices are being artificially held up right now because 401K investors are required to invest in them. These are investors who have no choice to do otherwise. Right now, over 99% of 401k plans have no fossil free option. And so these investors are not given the option to avoid investing in this risky sector, even though the writing is on the wall really? That people like. Driving electric cars and the combination of solar wind a battery is less expensive than fossil fuel power generation and so it is an industry in decline yet we everyday people are being forced to invest in this industry and so that we believe leads to an artificial bubble in the share prices of fossil fuel companies.

28:50 Alex Write-Gladstein And we're trying to give people a way out of investing in that risky industry so that they can really invest in a nicely diversified way without being exposed to that risk.

28:58 Dave Anderson Yeah, I've heard you talk about the fossil fuel industry pushing back against 401K investors or investments being able to move them and shift them away from the fossil fuels. So I'd love if you could talk to us a little bit about some of the resistance you've maybe faced and ways that you're dealing with it or.

29:13 Alex Write-Gladstein Ways you're thinking about that resistance from where in particular?

29:18 Dave Anderson Well just the fossil fuel industry just generally how there's a general pushback against them and obviously for the reasons that you've already mentioned just now, there's a resistance of them to have people put together funds that would invest away from the fossil fuels. I mean obviously the people that are driving investment toward fossil fuel are people within the fossil fuel industry and they have a vested interest in making sure that the fossil fuel industry continues to succeed and grow. And I know that there's a lot of resistance that would be faced by very powerful both just lobbyists as well as people that control some of these larger 401K investment funds. Are you finding as you're starting to try to grow your fund just general resistance because it's so far outside of or maybe not so far outside of, but just because it's different and it is bucking the status quo?

30:07 Dave Anderson What sorts of resistances have you found as you've tried to talk to people and how are you trying to overcome the resistance of getting people to move both on both of your products but specifically on the fund side?

30:21 Alex Write-Gladstein Yeah, I'm glad you asked that question because it's been wild to experience the focus that the fossil fuel industry has had on this issue and has started to have on this issue just over the past year. So I founded this company two years ago and I thought it was kind of a niche thing, let's green 401 and then the fossil fuel industry started noticing that this trend was happening, as you say, and pushing back. And there was an effort. I don't want to bore you with too much of the kind of policy back and forth that's been happening on greening 401 KS, but essentially, under the Trump administration, the Department of labor, which interprets the law, which is called ERISA law that created and regulates 401 KS. They put out some guidance, really trying to prevent 401k fiduciaries from putting any green options in 401k plans.

31:20 Alex Write-Gladstein Or any climate friendly options in 401k plans. And then the biden administration department of labor decided to put out new guidelines overturning what the trump administration DOL had done and making it clear that it's okay to put climate friendly options in 401. And then that is when really the fossil fuel industry started putting a lot of money into a new, really culture war is what I have to call it. It looks like based on influence maps findings, they put out these really interesting reports. It looks like they've been putting over a billion dollars into this culture war where they created this anties movement. They also call it anti woke capitalism. And a very clear focus of this is 401. And I was really shocked when the first veto of president biden's presidential career ended up actually being on this little old topic of greening 401 KS.

32:23 Alex Write-Gladstein They got enough support from members of congress to overturn that department of labor rule that said it's okay to do climate friendly investing. And so biden vetoed that overturning. So it's become really an know flashpoint of these culture wars, and it's gotten a really huge amount of funding from the fossil fuel industry directly going into creating laws. The first law that was actually passed. So outside of this guideline from the know, it's not a law so much as how to interpret the law that already existed. But the first law that passed that really is anti climate friendly investing law was passed in the state of Texas. And the sphere 500 climate fund is one of the named funds that now, any pension fund manager, any money manager on behalf of the state of texas is legally not allowed to invest in the sphere 500 climate fund.


33:24 Alex Write-Gladstein And that list contains a whole bunch of different asset management firms going up to BlackRock, all the way down to small ones like us. And so, yeah, it's really been a wild thing to experience this pushback. And when we've looked into why that is, we've realized, you know what, there's about $10 trillion invested in 401 KS and similar plans, they're called 403 b's at nonprofit companies. But these similar types of retirement plans have about $10 trillion. About 10% of the s and p 500 is invested in the fossil fuel industry. So if you just multiply those two numbers, you realize there's about a trillion dollars invested in fossil fuel companies just from these 401K type plans. If you look at the market cap of US. Fossil fuel companies, that's about a third of their total market cap. So of course they're scared of people having an option to not invest in them.

