If you ‘follow your money’, where does it lead?

Choose to invest sustainably this RRSP season (and always)

“Follow the money,” informant Deep Throat whispered in All the President’s Men, a movie about corruption in the Nixon era.  That now-famous line speaks to a basic truth in our world: money makes things happen, and lack of money prevents things from happening.

Energy is a good example.  Fossil fuel companies would never be able to extract oil, coal and natural gas without the backing of financial institutions – which in turn have made tons of money by bankrolling the sector.  And here’s a devastating reality: banks continue to finance new fossil fuel development, even as the climate change consequences of burning fossil fuels become clearer, and even in spite of the ambitious emission reduction targets of the 2015 Paris Accord.  A global report card by the Rainforest Action Network found:

• US$5.5 trillion have been invested in the fossil fuel industry since the signing of the Paris Climate Accord by 60 of the planet’s largest banks – the vast majority of it by the Top 20.
• All of Canada’s Big Five banks are in that Top 20.  Royal Bank of Canada is the fifth largest fossil fuel investor in the report card, followed by Scotiabank (9^th); TD (10^th); Bank of Montreal (15^th); and CIBC (19^th).

Imagine where we’d be if that $5.5 trillion had instead been invested in clean, renewable energy.

So what can you do?  Most of us have retirement portfolios or pensions, and it’s RRSP contribution time.  You can steer your money to where it does the most good and least harm by:

• Learning as much as you can about sustainable investing (here’s a nice overview) and corporate Environmental, Social and Governance (ESG) scores (here’s a nice overview); or subscribing to the free Green Money Journal. 
• Asking your advisor to divest your portfolio of fossil fuel holdings and instead seek out viable sustainability-oriented investments (and there are more to choose from all the time).  
• If you’re a client of one of Canada’s Big Five banks, letting your advisor know you’re not happy with their support of fossil fuels, and asking them what their bank’s plans are to divest.  Remind them you have options.
• Moving your business to a more sustainability-minded financial institution if you’re not happy with your bank’s divestment plans. 
• If you’re ready to take things a step further, joining a campaign like Fossil Banks: No Thanks to pressure banks or Shift to pressure pension funds (including the Canada Pension Plan fund, in which all Canadians have a stake) to divest of fossil fuels and shift to investments that fight climate change.

If you haven’t already, now’s a perfect time to start making wise, sustainable investment choices, so that when you ‘follow your money’, you’ll find it’s making good things happen!