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Pete Krull, Earth Equity’s Founder & CEO, received some well deserved recognition from Investopedia yesterday, and was named one of the 100 most influential financial advisors in the U.S. He was the only WNC based advisors honored in the INVESTOPEDIA 100 list.

Investopedia is the premiere online source of trusted financial content, with over 30 million monthly users. Hundreds of applicants were submitted for this year’s Investopedia 100 and those chosen stand out for their contributions to critical conversations about financial literacy, investing strategies, life-stage planning and wealth management. Investopedia editor Caleb Silver stresses that the list’s goal is to measure and celebrate influence, “We have endeavored to quantify the impact that our advisors have on their clients and the broader financial community. Influence isn’t about being popular. It’s about helping others, although being popular helps if one’s popularity is tied to the mission of educating investors.”

Pete was selected by Investopedia’s data science and editorial teams. They looked at 3 key metrics when making their decision:

• Social Media Influence, which includes the advisor’s social media followers
• The “Matrix of Influence,” based on an algorithm that gauged each advisor’s influence with their peer community
• Online Presence, the measure of each advisor’s contribution to industry sites and publications

“The INVESTOPEDIA 100 represents the financial advisors who understand where the industry is headed and how to create a strong online presence and showcase their expertise to a much broader audience,” comments David Siegel, CEO of Investopedia.

For Pete, and for Earth Equity Advisors, we center this influence and expertise around responsible investing. In a Press Release from today, Pete says, “I believe that this is tremendously validating for socially and environmentally responsible investing. As the fastest growing segment of the investment industry, it is important to have a voice and to spread the word about the importance of investing with our values.”

Pete, from the Earth Equity team, CONGRATULATIONS. We are thrilled to share in this with you.

EARTH EQUITY ADVISORS IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Guest article by Earth Equity’s friend and colleague, Garvin Jabusch of Green Alpha Advisors

Originally published as “ESG Screens Don’t Go Far Enough” by WealthManagement

If you’re interested in sustainability focused or other forms of impact thematic investing, that’s great, and personally I believe we should all consider some allocation to solutions for our primary risks. However, it’s not as straightforward as it may seem. Don’t be too impressed with a fund just because it purports to use ‘ESG’ – Environmental, Social, and Governance – criteria. While ESG criteria can be a value-add tool, its value quickly dissipates when simply overlaid on backward-looking investment analysis. Investing in a pool of legacy businesses—like fossil fuel extractors or toxic agrochemical corporations–that possess some positive ESG factors  is neither necessarily ethically responsible, nor a satisfactory strategy for long-term performance. Achieving a truly sustainable portfolio with strong long-term returns must be more than simply screening an established index and adding a green, pink, or any other wrapper.

ESG, as generally practiced, still falls for the old trope that your portfolio has to shadow a benchmark to be considered low risk (as though risk and volatility are the same thing!). But such facile utilization of ESG rankings relies on backward-looking analysis of legacy businesses and technologies, some of which will not have much valence in the near future. If we take a closer look at which types of businesses are creating value, these winners-of-yesterday aren’t as likely to generate competitive long-term performance going forward, whatever their ESG scores may be.

My Green Alpha co-founder, Jeremy Deems, and I managed a couple of negatively screened, more-or-less typical green ESG funds from 2002 to 2007, prior to our founding of Green Alpha.

We found that starting with a defined universe like the S&P 500—without much opportunity to seek interesting, sustainability-driving companies outside that index—was limiting, both in terms of potential performance and achieving sustainability goals. Being given a list of stocks and told to make it greener, as opposed to looking for the growing basket of green stocks across the market, does not result in a sustainability-facing portfolio. Applying ESG criteria to an existing old-economy index is simply insufficient relative to the growth opportunities available outside of those indices, and to the scale of the risks of delaying sustainability.

So it’s not that ESG metrics aren’t valuable, but they can only have valence within the context of investing in companies that are advancing sustainability to start with. In the solar industry or sustainable agriculture, for example, ESG metrics like efficiency of water-use can assist in identifying leaders. On the other hand, relative ESG rankings within industries like fossil fuels burning utilities or topsoil depleting agricultural chemicals don’t mean much, yet these firms routinely end up in ‘ESG’ labeled portfolios.

