Revving Up ESG Spending

Were you forwarded this email? Subscribe here.

Almost a century after FDR signed the New Deal, a bill for $550 billion in new spending on infrastructure is working its way through Congress. The politicians in Washington may not agree on a lot of things, but a proposal to fix and build roads and bridges to spur the economy has found backing on both sides of the aisle.

Besides promising half a million new manufacturing jobs by 2024, the bipartisan bill is also meant to help with the climate crisis and promote equality. Here are some of the big ESG-friendly spending goals in the 2,700-page document that caught our attention:

• $73 billion to update the power grid to transport renewable energy
• $65 billion to expand broadband internet access
• $55 billion for clean drinking water
• $50 billion for climate change resilience
• $39 billion to modernize and expand access to public transit
• $21 billion for environmental remediation or cleanup
• $15 billion for a national network of electric vehicle (EV) chargers, electric school buses

Many analysts expect investors to rev their engines and prepare to buy stocks they see benefiting if the legislation passes, including EV stocks like hydrogen fuel cell makers. (Well, maybe it’s time to retire the word “rev.” That’s an internal combustion thing.)

The White House recently said it aims for zero-emissions vehicles to make up 50% of new vehicle sales by 2030, and Detroit’s Big Three automakers responded with similar targets of their own. And we know the US is not alone as other leading economies are speeding up (ha) their transitions to electric vehicles as well.

While clean energy is a familiar category in ESG conversations, the pandemic has underlined the need for digital access. Imagine what last year looked like for those who tried to learn and work from home without reliable connectivity. That's the reality for many Americans today.

The upshot? This bill could have a big impact on many individuals and the ESG movement at large.

ETFs vs. Mutual Funds

Have you ever asked people to define what a sandwich is? It turns out, depending on who you ask, tacos are our favorite type of sandwich. Sometimes things that share so many characteristics can still be (or at least feel) very different.

And so it goes for two common investment vehicles, exchange-traded funds (ETFs) and mutual funds. These investments are popular with first-time investors (and first-time ESG and impact investors) because they both allow investors to pool their money to buy a collection of different stocks, bonds, and other assets for a straightforward way to build a diversified portfolio right off the bat.