34:20 Alex Write-Gladstein They need that money. And so, of course, they're going to pour a lot of money into trying to make sure that everyone is required to invest in fossil fuel companies, whether they like it or not. So what are we doing about it, was really your question. We are collaborating with a group of nonprofit organizations and for profit organizations that are working to green 401 KS, that are working to let everyone have the option to invest in a climate friendly way. And we're putting together a virtual march for the start of September where anyone can participate from anywhere by uploading a few pictures of themselves and generating an image that'll look pretty epic of them walking down Wall Street and they can share that image on their social media. And really it's a way to raise awareness of this issue. We're hoping that as many people participate in this virtual march as possible and really just let their spheres of influence, their communities, know about this issue so that the word spreads.

35:20 Alex Write-Gladstein And then from there, we'll follow up with everyone who participates in the march with clear actionable steps on how they can both invest their own personal money outside of 401 KS in a climate friendly way, as well as invest their help, get their companies to offer climate friendly options in their company 401 KS. And it's really a fantastic group of nonprofits and for profit organizations that we're working with to pull off this virtual merch.

35:45 Dave Anderson Yeah, I'd love to talk more about that specific point as well. And one of the things that I like to talk about on the podcast with one of the wonderful guests that come on are the things that individuals can do right now. And so while I love what you guys are doing, I love any company, any entrepreneur that starts a business and is using and trying to be a market mover in a really impactful and positive way. And I think you and Severe are trying to do that, which is really fantastic. However, the Severe 500 product isn't available to everyone as well as I would imagine in many four hundred and one K and four hundred and three B options and other retirement accounts. It might be difficult for individuals to be able to find a climate friendly retirement option as it was for you three years ago before you started the business, or a handful of years ago before you started this business.

36:29 Dave Anderson And with so many companies that are making claims about how sustainable or the renewable claims that they're making, what's advice that you would give to investors that don't have some of those four hundred and one K, four hundred and three B, other retirement account options? What are some advice that you'd give for people to be able to participate in clean, renewable investing with the limitations that might be imposed upon them? What are some simple steps that people can take?

36:58 Alex Write-Gladstein You're right, it's not easy to navigate and that's why we're starting off with this campaign in September to really make people aware of the issue and also to get their email addresses so we can follow up with actionable steps. And we're not the only company offering green investment options or green retirement plan options. There are a lot of nonprofits and for profits working in this space with a lot of resources for everyone. So I would say the first step that's easy right now is sign up for our mailing list. If you go to our website, Rsphere.org is the website. You can sign up with the Get Started button. We'll get your email address and then we'll communicate with you about this campaign in September. And that will get you, if you participate in this virtual march, that'll get your email on the mailing list and you'll start receiving emails from the nonprofits.

37:50

Alex Write-Gladstein And for profits that are working in this space, you'll hear about all kinds of companies that can support you, whether it's financial advisors that can help walk you through it, or companies that specialize in offering retirement plans that are green. For companies or nonprofits that are really just shining a light and making more information available organizing nonprofits. There's a ton of support out there. But I'd say just start by signing up on our mailing list and you can also set up a meeting with someone on our team. We have a scheduling option on our website, so if you want a 15 minutes call with someone to just help walk you through your options for how you personally can make a difference, we're happy to do that as well.

38:35 Dave Anderson Yeah, that's wonderful, thank you for that. Yeah, and I would encourage listeners that want to figure out more about how to invest in clean and renewable and sustainable energy to certainly go to the website. So that website one more time is Rsphere.org. And I think that's a fantastic offer to be able to speak with one of the well trained individuals on your team that can help navigate them in a quick 15 minutes phone call. I might just ask though, at least in your perspective, we talked about several of them, but what do you think the biggest challenge is that's facing sustainable investing movement currently?

39:08 Alex Write-Gladstein I think it's what we just talked about. I think it's the billion or maybe potentially billions of dollars that the fossil fuel industry is pouring into misinformation on this issue. They really want to set up the choice as you either invest with your values or you invest for good returns. And that's honestly a false choice, because there's so much data showing that investing with your values has led to better returns in the past. And it seems like there's so much data showing that it's a shame for people to think they have to make that choice. And we don't want to let the fossil fuel industry win that narrative. And so that's why we're creating this campaign, to really spread the word that investing with your values more often than not, has led to better returns. And it's just something everyone should be able to do.

39:56 Dave Anderson Yeah, it's maybe the same answer but why do you think this topic remains divisive and controversial? I mean it seems like it should be a pretty straightforward topic of conversation with individuals as it relates to just anything sustainable, period. I think most people, if you were asked them on a one one conversation is it good to do good? The answer is always yes. Then the question is what does good mean and what can I do to do good? And then all of a sudden it gets really cloudy and confusing and I don't think it has to be that way. But why do you think from your perspective and from the position you're sitting in trying to really direct change as it relates to investment into renewables, why do you think that this remains a divisive category or divisive topic?