Consider the following ad, snipped from my Bloomberg Terminal:

I applaud Bloomberg for developing the advertised app, as it surely is interesting to know which fossil fuels companies are attempting to moderate their destructive behaviors, however marginally. But no level of awareness of the relative carbon intensity of your oil and gas holdings can de-risk your portfolio from the downsides of climate change, water degradation, and premature death from pollution as well as simply not holding oil and gas securities. But this is the mindset engendered by our collective inherited paradigm: as long as I’m able to represent that I hold a relatively “good” tar sands extraction company, I can claim my portfolio is ESG.

At the end of the day, a firm’s absolute performance in leading the way toward a sustainable economy is what matters, rather than its narrowly-defined, industry-relative ‘progress’ toward a vague goal.

But it’s easy to simply say I don’t like the system. I have to actually propose something else, an alternative.

To think about a portfolio, we have to think through the economy that portfolio will reflect. The global economy will only self-perpetuate and grow under certain conditions, given a first principles view of the current political-economic situation. Therefore, a sustainable, efficient, and value-creating economy must stand on four pillars:

1. exclusive use of true zero-carbon, cheap renewable energies,
2. waste-to-value economics to reduce and ultimately nearly eliminate our reliance on destructive resourcing of materials from primary geological and natural sources,
3. ever-accelerating productivity gains, ultimately to the point where there are so many economic outputs from so few inputs that we can thrive and even grow indefinitely while shrinking the economy’s ecological footprint, and
4. equitable ownership of these new means of production.

The emerging and accelerating growth of an economy built on these tenets will greatly diminish the chances of global civilization succumbing to one or more existential-level systemic risks, while simultaneously creating wealth and even abundance. We call this Next Economics, and we’ve predictably dubbed its practical application Next Economy Portfolio Theory.

Next Economy Portfolio Theory begins by positing that any company that 1) is not contributing to the advancement of one of these four pillars, or 2) does not have a viable and preferably exciting business model, is more likely than not a bad equity investment, especially for the long term. Why? Because any investment that doesn’t serve the de-risking of the global economy while simultaneously generating productivity and therefore wealth and abundance will by definition eventually self-destruct. For example, attempting to double world GDP over the next couple decades on the basis of high-carbon energy inputs will cause that economy to struggle and likely fail. For us then, avoiding investing in the causes of major problems, in preference to investing in companies driving the Next Economy, is just common sense.

Does ESG matter? Yes, but you can achieve a much more potent impact investing style by utilizing ESG only within the context of the already-sustainable economy— by simply focusing on what’s next. If the fact that the four pillars of the Next Economy serve the cause of sustainability means you equate Next Economy investing to ESG, that’s fine, but don’t imagine that ESG methods and rankings alone will get us there. It takes way more.

EARTH EQUITY ADVISORS IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

In a recent blog post, I discussed one of Earth Equity Advisors’ core values, GRATITUDE. In this post I’d like to focus on another principle of our firm, PASSION. What is passion? Most people would agree that passion refers to a strong motivation mixed with intense emotions (Psychology Today). My definition of passion is the feeling of losing perspective of time and place, and being in the “zone.” I’m motivated to experience the things I’m passionate about, even if it means making changes or sacrifices.

As a simple example, I am passionate about waterfalls. My husband has learned over the years that I will hike much further if I get a waterfall payoff at the end. We are on a quest to hike in as many National Parks as we can before our knees wear out!  On a trip about 10 years ago to Yosemite National Park, I found these Advice From Nature cards by Ilan Shamir in one of the park stores. The “Advice from a Waterfall” card really spoke to me, and has become a mantra for all the passions in my life:

Advice from a Waterfall:

Go With the Flow

Roar With Excitement

Let Your Cares Fall Away

Create Your Own Music

Immerse Yourself in Nature

Stay Active

Make A Splash!

