8 min read

2023, Here We Come!

Forwarded this email by a friend? Subscribe here.

The email header with the "For What It's Worth" logo, graphic that includes a hand holding a representation of a blooming flower that has money blooming at the top, and the tagline "Insights to invest in the world you want" underneath it.

What day is it again?

The days leading up to the new year always seem to run into each other. But we’re back in your inbox, meaning it’s Thursday, and NYE is just two days away. 🍾🎉

If you’re like us, you might have new year’s resolutions on your mind this week. We don’t have any gym or diet recs to help with that “get fit” goal, but here are a few resources that might help you on your path to achieving whatever financial resolutions you’ve made for the year ahead:

Our Resources page is full of additional websites and insights that can be helpful as you embark on your 2023 financial resolutions. If you’d like to spend a little more time reflecting on the past 12 months, you’ll find below our recap of the top sustainable business stories of the year, plus our final quiz of 2022.

Happy holidays!

Asking for a friend….

We know there is a lot to think about these days, and it can sometimes be a bit overwhelming. To help with those nagging questions and so you have useful resources at your fingertips, here are few links to resources and past stories relevant in these turbulent times:

Get in-quiz-itive

As we look back on 2022, we have to say that there were more financial news and market shifts than any of the analysts we spoke with expected. We’ve been sharing the latest resources, news, and trends to help you stay on top of the world and align your investing with your values, and we’ve covered a lot of areas — from faith-based investing and where to invest your savings to how to invest while trying to prepare for a potential economic downturn. Whether you’ve been reading for two weeks or 52, take this short, no-judgment quiz to see how much intel you’ve absorbed through our newsletter.

And if you miss a few answers? No sweat. You will see links to relevant content, so you can catch up on any stories you missed.

Good luck!

The biggest sustainability news of 2022

Graphic of wind turbines with blades that look like leaves.

In 2022, we witnessed economic turmoil, hybrid workplaces, multiple interest hikes, supply chain snarls, inflation, Omicron outbreaks, a war in Europe, an energy crisis, more new electric vehicles than we can keep track of, a UN pact on biodiversity, and the list goes on.

Every investor makes their own decisions based on their priorities, but before the ball drops and as we prepare to enjoy the final hours of 2022, we’re looking back at the biggest sustainable business and investing developments of the year to get you up to speed.

1. Patagonia declares Earth its only shareholder

In September, the outdoor clothing retailer declared that all profits not reinvested in the business will be used to fight the climate crisis. This amount is projected to reach roughly $100 million a year. As part of this decision, founder Yvon Chouinard and his family transferred all their ownership stock to a nonprofit and trust.

Why it matters: The B Corp has long been lauded for its responsible practices, but this extraordinary gift changed how many think about capitalism and philanthropy, creating a new model for businesses serving social and environmental causes. Chouinard’s inspirational words bear repeating: “If we have any hope of a thriving planet 50 years from now, it demands all of us doing all we can with the resources we have. As the business leader I never wanted to be, I am doing my part. Instead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source.”

2. SEC steps in for sustainability

In March, the Securities and Exchange Commission, the federal agency responsible for protecting investors and regulating financial markets, proposed the first-ever climate disclosure requirements for public companies. Final rules are expected next year. This year, the SEC was also rejecting more corporate challenges to ESG shareholder proposals than before and began cracking down on asset managers greenwashing funds.

Why it matters: A major criticism and complaint about the sustainable investing landscape has been its lack of data reporting and standards. With the SEC getting increasingly involved, investors can look forward to more transparency on climate risks to businesses, emissions and ESG labels, and more opportunities for investor engagement with proxy voting. This could play a big role in increasing your (and our) confidence in claims made by companies moving forward. We’re already seeing asset managers become more cautious as a result and even seen some remove the ESG status of their funds.

3. The Inflation Reduction Act (IRA) passes

In August, President Biden signed into law the most significant climate change legislation in history with nearly $400 billion devoted to driving the green transition. Most of it comes in the form of tax credits, with $216 billion for companies and $43 billion to make goods like electric vehicles, solar panels, and heat pumps more affordable for consumers. The rest is benchmarked for loans and grants to fund clean initiatives.

