Keeping fossil fuels out of retirement savings

A new 'fossil-free' fund is competitively priced compared to traditional investment options

Spotted: Fintech entrepreneur Alex Wright-Gladstein created her latest company, Sphere, to provide the climate-friendly investment opportunities that are largely missing from the retirement savings market. Having searched for climate-friendly investments as part of her previous business’ 401(k) retirement plan for employees, Gladstein identified a gap between what was being offered and what employees wanted.  

Most employees in the United States with a 401(k) – a type of company-sponsored retirement account – are invested in fossil fuels, something Sphere hopes to change. The Sphere 500 Climate Fund (SPFFX) is a fossil-fuel-free investment fund designed specifically to work with the most common North American retirement plans. Because it was created to fit within existing financial structures, employers can include it in their retirement portfolios without any additional work or processes.

Sphere specifies that fossil-free investment means not investing funds in any companies that participate in the industry, whether that be refineries, distributors, or equipment suppliers. As such, the company’s fund tracks the Sphere 500 Fossil-Free Index, which is composed of the top 500 US companies minus 84 fossil fuel companies. Returns are crucial for any investment, and since 2012, this index has outperformed the BUG500 – an index made up of the top 500 US-listed companies including those in the fossil fuel sector.

Previously, one of the main reasons that employers were unable to offer sustainable funds as an option to employees was the higher costs of those investments. With that knowledge, Sphere prices its fund around 8.5 times lower than other climate-friendly funds, which is at a level more in line with standard investment costs.  

From a neobank ensuring that no deposits are made in polluting or unsustainable industries to a carbon offsetting project verification platform, Springwise has spotted many fintech solutions in the archive that are helping people make the most of their money while protecting the planet.

Written By: Keely Khoury