I have rewarded myself with these Advice From Nature cards after various hikes, and have collected quite a few.  I have used them in a leadership program for ministers to help them figure out their passion and vision for the future.  They are fun to read through, and you can see if you resonate with advice from a bear, owl, buffalo, butterfly, the ocean, a geyser or others.

From a professional perspective, starting about 10 years ago, my passion has been to promote a triple bottom line (profit, people, planet) philosophy of doing business. After working for Fortune 50 companies most of my career and seeing the singular focus on the traditional bottom line, I resonated strongly with the B Corp Declaration of “using business as a force for good in the world.” I even told friends that I would only return to work for a company (while running my own consulting firm at the time) if it was a Certified B Corporation.  I continued to check the B Corp website listing for companies in North Carolina. Three years ago, Earth Equity Advisors (formerly Krull & Company), headquartered in my hometown of Asheville, showed up on the list, and I sent Pete and Neill my resume. It was a match from the beginning — an opportunity for me to use my financial and psychology background to work with people as they navigate their relationship with money and plan for the future. Since the work aligns with my vision, it doesn’t feel like work, in the sense that I am putting my energy in a place where I have passion and commitment.  I have developed a niche working with women in transition, helping them navigate financial life decisions.  As we help people align their investments with their values, it is energizing to be part of a movement to use business as a force for good in the world, and to support all stakeholders, instead of only the bottom line that focuses on shareholder return (an outdated model in my view).

If you can figure out where your passion lies, it can help you channel your energy in the right direction. Hopefully, you are already living a life of passion, personally and professionally.  Spring is a great time for new beginnings and exploration, so ignite some PASSION!

EARTH EQUITY ADVISORS IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Solar cells imported into the United States will now face a tariff. That’s the bad news. The good news is that it could have been worse.

Here comes the most “dog bites man” news flash of all time. Ready? The President of the United States made headlines this week.

President Trump concluded the Suniva and SolarWorld tariff petition process by imposing a tariff on silicon solar cells and modules that are imported into the United States. That’s the bad news. The good news is that it could have been worse.

I’ve written about this situation before, see parts one and two if you want more of the backstory. And, you can find additional details on the tariff here, but I can give you the highlights as well. The tariff is for four years, and it starts at 30%, declining 5% per year to 15% in the last year. The first 2.5 gigawatts of imported solar cells are exempt from the tariff.

When the International Trade Commission recommended a tariff to the White House a couple months ago, the commissioners’ recommendations were slightly more severe. One commissioner suggested a 30% tariff on solar cells that declined by 1% per year for four years. Two others sought a 30% tariff on solar cells declining by 5% for four years (as the White House decided), but with a 1-gigawatt exemption amount. The fourth commissioner recommended a quota, outright restricting the gigawatts of solar cells that could be imported.

See! Could have been worse.

Look, it’s still unfortunate. The decision will cause more jobs in America to be lost than gained, simply because the majority of solar jobs in America are in the installation of panels, not the manufacturing of them. With an artificially higher price, fewer panels will end up being installed over the next four years.

Even still, this article by Bloomberg suggests the impact on installed prices won’t be crippling. According to Hugh Bromley, one of their analysts, the tariff will “increase costs for large solar farms by less than 10 percent and for residential systems by about 3 percent.” The reason is because solar cells make up only a fraction of the total costs to install solar panels.

If I’m a betting man, and I admit that I am, I would bet that declining costs in solar will continue to make it the smart play for our long-term energy future. Even though American solar energy did just have a protectionist tariff slapped on it, the last time I checked, the Sun was still blasting the Earth with free electrons on a daily basis. Fear not, fellow fans of a future with fossil fuel free energy (hehe, alliteration), solar still looks bright (hehe, pun).

John Anderson Lanier is the Executive Director of the Ray C Anderson Foundation. Serving in this role has been an immense honor, and he feels privileged to work with his family to advance the legacy of Ray, his grandfather. Lanier’s passion for environmental stewardship was sparked by Ray’s example and story, and he never tires of sharing this story with others.