A warm welcome to this week’s Survivaltech.club newsletter! This week, we are taking an exceptional peek into the world of sustainable investing.
Even though this newsletter focuses on science-based solutions, I wanted to also highlight you the importance of sustainable investing this week.
I had the privilege to interview Sana Al-Badri, Co-Founder and CPO at Sagefund. Sagefund is a Berlin-based startup offering a sustainable investing platform for individuals. Their customers are making an impact by investing in sustainable assets.
We spoke about the founding story of Sagefund, what sustainable investing is, and Sagefund’s approach to empowering individuals with sustainable investing. We also discussed the role of capitalism in tackling climate change.
Enjoy and invest for our humanity’s survival!
Sagefund has developed an easy sustainable investment platform for private individuals.
At Sagefund, individuals can invest in a sustainable investment instrument tailored by Sagefund. The instrument is a balanced portfolio of Exchange Traded Funds (ETFs). They invest globally, and put particular attention towards clean energy companies, green bonds, and sustainable development bonds. [To find out more about these financial instruments, click the links.]
Sagefund applies a strict sustainability criterion for selecting their portfolio. More about this later!
Sagefund just exited beta stage and launched! Sagefund welcomes new customers from Europe. Check out Sagefund, if you want to learn more about sustainable investing.
🧠Wisdom from Sana
Where did you get the idea for Sagefund?
It is a personal story. When I was very young, my father died. I got access to the inherited money when I was in my early twenties. It was a good chunk of money, and I wanted to make something smart with it. I understood that I should probably invest the money. That sparked my journey into the world of investing.
I wanted to invest the money sustainably. I’ve always been a climate-conscious person, and sustainability is an integral part of my daily life. For example, I’ve been vegan for ten years, I recycle and use clean electricity. Therefore, I wanted my investments to also reflect on these values.
But when I started talking with advisors and bankers, I wasn’t convinced on how they handled sustainability. Most of them blindly trusted the ESG mark and didn’t go a level deeper.
I began to educate myself on the topic of sustainable investing. I soon became my own expert and also started to help my friends. That’s when I realised that I should turn this into a business to scale my actions.
What problems are you tackling at Sagefund?
We want to empower ordinary people to invest sustainably and help grow their wealth.
There are currently two main problems:
1. Lack of time and knowledge on investing
People that would be privileged enough to invest don’t invest because of a lack of time and knowledge. This applies especially to sustainable investing when you add another layer of complexity to your investment decisions.
2. Exclusion of normal people from wealth management
If you go to a financial advisor, they charge you 200 euros per hour. If you go to a bank and ask for financial planning, you would typically need a minimum of 1 million euros to invest.
There are currently few options for normal people in wealth management. Especially if you want to make sustainable investments.
Our long-term vision is to make Sagefund a personalized and sustainable wealth management platform. A customer would choose their financial goals, and then Sagefund would recommend a mix of suitable financial products. The sustainability criteria would always be met, as it is an integral part of our way of operating.
How do you do sustainable investing at Sagefund?
There are three levels of sustainable investing.
The first one is the ESG-criteria (Environmental, Social, and Governance) that excludes the worst “sin stocks” like weaponry and oil.
The second level is called socially responsible investing (SRI). It extends the ESG criteria further with ethical aspects and excludes companies involved in, for example, gambling.
The third level is called the “best-in-class” approach. In this approach, you only include companies with the highest sustainability score. We at Sagefund follow this approach. This means that ~ 75% of all companies are excluded.
Even in the best-in-class approach, you still invest in big multinational companies. But what happens is that you invest in Apple instead of Amazon and in Unilever instead of Nestle. This is because there are big differences in these companies’ actions, policies, and innovations when you start to dig deeper.
How do you validate the sustainability of the chosen ETFs in your final product?
We have designed strict sustainability criteria for choosing ETFs. Furthermore, to increase the validity, we check their sustainability measures from multiple data sources and use meta-data, such as Conser.ch (which provides summaries of several data providers and their level of agreement)
We first check the ETF’s sustainability rating from several sources like MSCI ESG and Sustainalytics. Then, we compare the ratings and see what ETFs perform best in sustainability across the data providers.
We then work with third parties to validate the ETF’s sustainability even further. For example, we used platforms that show you how fund management companies, such as Vanguard vote. MeinFairMögen for example shows you whether your fund’s voting record and policies are aligned with 1.5 degrees.
For example, even though Vanguard offers ESG and SRI funds, their fund managers tend to vote against climate policies. In contrast, BlackRock pushes for more aggressive climate policies.
Money holds tremendous power. Nordea published a report on sustainable finance where they compared the impact of having your pension money invested sustainably to living with sustainable daily habits. They found that investing your pension money sustainably had 27 times more impact over your lifetime than your sustainable habits.
Some people see capitalism as evil. However, I see capitalism as just a very efficient way to generate resources. Capitalism is just a tool, but how we use it is up to us. We can use it in a harmful way, but we can also use it to build a better world. Thus, we can use the efficiency of capitalism to transition fast to a climate-neutral world.
I hope you learned a ton from sustainable investing and were inspired to start investing sustainably if you weren’t already doing it!