Episode 1: A Drop Becomes a Flood

Molly Wood:

Hi, everyone I’m Molly Wood and welcome to Everybody in the Pool. A show about solutions to the climate crisis and the people who are working on them. This is episode one.

Molly Wood:

If you’re not already familiar with me I was a tech and business journalist for more than 20 years at CNET the New York Times Marketplace on public radio. But even for a tech journalist the climate crisis got too big to ignore. But I kept hearing about problems and not that much about solutions. And I can’t stand a whiner.

Molly Wood:

So around 2017 I went looking for people who were working on this problem. Entrepreneurs, policymakers, investors, individuals. And it turns out that the climate crisis is the biggest business story of our time a moral and an economic imperative an opportunity to change everything about how we live work shop do business and invest.

Molly Wood:

So for today’s episode let’s start with investing

Daniel Naim:

My name is Daniel Naim, founder and CEO of Fennel Markets.

Daniel Naim:

What we're building at Fennel Markets is a new way to imagine how someone can actually use their investments in this world to have a bigger voice, to affect issues around environmental sustainability, around companies, social issues and governance.

Molly Wood Voice-Over: 

At its most basic Fennel Markets is an investment app that lets you buy and sell stocks learn about the impact of the companies you’re investing in and get informed about your rights as a shareholder. But I hear you going like come on, Molly, I’m not sleeping in a bed of money here this is not for me.

And that’s where I say QUIT WHINING! But also one of my theories about solving any big problem is that a drop becomes a flood. And the way that people are investing their money is a noticeable set of drops. Here’s a little data from M-I-T.

In 2021 according to the S-E-C about 2.7 trillion dollars were invested in E-S-G funds out of a total of 250 trillion invested in public markets globally. E-S-G stands for environmental social and governance so companies that have some specific focus on sustainability diversity and treating people well at work and ethical business practices.

And that’s not all  there’s another half a trillion dollars in green bonds out there debt that you buy a chunk of that goes to finance some kind of climate-friendly project like a solar farm or an environmental cleanup project. And big investors are increasingly dumping fossil fuel stocks from their portfolios about 40 trillion dollars worth as of last year.

And the idea behind Fennel and some other companies and initiatives I’ll mention later is to get more money moving in this direction and create a flood of change. Because I don’t know if you’ve heard but money talks. And Daniel started realizing this back in 2019 (CK) … while he was goofing off being a science genius.

Daniel Naim:

Previous to this, I was doing my PhD in physics. I was studying actually dark matter. And I was studying it in the Bay Area. And you know, the problem that I found was we had this fifth, season in the Bay Area just called Fire , where, you know, we were using N-95 masks before it was cool. We'd go out into the, into the summer. You couldn't breathe, you couldn't see the sun most days. 

And I really started to think, you know, is this, is this what I wanna be spending my time working on? You know, do I wanna look back in 20 years and not say, okay, I helped the climate issue, or I helped, you know, some aspect.

I did what I could. And so three major things were happening at the time and the world around me that kind of led to thinking about finance, thinking about how can really a collective group of people take action.

Molly Wood Voice-Over: 

First, Daniel told me he was noticing Tesla’s stock price went bananas. Investors didn’t care about the finances or the fundamentals of the company as he saw it people were voting for a future with electric vehicles and when a stock goes that crazy everybody wants in that pool.

Daniel Naim:

All of a sudden, domestic and international policy started to change. So, by 2035, only the sale of electric vehicles in both California and New Jersey. Similarly in Germany, all the stuff started to happen, and then you had, you know, other public companies dumping billions of dollars into the infrastructure around this space.

Daniel Naim:

So, you know, me being a physicist, not really thinking about, you know, I kind of went into physics to get away from economics, to get away from the real world to some extent. You just start to think like, okay, capital markets talk money. Money has an impact on society, on politics, on all this stuff. So I thought, you know, that was a very interesting case.

Molly Wood: 

Then in 2021 there’s a hostile takeover at an oil giant

Daniel Naim:

With this hedge fund called Engine Number One. Their sole intent was to get a company like Exxon to re-reduce their carbon emission. And the way that they wanted to do it was by taking Overboard seats at that company and they only had a 50 million fund. But they did it. They were successful. They took over four of the 12 board seats of ExxonMobil with the sole intent of reducing carbon emission.

