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What if the solution to fast fashion is not buying less and using longer, but renting an array of trendy, designer clothes for an affordable price? Rent the Runway went public this week with the stock symbol “RENT.” Founded in 2009, it has grown into a fashion industry disruptor with 112,000 subscribers renting everything from designer workwear to maternity clothes to handbags. The vast majority say they buy less fast fashion and fewer clothes overall after joining.
While many are heralding this women-led, women-founded company as a sustainable alternative to fast fashion, competing studies recently looked at the environmental impacts of clothing rental. One study suggested that it is more harmful to the planet to rent clothes than throw clothes out and buy new ones. Rent the Runway responded by commissioning its own study, reporting that renting has net environmental savings in water, energy, and emissions due to the company’s role in displacing the production of more than 1 million new clothing items since 2010. These competing studies are an example of how the “circular economy'' model, which includes sharing and recycling, should be watched closely to understand the true impacts on the environment of these new market entrants.
Another circular economy company we’ve talked about before, Allbirds, is preparing for its IPO. Earlier this month, the company amended portions of its filing documents dealing with sustainability, eliminating almost half of the references to it in the filing.
Other market debuts to watch this week: Fluence Energy (FLNC) today and Udemy (UDMY) tomorrow. The green energy storage unicorn Fluence Energy says its carbon reduction impact is the equivalent of taking 30,000 cars off the road each year. Edtech firm Udemy, which was included on Fortune’s 2020 Change the World list, is aiming to be valued at around $4 billion and eyeing growth in its enterprise B2B business.
All that glitters is not good
Inflation is on everyone’s minds, lips, and bills these days, and gold is often said to offer protection against it (although the jury is still out on that). Whether you’re considering gold as a socially responsible investor or as a consumer, buying gold can be fraught with concerns about human rights abuses and environmental impact.
Most of the ESG problems arise in mining projects, which may pollute the atmosphere with toxic chemicals like cyanide and mercury, exploit labor, and harm local communities. On average, mines emit nearly 1 ton of CO2 for every ounce of gold. The “dirty” background is erased with processing in places like Switzerland before the finished product we see emerges as bullion, coins, or jewelry.
So how do you know what you buy meets the gold standard (ha!) for sustainability?
Gold bars or coins: Look for the name of the refiner/minter and check if this company is on the London Bullion Market Association’s Good Delivery list. If it is, it means it complies with the LBMA’s Responsible Gold Guidance standards.
Gold ETFs/mutual funds: The key here is figuring out the nature of the physical gold backing your fund. Many asset managers will say they only own LBMA Good Delivery bars, but the Responsible Gold Guidance requirement for refiners was only put in place in 2012, so older bars do not qualify.
Jewelry: The Responsible Jewellery Council, an industry group, provides a searchable list of jewelry retailers, manufacturers, and wholesalers that adhere to its Code of Practices. You can also look through Certified B Corps in the jewelry industry here or shop at eco-friendly brands that only use gold recycled from existing jewelry and electronic waste. The Alliance for Responsible Mining certifies gold from small-scale/artisanal miners and maintains a directory of jewelers you can buy from. There’s only one jeweler in the US using certified Fairtrade Gold – a New Mexican company called Reflective Jewelry.
While these standards are useful, they’re definitely not perfect. The Human Rights Watch has detailed their shortcomings and ranked major jewelry brands on responsible sourcing, in an illuminating November 2020 report.
Call me, beep me, if you wanna reach me
What’s spookier than getting a phone call from an unknown number while lost alone in the woods? Answering that phone call.
From food delivery apps to customer service chatbots, the digital revolution is not given enough credit for how much it’s reduced the need to talk on the phone. That’s not just a relief to the shy and the introverted. When it comes to investing, it could be revolutionary.
An alternative to having to call a stockbroker on the phone? Robo-advisor platforms have democratized finance at a scale unseen for generations. In fact, 50% of the trading app Robinhood’s 15 million users are first-time investors. Robinhood, Public, Acorns, and other platforms draw in new users with a “gamification” approach that demystifies investing.
Another factor in the success of these platforms: affordability. Many offer lower management fees, commission-free trading, and little or no deposit for the accounts. Also, buying a share of stock in a public company is increasingly out of reach for retail investors, but buying a portion of that stock is not.
Now that the market is becoming more accessible, new investors are creating waves with their investment choices. Recent research found that investors' behaviors on Robinhood impacted the prices of shares around reporting seasons (a phenomenon called ‘the market moving the market’).
The rising power of the individual investor presents an opportunity to make an impact as you align your portfolio with your values. Some robo-advisor platforms, like Public, have responded with baskets of “green power,” “women in charge,” and “immigrant founders” stocks for users to consider.
Shortages lead to innovation
As economies reopen and we dust off our passports, there’s been unprecedented demand for energy. Unfortunately, it’s combined with a perfect storm of issues on the supply side, like low natural gas inventories in Europe after a colder-than-average winter.
This severe supply-demand imbalance has caused the current energy crisis, with prices spiking everywhere. A few wrongly blame the climate effort for making the sector less flexible, citing low investment in fossil fuels for years and dependence on weather-reliant renewable energy.
The shift to clean energy is essential, unavoidable, and already very delayed, as the recent “code red” UN climate report explained. It’s likely the energy crisis could have been avoided if we had accelerated the transition to lower-carbon energy sources. Governments are now under pressure to boost supply while meeting emission targets. France has embraced nuclear energy once again, the US government is boosting offshore wind farms, and China continued to focus most of its investment in wind and hydropower as of August.
There’s a lot of activity on the greentech side as well. Here are some categories to watch as a sustainable investor:
Green hydrogen: Although it doesn’t emit any carbon when used as a fuel, regular hydrogen is made from fossil fuels in a dirty, polluting process. The “green” version is made using electricity from renewable sources and electrolysis. “Blue hydrogen” is another alternative, but data shows that it has a larger carbon footprint than gas.
Green ammonia: Another zero-carbon fuel that can be made using green hydrogen.
Energy storage: Renewable energy solutions, such as wind and solar, bring with them the need for more and better infrastructure to store renewable energy long-term.
Nuclear fusion: Unlike nuclear fission, nuclear fusion doesn’t produce long-lasting radioactive nuclear waste, cannot cause a nuclear accident, and cannot be weaponized. In 2019, National Geographic called it “the holy grail for the future of nuclear power.” That’s pretty powerful.
Before you go -
Remember ranking your trick-or-treat haul based on your favorites (and which ones you were willing to trade)? Green America did something similar with a socially conscious twist. See where your favorite chocolates stack up!