40:41 Alex Write-Gladstein We're going through an incredible period of change right now for the global economy. We're moving away from fossil fuels which have powered a massive industry that has a huge amount of wealth now to new types of energy and I don't think there's ever been that type of transformation in the global economy without it creating a lot of being tough. Change is hard no matter how you cut it, right? It's not easy to create change. I think if the first cars, if the first internal combustion engine cars were on the road back in the early 19 hundreds and you were to ask the horse and buggy industry how they feel about that they probably were not too supportive and they probably put everything they could into keeping their industry alive. Right? And we're going through another period of transformation like that right now. It's not going to be easy.

41:40 Alex Write-Gladstein There's going to be a lot of resistance. A lot of people just want to keep things the way they have been. And the reality is though we all have been feeling personally the impacts of climate change. I don't think anyone on the globe at this point has been able to avoid experiencing a wildfire close by or a hurricane coming through or floods or some kind of impact of climate change. We're all feeling that the time is running out and we need to speed up the speed of change and so it's not going to be easy. Change is always tough but of course it's going to be tough. We have to expect that and push forward I think.

42:17 Dave Anderson And I'm going to mess up this quote. So we won't call it a quote, but something I remember reading from Henry Ford is if I'd have given the people what they wanted, I'd have given them a faster I think that speaks somewhat to your know one thing would say and I'd be curious what your take is on this as well is whenever you're talking about sometimes new industries spark up and there aren't winners and losers. But all too often whenever you have a transition or a change there's winners and there are losers. And obviously the fossil fuel industry to your point stands to lose if all of the investment dollars that are in 401K accounts it looks like it's a trillion dollars or a third of the market cap shifting. How do you sort of think about that in terms of winners and losers? Is it a we versus them?

43:06 Dave Anderson What's the perspective that you have as the leader of both because obviously you're trying to be the leader of a successful company but you're also very cause driven. How do you sort of reconcile or think about that? It's we versus they. It's us versus them. It's winners and losers.

43:24 Alex Write-Gladstein I actually don't see it that way and that's probably surprising to a lot of people. I've had people respond to me in conversations that oh we can't take our investments away from the fossil fuel industry because we rely on them. We need them to provide fuel for our cars and heat our homes and we can't mess that up. That's too scary to think about. And my response there is taking away some of our investments in those companies will not negatively impact their ability to provide gasoline for our cars and heating oil for our homes. They make enough revenue from those products to be able to finance continuing to give us those products as much as we need during this period of transition and we need to be really careful to not conflate divesting removing our investments from these companies with stopping using their products. The reality is we live in a world where we all rely on fossil fuels every day.

44:20 Alex Write-Gladstein It's just the world we live in. It's really tough to not use fossil fuels if you live in today's modern world and that's okay. It's okay to use fossil fuels. We live in a system where it's necessary, but we need to change that system. And removing our investment dollars from these companies takes away a little bit of their power, takes away a little bit of the voice of authority that they have. When they go to our president and to our members of Congress and tell them, do this for me. Do this for my industry, we need that power to be taken away from them. They have way too much power in politics right now and this is the best path forward. We have to remove that power from them and they will do just fine and we will do just fine in terms of powering our lives and the modern economy, but we have to take our money away.

45:08 Dave Anderson Yeah. And this is actually speaking negatively about our industry sometimes. I think it's all too often that obviously this is the solar podcast and solar is all about generating electricity. But one of the problems that happens all too often is people talk about energy usage as being the evil. That's not necessarily the case. I mean, electricity in and of itself isn't an evil or a bad thing. It's just we're trying to figure out more sustainable ways, renewable ways to be able to continue to drive our economy, continue to enjoy the lifestyles that we have, continue to use electricity. We're just trying to figure out more sustainable ways to do that.

45:45 Alex Write-Gladstein What are your thoughts on that, Amen? I could not agree more. And this could take us on a totally side rabbit hole, but one conversation where it drives me crazy that people conflate energy use as being bad is bitcoin. I just feel like the climate community hates bitcoin so much and is on such a high horse about it because it consumes energy and energy use is not bad. Burning fossil fuels is bad and I love that you said that. And then another point I want to make is that I know a lot of people who work in fossil fuel companies and they have entire departments that are focused on greening the economy. Most fossil fuel companies have devoted large amounts of money into renewable energy and so on that front too. I don't think it's us versus them. I do think it's dangerous to trust fossil fuel companies to lead the way on the renewable energy economy because they have a conflict of interest there.

46:53 Alex Write-Gladstein And we saw the best example of it actually very recently with Shell. They had invested a lot into alternative energy and they got a new CEO, I think about six months ago and he just recently announced that they're axing most of their renewable energy investment projects and doubling down on developing fossil fuels. It's a huge shift from where they were in the past, but it just goes to show, yes, it's great when fossil fuel companies are focusing on the future and trying to make themselves relevant for the new economy, but we can't rely on them to really lead the way. We need to have newcomers coming in because they have a vested interest to maximize profits. And right now the vast majority of their profits come from fossil fuels and there will always be that pressure for them to continue doing so. I always cheer when I see new companies coming with renewable products that don't get acquired by the big fossil fuel companies because that's where that conflict starts to arise, is when they get acquired.