Molly Wood:

And then finally there is a revolution of Reddit investors blowing Wall Street’s MINDS by deciding to invest like CRAZY in a failing video game retailer driving up its stock to unbelievable levels mainly to stick it to giant hedge funds who were betting on Gamestop to fail. This was such a wild ride that it’s now a Netflix documentary.

Daniel Naim:

And then obviously the last thing was the GameStop movement, where you had, you know, millions of investors coming together collectively to take on a financial institution to create change.

Daniel Naim:

And so in my head I thought, why can't you just, why can't we just put all three of these things together, right? Why can't we have a place where the younger generation and a lot of the older generation too, looks at the way that companies are either polluting or treating their workers or doing whatever and are waiting for politicians to create a change.

Daniel Naim:

Not knowing that they actually have the power to create that change themselves through their investments. And so that's kind of, that's what led to this. That's been kind of my driving ethos.

Molly Wood: 

So that ethos became an app called Fennel which as it happens is launching to the public today, May 17

Molly Wood: 

And as I mentioned at its simplest it’s a mobile investing app that gives you a lot more information about what you’re doing than investing apps usually do. For climate purposes a lot of that comes down to detailed data about a company’s practices.

Daniel Naim:

We show you from zero to a hundred, how does this company's environmental standards across X, Y, Z themes rank relative to its peers.

Daniel Naim:

Okay? But we do one step further in which we show the underlying metrics. So you can come on and say, How many oil spills does this energy company have relative to its peers? How much carbon emissions does this company have? How much carbon credits does it purchase? What, what is its, uh, energy re renewable percentage, X, Y, Z. I mean, we have, how much waste do they dump, 

et cetera.

Daniel Naim:

So you as a investor can come on and. , and you don't have to look at the greenwashing marketing campaigns that say, Hey, we're a jet fuel company that's trying to reduce emissions in this space. You can see the numbers and see how they actually stack up against their peers.

Molly Wood:

And once you’ve done the research

Daniel Naim:

Either you can choose to stay away from this company to divest, which is what I think has been the standard for the past, you know, 30 plus years. But a new one that's starting to emerge is actually, you can look at, you know, quote unquote brown companies, companies that you think don't have great environmental sustainable practices, invest in them just to vote , just to put votes forward to try to change their environmental practices.

Molly Wood:

I’m going to simplify the mechanism here but often when you buy and sell stocks there’s a brokerage in between they get a fee or commission to complete trades. Sometimes they sell some of that order flow as it’s called for extra revenue

And sometimes when you buy shares through a broker they can control and even sell the VOTE that you get as a shareholder. You get one vote per share, generally.

And it turns out that can be powerful

Daniel Naim:

On the point of divestment, it's, it is very important. But what you've started to find is that, divestment no longer has the same signal within the finance community. They don't, they don't really, they're not really scared of it. You've seen the kind of the run up on energy and oil companies and the profits that they're making, and people still chase the profits.

Molly Wood

But ALSO 

Daniel Naim:

There have been over a hundred percent increase in the amounts of proposals sent forward to companies around environmental, social, and governance standard practices within the past two years.

Daniel Naim:

And so, companies are starting to hire people on the board that focus on ESG metrics and their communication. They're starting to hire, um, investor relations teams internally to start to talk about esg. And they're starting to implement a lot of these environmental, you know, and social changes beyond just, beyond just greenwashing.

Daniel Naim:

And so, you know, I don't think there's any like, yeah, I, I think it's just because this movement hasn't really had any time yet to, mature and to show the results. And I think engine number one and kind of this fight in ExxonMobil is the first, is the first meeting to really, yeah. Try to change things internally from the company.

Molly Wood:

So the app tries to make it really obvious what shareholder votes are coming up how you can participate and how the drop can become a flood and obviously this is the kind of thing I’m into because first of all 

Molly Wood:

A big part of my core thesis here is getting the money involved because I think real change comes from awareness activism and economics.

