Ian Monroe, President and CIO of Etho Capital

The Plantbased Business Hour

Ian Monroe, President and CIO of Etho Capital joined me on the VegTech Invest Inside & Impact series and also The Plantbased Business Hour.  We discuss impact investing to take the planet from climate negative to climate positive through emissions avoidance, as we strive to do at VegTech Invest.

Specifically, we discuss

  1. The Climate+Positive Initiative and what it accomplishes,
  2. Who are the key players in Climate+Positive investing (spoiler alert: you),
  3. How to invest for Climate+Positive results,
  4. What is the timeline for Climate+Positive impact.

Here is a clip from our long -form conversation.

Elysabeth: Hi everyone, thanks for joining me today. With the release of the IPCC, Intergovernmental Panel on Climate Change, report saying that incorporating a plant-based diet is a great way to mitigate climate change, I thought it would be wonderful to talk about climate change and how we mitigate it and how we do draw down on climate change on today’s VegTech Invest Upside and Impact webinar.

At EATV, the world’s only Plant-based Innovation and Climate ETF, we have been focusing on emissions avoidance so we’re going to talk about that today, about how to avoid creating the emissions, meaning you don’t have to buy carbon credits because you’re just not making the emissions to begin with. This concept of emissions avoidance can be a useful tool for climate mitigation. It’s what we focus on in our EATV ETF. Indeed, we are carbon neutral without buying credits due to that emissions avoidance. This means that when one looks at the global potential warming temperature of EATV, you’ll see a potential warming temperature of 1.18 degrees Celsius. This would be compared to a standard investment like the S&P 500 Index which has a global warming temperature potential of 3.2 degrees Celsius. So you see this power of plant-based innovation in emissions avoidance and how that can be a very strong tool for one’s investment portfolio to potentially reduce carbon impact.

Who better to talk about this with than Ian Monroe, the president and CIO – Chief Investment Officer – of Etho Capital. They have their own ETF, ticker ETHO. Today we’re talking about his newest initiative, the Climate Positive Initiative in which we can all start to move from net zero to actually climate positive. A big part of that is based on emissions avoidance. Let’s get into it.

Ian Monroe: So part of what we’re doing with the alliance is first we need to be setting more rigorous targets for where portfolios actually need to decarbonize and how we need to get the pollution out that’s aligned with, again, what science says is necessary. And then we need to be doing the complete climate math to show that we’re actually doing that- that we’re actually removing pollution from our investments and shifting our individual investments and overall portfolios to net climate positive.

This is a big piece of what Etho has always done with the investment funds that we help create as well as analysis that we’ve done for investors of various sizes including some of the largest investors in the world, is this full- what’s called Scope 1, 2, and 3 climate accounting. This is where we look at the full pollution connected to every company we consider investing in, including not just what’s going on at a company’s facility in terms of their operations and electricity use which are called Scope 1 and 2 emissions, but also really importantly, including what’s going on with the company’s supply chain as well as the climate pollution connected to the products and services that the company puts out into the world. That’s typically termed Scope 3 emissions and a part of that downstream Scope 3 emissions can be what are called avoided emissions for climate solution technologies. For example, for plant-based foods there are substantial avoided emissions relative to the meat and dairy products that those foods are replacing and of course there’s also avoided emissions for renewable energy relative to the business-as-usual grid intensity of electricity that includes fossil fuel pollution and same goes for electric vehicles, etc.

So to ensure that an individual investment is net climate positive, you really have to do this full Scope 1, 2, and 3 climate math that includes avoided emissions calculations for climate solution technology companies. And if you’re not doing that you’re not getting the full picture and you’re not really seeing if you are investing in solutions and how big a piece those solutions are of decarbonizing a whole portfolio and getting all the pollution out even to the point where there’s a net climate benefit where your portfolio is net climate positive.

So a big piece of what the Climate Positive Investing Alliance is doing for investors of all sizes is helping create standards for doing these calculations and then actually we’ll be creating free tools and datasets that investors can use to do these full calculations and ensure that their individual investments and overall portfolios are shifting to net climate positive. We get into some more details about just overall climate positive Scope 1 through 3 climate impact calculations on the Etho Capital website. The link is right there at EthoCapital.com/climate-positive-investing and I’m happy with any of your listeners to reconnect after the talk and geek out about the details of this, but suffice to say it’s really essential that we’re doing the climate math to show that we actually are achieving the goals that we’re setting for ourselves. So that’s a big piece of what the Climate Positive Investing Alliance is doing as well.

Elysabeth: So this resonates with me so deeply because at VegTech Invest we’ve been really working on that climate math and I empathize with the audience when they say “Oh my god, ESG greenwashing, climate zero, climate neutral…I’m lost and then indictments. I mean I’m just lost in the news cycle of what’s going on in the world and what makes sense to me.”

I just want to highlight what Ian has said here because it is so critical. This is really where we focused our climate math with VegTech Invest and again you can look at the work we do there if you’re interested in investing for change but that emissions avoidance is really key to the math if you are to have the most impact possible and that’s where the shift comes right? One was focusing their attention on let’s say an investment that had a large emission output and if you shift to something that has less emissions you are avoiding emissions and that’s getting you to climate positive.

I also want to underscore here, it’s where we focus a lot of our attention for our shareholder engagement work, getting the data for emissions on Scopes 1, 2, and 3 is part of the climate math. It’s very hard to do the math if you don’t have the numbers so really encouraging those companies up and down the supply chain to disclose their emissions and Scope 3, way up in the supply chain, being so critical. You know if you’re interested in shareholder engagement please reach out to me. We have a lot of campaigns really encouraging companies to show that data. It makes such a difference for us.

New episodes are out every week. Never miss the Plantbased Business Hour or Minute. Subscribe on iTunes and Youtube, and sign up for the newsletter. Follow Elysabeth on Linkedin. For information on Plant Powered Consulting, click here.

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