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Carbon Collective

Invest your retirement funds in a robo-advisor that specializes in climate action.

Most people are familiar with environmental, social, and governance (ESG) focused investments, but merely excluding "bad" companies does little to help combat climate change or reduce poverty. Carbon Collective takes a fresh approach to climate action by excluding "bad" companies and reinvesting the difference in companies making a real impact.

Let's look at who's behind Carbon Collective, how the advisor works under the hood, and why you might want to consider it.

Who's behind Carbon Collective?


Zack Stein and his co-founder James Regulinski grew up together in the Bay area. When James turned 10, his family bought a 50' sailboat and began an around-the-world journey. The two worked in sustainability-focused careers before reconnecting in their early 20s. At that point, they began working on a series of sustainability-focused startups.

In 2020, the two recognized that climate change would become their generation's biggest challenge. Like many of us, they witnessed the effects of climate change first-hand and began looking for ways to channel those experiences into action. They saw the "ESG" approach Wall Street was selling and decided to make something more impactful.

In November 2020, they launched Carbon Collective to provide investors with the advice and platform they needed to leverage their portfolios to make an impact on climate change. They raised a pre-seed round during the first quarter of 2021 and have been growing rapidly as investors seek to make a difference in climate change.

How Carbon Collective works


Carbon Collective's process begins with a brief 2-5 minute survey to determine the best account type, portfolio focus, and financial goals. After reviewing the survey, you'll be sent an invitation to complete the setup process by setting up an account with Altruist – the company's brokerage partner for managing the account and executing trades.

Once you finish these transfers and set up auto-deposits, Carbon Collective will handle building a greener portfolio by divesting in the ~20% of the market that is dependent on fossil fuels, reinvesting that in the ~20% of companies building climate solutions, and holding the rest to pressure them to decarbonize through proxy voting efforts.

The advisor charges a 0.25% management fee, while the funds in its portfolio have an average expense ratio of 0.10%. Notably, these fees are significantly lower than the 1% or more than many conventional financial advisors charge for their services. Meanwhile, its portfolios consistently outperform their passive index benchmarks.

If you're unhappy with the service or the business goes under, Carbon Collective also offers a transfer guarantee, where they will transfer your assets from their custodian to any other advisor or custodian, such as Fidelity, Schwab, or Robinhood. As a result, you don't need to worry about the complexities of transferring assets.

Should you use Carbon Collective?


Carbon Collective is an excellent way for hands-off investors to transition their assets to support climate action. Since non-accredited investors can only contribute a limited amount to private Regulation A or Regulation CF offerings, the advisor provides a valuable way to ensure that the rest of their retirement funds combat climate change.

If you'd rather use a self-managed account, you can take a peek at the company's Climate Index for an extensive list of climate action-oriented public companies as a resource when building your portfolio.

The bottom line


Carbon Collective is a robo-advisor focused on climate action. Like Betterment or Wealthfront, you choose the strategy right for you and set and forget your contributions. Given the limits on Regulation A and CF contributions, the advisor is an excellent way to ensure that all of your assets combat climate change and don't support fossil fuels.

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Dec 08, 2022

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Asset Class

Advisor

Impact Focus

Renewable Energy

Tags

advisor esg

Highlights

  • Divest from companies fueling climate change and invest in those solving the problem.
  • Low expense ratio compared to traditional financial advisors.