Molly Wood:

And this is a different way to consider the impact that even a small number of votes can have and how the idea of pushing for change from within gives big institutions the ones everyone is always saying we need in the pool? A way to use THEIR huge number of votes

Molly Wood:

The way we want them to.

Daniel Naim:

It's a pain for them to divest, right? Pension funds, large fund managers, they don't wanna remove their position entirely. They want their position to become more valuable. And so the way they do that is they put their influence into the boardroom, into their votes, and they try to direct the company in the way that they think.

Daniel Naim:

It should be. And so you start to look at consumption habits of Gen Z and millennial. I mean, they don't even make purchases if the company's not sustainable, right? I mean, and true. Maybe right now there are about six to 10% of all purchasing power within the United States, but over the next 15 years, what is it?

Daniel Naim:

The largest intergenerational wealth transfer in history is about to occur. They're gonna start to account for more of this purchasing power. You're already seeing the companies that are adopting these policies. Benefit tremendously from it. And so the other thing to note here is like there are people within these large companies that need support.

Daniel Naim:

They see the vision. They see, hey, this company needs to become more sustainable and X, Y, Z. 

And either upper management or leadership doesn't listen to them. By providing these votes by, by sh, by the shareholders speaking out in support of these people, you actually.

Daniel Naim:

You actually get, give them a larger voice. You give them the ability to change things from within.

Molly Wood: 

Now before I leave you here I’ll play you some audio from an ad Fennel did highlighting the importance of these shareholder votes it’s a re-creation of the actual word for word conversation at a huge public company in its public notes  about its board meeting.

Board Member:

We've been asked to produce a report into our plastic pollution, but single use plastics are a key part of our business.

Board Member:

Exactly. I advise you. Vote no on the proposal. I think we're all in agreement, so let's just vote. But one of our competitors box is committed to making reusable containers and another major competitor is cutting virgin plastics by 50% by 2025.

Board Member:

What's your point? My point is we don't have a virgin plastic goal. It would hurt us financially if we did so I'm advising you. Vote now. You know, these rights are made public. Anyone can access them. 

The people may start thinking that we don't care about the environment.

Board Member:

But no one will know where to find it unless.

Board Member:

Someone were to, I dunno, take it, make a short video and put it on social media.

Molly Wood:

Ok that last part wasn’t in the board minutes but everything else was and they voted no on that no on reporting antibiotics use no on reporting lobbying activities and expenditures and yes on an 84% increase for executives.

Molly Wood:

So I’m just saying this is where the power is. We can be in the room when this is happening so why wouldn’t we be?

MUSIC BREAK

Molly Wood:

There are other companies and movements and even institutions who are offering solutions that let you control your money and its impact there’s a really interesting movement around changing the options for 401ks in fact. Read all about that in this week’s Everybody in the Pool newsletter which you can find at mollywood dot co.

Molly Wood:

And now for one of the regularly occurring segments on this show

JOB BOARD STING

Molly Wood:

One of the things I suddenly spend a lot of time on is talking with people who want to pivot their careers into climate like I did for example.

Molly Wood:

So if you’re one of those people whether you are just starting out and looking for a climate job or you’ve already made the leap please email me! The email address is in at everybody in the pool dot com that’s in as in I am in the pool. Get it? Real proud of that one.

Molly Wood:

So for this first episode let’s start with someone who said I have had a nice long career but this climate thing is a big deal and it’s never too late to go back to school.

TAKE SOT: Job Board cut

Molly Wood:

And that is it for Everybody in the Pool

Molly Wood:

thank you SO MUCH for listening … and subscribing. I hope you’ll tell a friend … and leave a review … and send me your thoughts and your feedback and your ideas for people to interview. It won’t all be startups … it’ll be a lot of them … because I believe in the energy and innovation of this unique arena …

Molly Wood:

But over the course of the show I’ll be talking to business leaders … policymakers … everyday people … about all of the things we can do … and ARE doing … to find all the solutions we can … as fast as we can. No solution is too big … or too small … or too unexpected … or too obscure and creative … because we need them … ALL.

Molly Wood:

Thanks again for listening … and see you next week.