Why it matters: No matter where you stand on the political spectrum, the impact of these investments is already being seen. The IRA promises 40% emission cuts from 2005 levels by 2030, and it strongly benefits green companies, like renewable energy producers and makers of biofuels, EVs, green hydrogen, wind turbines, batteries, etc. As the Environmental Defense Fund points out, it has the potential to help all companies meet net-zero goals, provide businesses with the certainty to make long-term investments in the transition, and strengthen the American economy.

4. ESG goes mainstream and faces backlash

The term “ESG” became one of the biggest topics of debate in 2022 news cycles as it got drawn into the political realm. Asset managers who control trillions of dollars in investor assets under the ESG banner are being grilled by elected officials concerned about fossil fuel companies. Some investing experts, like Professor Aswath Damodaran of New York University, also came out against it.

At the same time, we saw ESG appear on coursework in top business schools and grow increasingly linked to executive compensation at large companies. A record 471 environmental and social shareholder proposals were submitted to Russell 3000 companies, and another asset manager made diversity demands from portfolio companies. US sustainable funds also proved more “sticky” with net flows in positive territory last quarter, even while the broader market saw outflows of $86 billion.

Why it matters: Many have seen the increase in companies reporting on ESG issues as a positive, but the lack of transparency and standardization leaves this movement open to criticism. This is a key moment where conversations about the value and future of ESG will either create more awareness about greenwashing and force asset managers, regulators, rating firms, and companies to define measures and offer investors more clarity or will forever marginalize the term “ESG.” In theory, criticism is natural, important, and can lead to adjustments that make the metric stronger, but we will have to keep an eye on this as the debate heats up.

5. The war on plastic pollution intensifies

In March, United Nation member states agreed to create the world's first global plastic pollution treaty by 2024. It’s been called the most important international multilateral environmental deal since the Paris Agreement in 2015. Then, in June, California enacted a landmark law to combat plastic pollution. This month, our neighbor to the north, Canada, started a ban on harmful single-use plastics.

Why it matters: Besides clogging landfills and waterways, leaching harmful chemicals into the environment, and suffocating wildlife, plastics are also part of the climate change problem since they’re made of fossil fuels and release carbon emissions when disposed of by burning.

Stronger regulations are needed to ensure producers take more responsibility and companies are proactive about reducing plastic waste, and we saw a few steps in the right direction in 2022. Negotiations on the details of the international deal are underway though proving difficult, reports say. Time will tell whether the world can come together on this important issue.

We also hope to continue to see more voluntary changes on the part of consumers and companies, like the growth of sustainable fashion and commitments to using recycled and recyclable materials in packaging, like Coca-Cola made in February. Looking to learn more? Check out more from FWIW about investing in plastic reducing solutions.

6. Rules around 401(k)s are loosened

Last month, the US Labor Department announced that those who administer retirement plans like the 401(k) will be allowed to consider ESG factors. This will go into effect on January 30, 2023.

Why it matters: The DOL has reversed Trump-era rules that made it difficult for administrators to put sustainable fund offerings on the 401(k) menu for employees. In 2020, it was reported that less than 3% of 401(k) plans had even a single ESG fund. This change, which clears the path, is seen as a neutral approach. It acknowledges that climate change and other ESG issues can have a financial impact on companies and opens more opportunities for investors to direct their 401(k) holdings in line with their values. To learn more, check out FWIW’s The 411 on your 401(k).

Honorable mention: Nuclear energy gets a rethink and a breakthrough

The energy crisis has prompted policy shifts on nuclear power, like the European Union classifying nuclear power projects as “green,” Germany delaying its nuclear plant phase out, and Japan seeking to replace decommissioned reactors and extend the lifespan of others.

At the same time, promising experiments with nuclear fusion, first in the UK and more recently in the US, have many excited about the prospect of a new cleaner and safer solution for the future. Bloomberg reports that investors are on track to pour more than $1 billion into the technology this year. You can read more about nuclear energy in our Guide to Cleantech Investing.

Before you go -

While we focus on new year’s resolutions, clearly others have more spring-centered topics on their minds. Seaweed compost, gravel gardens, and slugs are apparently among the top gardening trends for 2023.

Want to learn a bit more about the writers behind FWIW? Have an idea you would like us to cover in the future?