For too long investing has been about making money at any cost. Verve is here to fix that.

We want you to be truly inspired by your investing journey. To look back one day and be proud of how you invested. To be proud of how you chose to build wealth for a brighter future.

That’s why Verve Money’s three investment options are invested ethically.  

Our investment objective is to strive for strong returns for our members by making investments which aim to contribute towards a future world that is sustainable and equitable, with thriving communities and a healthy planet.

It’s why we screen out investments that we believe to be harmful or contrary to our investment objective (i.e. we don’t directly invest in fossil fuels, nuclear energy, weapons, gambling, or tobacco).

It’s why we invest for a positive impact in carbon leaders, sustainability leaders, and green bonds.

And most importantly, it’s why we seek to invest 20% of each of our portfolios in climate solutions.

Here’s how we do it and why.

What is climate solutions investing?

Solutions to the climate crisis are being developed in laboratories, universities, and the halls of government. But they can also be found in boardrooms, the stock markets, and your very own investments – including your superannuation and share investment apps like Verve Money! 

Verve considers “climate solutions” to mean activities that reduce or avoid carbon dioxide (CO₂) emissions, like renewable energy, green transportation, and sustainable products. CO₂ emissions in the atmosphere lead to planetary warming, causing climate change. We believe a significant reduction in CO₂ emissions is required to solve the climate crisis.

Climate solutions investing, simply put, is the mobilisation of capital towards investments that mitigate climate change in alliance with the goals of the Paris Agreement. In other words, it’s investing in companies or projects that are working towards reducing and avoiding CO₂ emissions.

It isn’t climate philanthropy or climate gifting. It is about investing in solutions to help a faster transition while providing investors with a financial return. 

Why does Verve seek to invest 20% of each of our portfolios in climate solutions?

Before launching Verve Money, we surveyed circa 500 people to ask them about their values and what types of investments were important to them.

Investing in climate solutions was one of the most consistently important areas that our community wanted to invest in. One of our community members summed up our why more eloquently than we ever could:

“I am investing to build wealth. But how can I live a truly wealthy life if the world around me is collapsing…. I want to look my children in the eye one day and tell them that as a family, we built our wealth in a way that benefited everyone – that we did what we could to invest in a brighter future.”

Why not invest 100% in climate solutions?

The Verve Money Fund is primarily designed to support anyone in achieving their money goals through ethical investing. 

While it is possible to create a fund that invests only in climate solutions, this would limit the level of diversification in each of the investment options, meaning that there is a potential for higher risk without higher expected returns  – and this could negatively impact the ability of people to achieve their goals. 

In addition, we know that our investors also care about a broad range of sustainability and social impacts in addition to climate. That’s why we also seek to invest in sustainability leaders in other industry sectors – even if those companies or projects are not focused primarily on reducing global CO₂ emissions. That way our social and environmental impact is broader than just climate, and our diversification is also stronger.

So how exactly does Verve invest in climate solutions?

Climate solutions can be divided into five key segments. These are the areas where action needs to be taken, and that are most likely to benefit from the large flows of capital towards decarbonisation initiatives.

• Renewable or green energy – i.e. solar or wind energy companies
• Efficient or green transport – i.e. electric car companies
• Water and waste improvements – i.e. water purification companies
• Decarbonisation enabling solutions – i.e. electronic communications companies that minimise reliance on printing or travel
• Sustainable products – i.e. low toxin cleaning product companies

Ref: This chart is taken from the betaShares ERTH portfolio, which shares a similar philosophy to Verve Money.

A company or asset that derives, or is expected to derive, at least 50% of its revenue from activities that avoid or enable a reduction in CO₂ emissions in one or more of these five key segments, qualifies for inclusion in our list of investments classified by us as contributing to “climate solutions”.

* Note: A company may be a pure play decarbonisation company (which means it’s focused on a single line of business which is central to driving revenue), or it may be a company enabling the transition of others across the entire value chain.

Remember, to be included in our investment portfolios, a company or asset classified as contributing to climate solutions must also pass through our negative and positive screens, which address broader environmental, social, and governance (ESG) concerns. For more information, see our blog How Verve Money Invests Ethically.

What are examples of some of the climate solutions investments in Verve’s portfolios?

Our investment portfolios are invested in a range of alternatives, bonds, fixed interest, direct holdings in equities, and Exchange Traded Funds (ETFs). Our investments in climate solutions can span all of these types of investments.

The below investments form part of Verve Money’s Investment Universe, meaning that at any one time you may be holding some or all of these investments as part of your investment in Verve Money.

1. Alternative Impact Investments

Alternatives are generally private investments that are obtained directly from their source or issuer and are not tradable on public exchanges like the ASX.

Kilter Rural Murray-Darling Basin Balanced Water Fund

The Murray Darling Basin Balanced Water Fund has an objective to secure water for agriculture and restore threatened wetlands across the Murray Darling Basin. Investment in water rights and water allocations provide an opportunity for low-risk exposure to a growing global demand for agricultural commodities via the supply of the key limiting resource in Australia, water. Kilter has donated over 10GL of water to 30 wetlands across Victoria and New South Wales since 2015, and these donations are thought to be the largest private water donations in Australian history. 

Plenti

Plenti offers green loans to consumers so that they can fund solar, home battery and clean energy installations. Plenti has a Provision Fund which can be used to pay back investors like Verve if individual borrowers can’t repay loans. The Provision Fund has a 100% track record of protecting investors.

2. Australian Equities

Australian Equities are investments in Australian companies listed on the ASX 200 and ASX 300. 

Duxton Water Limited

Duxton Water owns and manages a portfolio of water entitlements, providing the irrigation community with a broad range of water supply solutions. This encourages more sophisticated water strategies and proper pricing of the resource, which in turn encourages efficient use.

Meridian Energy Limited

Meridian Energy is a New Zealand power company that generates electricity through 100% renewable sources – wind, water, and sun. They are New Zealand’s largest electricity generator.

3. Fixed income

Fixed income broadly refers to investments that pay investors fixed interest or dividend payments until their maturity date.

Artesian Green and Sustainable Bond Fund

The Artesian Green and Sustainable Bond Funds invests in global green and sustainable corporate bonds and cash. The investment manager has made a commitment to provide data about the carbon outcomes (e.g. carbon abatement) of the fund, as well as additional case studies where appropriate.

What can investors hope to gain from this approach?

Firstly, an incredible sense of “I’m doing something”. Of course, we can’t ‘invest’ our way out of the climate crisis, we need broad-based political and social change. But we can all take one additional step to help make a positive difference in the world. 

There’s also an intended financial return to these investments that feeds into the overall targeted returns of Verve Money’s investment options.

Our commitment to transparency

Our aim is to be transparent about our investments so that you can decide if we’re living up to your values or not.

The Verve Money Investment Universe is a list of companies, funds and assets that have passed our ethical screening methodology. This means that at any point in time, the Verve Money Fund may be holding some or all of these investments. 

For additional information, also check out our other blogs Verve Money’s Ethical Charter and How Verve Money Invests Ethically. 

We also encourage you to read our Investment Guide and visit our Ethical Investing page. Want to learn more? Book in a call with our friendly team here or send them a note at hello@vervemoney.com.au.

Continue reading

• Verve Money’s Ethical Charter
• How Verve Money Invests Ethically