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Wednesday, February 8, 2023

Beyond Investing Provides Investors With a Green Approach to Growing Wealth With Its Vegan ETF

Beyond Investing Takes Green Approach To The Stock Market

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Brandon Rossman

Written by: Brandon Rossman

Brandon Rossman

Brandon has covered all corners of the finance industry as a multimedia reporter for news outlets such as WUFT and WINK News. Early in his television news career, Brandon developed a reputation for leading interviews with financial portfolio managers, investment bankers, and venture capitalists, among other industry leaders. He writes with a journalistic hunger for the truth.

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Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro

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In a Nutshell: Beyond Investing allows investors to put their money and retirement funds into green, sustainable companies that don’t fund fossil fuels or exploit animals. The company’s ETF (Ticker: VEGN) evolves as Beyond Investing does more research to find greener investments or to remove companies that no longer align with the fund’s vision. VEGN has similar growth rates to other popular ETFs, such as the S&P 500, but is more carbon neutral and produces less pollution. Beyond Investing also speaks for its investors by encouraging companies it invests in to take steps to be more sustainable. 

People making the commitment to become vegan even 10 years ago was not an easy feat. Cutting out all animal products, including dairy, eggs, and leather made navigating restaurants and buying high-quality products a challenge.

That is not the case today, however. Restaurants feature more vegan meals beyond just a salad, a trend highlighted by the decision of Beyond Meat and Impossible Foods to roll out plant-based meat substitutes for chicken, beef, and pork.

The markets for these products are growing as well. People around the world consumed more than 1 billion pounds of meat substitutes in 2020. The market is expected to grow 20% every year until 2026.

Not only do plant-based foods help the environment – they taste really good, too. Sometimes I even prefer the plant-based meat alternative over the real thing. And the best part is that, by making that choice, I’m helping cut down on harmful emissions, and I save an animal’s life.

Cattle are the number one agricultural source of greenhouse gasses in the world. Studies and scientists say we are at a breaking point when it comes to limiting climate change.

Most Americans can make concessions with the products they buy and support, but when it comes to saving for retirement, options are slim. Putting money into a general retirement plan can lead to unintentional investments in companies that support fossil fuels and exploit animals.

Beyond Investing Logo

This was the issue Claire Smith ran into when looking into where to save for her retirement. Smith is vegan and got together with other vegan economic experts to create VEGN through Beyond Investing, the investment adviser she is CEO of. VEGN is an ETF that prioritizes sustainable investments.

VEGN takes the best-performing companies that follow Beyond Investing’s strict rules of not supporting fossil fuels or animal exploitation and puts them in an index. Beyond invests its funds on a weighted basis, ensuring an even blend of stocks and minimal volatility.

Beyond Investing even uses its power as a shareholder in companies to help them make more sustainable choices when it comes to how they run their business. Beyond said it wants investors to have a better understanding of exactly what they are investing in.

“Rather than invest in damaging companies such as animal agriculture and fossil fuels, we thought there should be a more clean and green approach to investing,” Smith said. “So that’s what we did.”

Understanding Where Money From Investments Goes

Beyond Investing is transparent with exactly where the investments into VEGN go. Its website features a list of its top-10 holdings

Investors can download Beyond Investing’s full holdings for VEGN on the website to see where funds are going and how much each investment takes up in the ETF. Beyond Investing also created an index that groups all of the companies that follow its guidelines together and weighs them based on whether they pay more or less than the market.

Claire Smith, Founder and CEO of Beyond Investing
Claire Smith, Founder and CEO of Beyond Investing

“We call it the vegan climate index because we wanted to pull together two different areas of focus – being vegan-friendly and climate focused,” Smith said.

Beyond Investing removes fossil fuel companies and banks that invest in fossil fuels from the index, including real estate companies that sell land for oil drilling. The advisor also removes companies if they use animals as part of their business model. This includes testing products on animals and zoos.

Beyond Investing focuses solely on whether a company’s products have any relation to animals. The adviser said it does not matter if a company executive has leather seats in their car as long as the company does not sell animal products.

“It’s not just about removing restaurants and a few meat companies, we take an in-depth approach to seeing if companies use animals in any way in business,” Smith said. “We’re also not just about animals, we’re also about treating humans properly.”

Researching Green Companies to Invest in

Beyond Investing has strict guidelines on which companies it includes in its VEGN ETF. If any company is engaging in business involving animal products — even if it’s a small percentage of the company — Beyond Investing will not consider them.

The VEGN ETF features a complex risk-spreading algorithm to ensure that the fund is not too concentrated in the largest stocks. VEGN rebalances several times a year, keeping a limit of 4.5% per company it invests in.

Companies in VEGN release 75% less emissions than the S&P 500. The companies the ETF invests in also produce only 5% of the waste that companies in the S&P 500 produce.

Beyond Investing also keeps track of deforestation and pollution metrics for the companies in the ETF. For companies that stray from sustainable products, Beyond Investing has no issues dropping them.

Beyond Investing took a stand against Apple over the leather bands the company produces for its popular Apple Watch line. When the Apple Watch line grew, so did sales of leather bands for the watch.

Beyond Investing never received a guarantee that Apple would make changes. Instead, it received a default answer that the company is actively looking into the situation. The response prompted Beyond Investing to let go of its investments into Apple.

“In terms of thinking forward when it comes to climate, we have as good of a climate score that you can get,” Smith said. “We are removing not just the worst stocks, but also all of the stocks that are causing significant environmental damage.”

Making an Impact as Company Shareholders

Beyond Investing is using its position as a powerful shareholder to enact change at companies it invests in to become more green. 

The VEGN ETF currently invests in several hospitals that work with outside companies that provide patients and employees with meals that include animal products. Beyond Investing puts together shareholder resolutions to encourage hospitals to provide plant-based alternatives, instead.

Beyond said providing more options works to everyone’s benefit in a hospital because patients and employees eat better and, in turn, are more healthy.

“It would not only affect positive change within those companies, but within all of their facilities,” Smith said. “Millions of Americans go to these facilities for health care. We think that they should have the opportunity to eat healthy while they’re using those facilities.”

Beyond Investing makes it clear: companies not receptive to discussions and change do not belong in the ETF. But the investment adviser said it’s important to engage with companies before taking action to remove them from the ETF. 

Making widespread change throughout industries is Beyond Investing’s top priority. It hopes to see more companies take a stand and become a part of the VEGN ETF.

“This is not just about providing a product that vegans can hold to provide a fund with environmentally strong metrics,” Smith said. “It also provides us with the opportunity to have discussions with companies and try to steer them in the right direction.”