47:56 Dave Anderson Yeah, I've oftentimes referred to Shell because they've made some huge investments into renewable energy, notwithstanding the fact that obviously the majority of the revenue comes from obviously the fossil fuel side of the house wasn't aware in candor that they had been axing many or some of those programs. So something that I'm certainly going to have to do some additional research on as well. I'm curious what other sorts of I mean with your ear to the rail as it is, I'm sure what sorts of other emerging technologies are you excited about that are helping to drive green investing or investing in renewables or sustainable companies? Are there any other sort of technologies or things that you're particularly interested in or excited in that's going to help the investment community be able to make better and more strategic investments into companies that are more aligned with people's kind of personal and objectives and goals as it relates to sustainability?

48:55 Alex Write-Gladstein

I will say I talk to entrepreneurs all the time who are developing some really cool new ETFs or different financial products that are really just designed to increase the flow of capital into green bonds or just financing community. Solar or solar development projects or giving access to a new type of investor, to these types of investments or ETFs that just are focused on green companies. And there's a lot of innovation going on and there's a lot of demand for this. People want to be able to invest in the future of the economy. People see that this is the way the economy is going. And so yeah, there's a huge amount of innovation taking place both in terms of financial products that give more access to these types of investments and then also just in the technologies. We hear about cement or steel being industries that are especially hard to decarbonize but it was fun being at MIT for a few years because I got access to seeing the beginnings of new companies that are coming up with ways to make cement that actually captures more CO2 than it produces or green steel.

50:10 Alex Write-Gladstein It's really exciting to see how human innovation can really provide solutions to some of these biggest problems. And I am an eternal optimist. And I think if we could work together to get a man on the moon, we can do anything. And we just need to do a better job of really setting our minds to this problem of climate change. And that's where really aligning our money, I think, will help align our voices and get us really focused on this issue.

50:39 Dave Anderson Well, I'd love to and thanks so much for spending as much time with me as you have and for our listeners benefit, I think it just needs to be said happy Birthday. So I know I'm speaking to you on your birthday as well so it's fabulous that you spend as much time with me as you have. Obviously at the time that this is published it won't be your birthday but hopefully people in the comments and other places will send you happy Birthdays and good mojo that way as well. But I have to ask you in the last little minutes we have here what's some bold predictions that you can make both in terms of the investment community, making strategic investments, making a change for good. What are some bold predictions that you'd make both for Sphere as well as just for things that you see coming down the pipe in the next just handful of years.

51:21 Alex Write-Gladstein I think this movement is going to grow. I think if you stop a random person on the street right now, they've never thought about the fact that they're personally invested in the fossil fuel industry. And I also think that when people find out that fact, it's one of those things you can't unlearn, people get really bothered by it and start wanting to do something about it. So I do think this is a movement that is going to grow massively. I have a huge amount of hope just knowing that there have already been social movements at some of the biggest companies in our economy of employees asking for climate friendly investment options. I think that is going to catch fire and spread and provide a real counterbalance to all the money that the fossil fuel industry is pouring into this antiesg, anti woke capitalism culture war.

52:06 Alex Write-Gladstein I think we're going to overwhelm them and we're going to get climate friendly investment options in every four hundred and one k and we're going to get everyone the ability to avoid the risky fossil fuel industry. And I think Sphere will be ready to both help sustainability teams reduce those emissions from 401 KS and to provide that easy button so benefits teams can easily make the change.

52:28 Dave Anderson That's awesome. I got to tell you, so many things that I learned during this podcast, I'm sure our listeners have as well. And one of the things that's really notable for me is that certainly I understand the greenhouse gas protocol somewhat. I'm in the space so it's something we've talked about and something I'm familiar with. And to your point, I've never really considered or thought about how a 401K should be part of that overall analysis and I can certainly see the value of adding it. In particularly, a pretty significant portion of the entire company's overall income is going into the investment retirement accounts and those investment retirement accounts have an impact on all of the companies that are being invested in through that retirement account. So this is something that's really impactful. So I think that your company has a real fantastic is playing an important role in helping to drive change and so I genuinely appreciate you coming on the show with us today.

53:16 Dave Anderson You obviously have a wealth of knowledge in this space and your passion definitely comes through as well. Alex, thank you so much for coming on.

53:23 Alex Write-Gladstein Thanks so much for having me Dave, it's been fun.

53:30 Announcer Thanks for listening to the Solar podcast. Please don't forget to rate review and share us with your colleagues and friends who are passionate about solar, renewable energy and the future of the environment. We'll talk to you soon.

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