Carbon Collective Company Profile

Background

Founded in 2020, Carbon Collective is an online investment advisory firm dedicated to addressing climate change through sustainable investment strategies. The company's mission is to close the annual $5 trillion climate investment gap by offering portfolios that divest from fossil fuels and reinvest in climate solutions. By providing low-fee, diversified investment options, Carbon Collective aims to make climate-focused investing accessible to a broad audience.

Key Strategic Focus

Carbon Collective's core objective is to facilitate the transition to a low-carbon economy by offering investment portfolios that exclude fossil fuel companies and allocate funds to businesses developing climate solutions. The company specializes in creating diversified, low-cost portfolios that align with environmental goals, targeting individual investors and small to mid-sized businesses seeking sustainable 401(k) plans.

Financials and Funding

As of August 2024, Carbon Collective reported annual revenue of approximately $750,000. The company has raised a total of $2.2 million in funding, with a notable seed round of $2.2 million completed on April 28, 2022. Investors include Powerhouse Ventures, HyperGuap, Elevation Ventures, Precursor Ventures, My Climate Journey, and Climate Capital. The funds are intended to support product development, enhance member experience, and expand the team.

Pipeline Development

In March 2022, Carbon Collective launched climate-focused 401(k) plans targeting employers with fewer than 300 employees. These plans offer diversified, low-fee portfolios integrated with major cloud-based payroll providers. The company also introduced the 2022 Climate Index, a comprehensive list of climate solution stocks, and the Carbon Collective Climate Solutions US Equity ETF (CCSO), an actively managed ETF investing solely in companies deriving at least 50% of their revenue from climate solutions.

Technological Platform and Innovation

Carbon Collective's proprietary Climate Index is a notable innovation, comprising companies identified as providing scalable climate solutions. The company utilizes low-carbon sector index ETFs covering various industries, providing exposure to approximately 80% of the stock market while minimizing investments in high-emission sectors. Additionally, Carbon Collective offers the "Drawdown Index," an index of publicly traded companies actively developing climate solutions across sectors such as clean energy, electrified transportation, efficient buildings, circular economy, sustainable foods, and industrial electrification.

Leadership Team

Zach Stein: Co-Founder, Chief Executive Officer, and Chief Investment Officer.

James Regulinski: Co-Founder, Chief Compliance Officer, President, and Investment Advisor.

Brooke Tomasetti: Director of Financial Education.

The leadership team brings a combination of expertise in investment management, compliance, and financial education, driving the company's mission to provide sustainable investment solutions.

Leadership Changes

In April 2022, Carbon Collective announced the addition of Brooke Tomasetti as Director of Financial Education and Community. Tomasetti, a personal finance coach and founder of Money Life Mentor, contributes to the company's educational initiatives and community engagement efforts.

Competitor Profile

Market Insights and Dynamics

The sustainable investing market has experienced significant growth, with increasing demand for investment options that align with environmental and social goals. Employers and individual investors are seeking portfolios that reflect their values, driving the expansion of ESG (Environmental, Social, and Governance) investment products.

Competitor Analysis

Key competitors in the sustainable investment advisory space include:

Betterment: Offers socially responsible investment portfolios focusing on ESG criteria.

Wealthfront: Provides socially responsible investing options with diversified portfolios.

Aspiration: Focuses on sustainable banking and investment products, emphasizing environmental impact.

These competitors offer various approaches to sustainable investing, catering to the growing demand for ESG-aligned financial products.

Strategic Collaborations and Partnerships

Carbon Collective has partnered with major cloud-based payroll providers such as TriNet, ADP, Gusto, Intuit, and JustWorks to integrate its climate-focused 401(k) plans. The company's 401(k) administration is handled by Vestwell or Ubiquity, depending on company preferences.

Operational Insights

Carbon Collective differentiates itself by offering investment portfolios that not only divest from fossil fuels but also reinvest in companies actively developing climate solutions. This approach provides a clear theory of change for driving climate impact, appealing to investors seeking transparency and alignment with environmental goals.

Strategic Opportunities and Future Directions

With the increasing demand for sustainable investment options, Carbon Collective is well-positioned to expand its offerings and client base. The company's focus on low-fee, diversified portfolios that align with climate solutions presents opportunities for growth in both individual and employer-sponsored investment plans. Continued innovation and strategic partnerships will be key to maintaining a competitive edge in the evolving sustainable finance landscape.