Yes, you can put your RI principles into practice

By Fundata Analytics

March 31, 2022

For investors with strong convictions about about environmental matters, finding investments that align with their values can be tough row to hoe. This is particularly true for those who see “consumerism” as the major contributing factor to such issues as excess plastic use, shrinking forests, and strained fresh water resources. But finding “anti-consumerism” investments can be a challenge.

That’s because, fundamentally, the general premise of investing is buying companies that you think are going to increase sales, and earnings, by increasing the production of the goods or services they sell. Investing in anti-consumerism sounds like a paradox. So where is the intersection of investing and anti-consumerism? Is there an intersection?

Technology seems like a logical place to start, although the major tech companies can hardly be seen as anti-consumer.

Apple Inc. promotes its goal of being carbon neutral by 2030 and, to its credit, has reduced greenhouse gas emissions every year since 2015, but their primary business is producing and selling phones, tablets, and computers. As a result, they emitted 22.6 million metric tons of greenhouse gases in 2020.

Alphabet Inc. (Google’s parent) and Meta Platforms Inc. (owner of the Facebook social media service) make most of their money from advertising, advertisements that promote consumption, while Amazon.com Inc.’s business relies primarily on consumption. The big tech companies obviously serve a valuable purpose, and there is a place for them in some RI portfolios, but not for investing in or supporting anti-consumerism. Most technology-focues investment funds hold some combination of the mega-cap tech players – if not all of them. Here again, it’s not easy investing with an anti-consumer perspective.

How about food and water companies? Food and water are, first and foremost, basic necessities of human survival, so at the very least food and water companies are providing for human needs as opposed to human wants.

That brings us to companies like Xylem Inc., which focuses on creating “sustainable, efficient, and autonomous water systems” by increasing the use of technology and data analytics. Then there is Helma Eigenheimbau AG, which brands itself as a “global group of life saving technology companies,” including a group of water analysis and treatment companies. One of these is Hydreka, which produces equipment and software for water optimization and monitoring. Helma (and its subsidiaries, like Hydraka) is a component in the iShares Global Water Index ETF (TSX: CWW), which tracks the S&P Global Water Index, providing “exposure to 50 companies from around the world that are involved in water related businesses.”

In terms of food companies, there are many related to the agriculture sector and fertilizer production, but an argument can be made that they actually contribute to overconsumption, contributing significantly to greenhouse gas emissions. A study from the University of Michigan found that 10%-30% of a household’s carbon emissions come from food, and according to the UN’s Food and Agriculture Organization, almost 15% of global greenhouse gas emissions (GHG) come from animal agriculture – 65% of that is from beef.

Investors looking to support “anti-consumerism,” companies that produce meat substitutes might be worth looking at. Two of the bigger companies that provide meat alternatives are Beyond Meat Inc. and Impossible Foods. Beyond Meat is publicly traded, but Impossible Foods is not, so I’ll focus on Beyond Meat here.

The number-one ingredient in Beyond Meat’s “Beyond Burger” product is pea protein, which results in significantly lower GHG emissions to produce than beef. According to Our World in Data, the production of 100 grams of beef protein results in 50 kg of GHG emissions, while 100 grams of pea protein results in 0.44 kg of GHG emissions.

Beyond Meat commissioned the University of Michigan to study the lifecycle of the Beyond Meat Burger and found that “the Beyond Burger generates 90% less greenhouse gas emissions, requires 46% less energy, has >99% less impact on water scarcity and 93% less impact on land use than a quarter pound of U.S. beef.” The Desjardins SocieTerra Positive Change Fund currently lists Beyond Meat as a holding. Hopefully more RI funds get on board once Beyond Meat becomes more established.

Investing in anti-consumerism is not easy, but it’s not impossible. For investors looking to fulfill their RI principles, the bottom line is to look at what your investments are producing and to what extent they promote consumerism – and then seek out investments, such as the two possibilities mentioned here, that meet or exceed your criteria. Always read fund prospectuses before investing, and discuss your investment choices with your advisor to ensure they match your objectives and risk tolerance profile.