Following the launch of the Global Returns Project, Hannah Wright spoke to founder Yan Swiderski, a former director at Citibank and partner at Finisterre Capital

Hannah Wright:

What is the Global Returns Project?

Yan Swiderski:

The Global Returns Project empowers individuals to reinvest in earth. It gives individuals a chance to make a difference – irrespective of governments and businesses. Independent research shows that donating to climate charities is the most effective personal action an individual can take to tackle the climate crisis.

To reinvest in earth, individuals commit at least 0.25% of their savings and investments every year to funding the most effective not-for-profit climate solutions. When financial institutions make Reinvesting in Earth normal and easy for everyone, just 3% of investors could raise $10bn every year.

It is still very early days. Even though we’ve been working on the project for about a year and a half, we only launched about three weeks ago, when the Global Returns Project website went live. We also did a Ted Talk at Countdown, which is a global initiative to champion and accelerate solutions to the climate crisis.

That’s when we launched. We have also done a pilot project which has already had 100 sign-ups. The pilot project is really encouraging because we had 2,600 unique visitors to our website with no publicity. Forty of the individuals that signed up were complete strangers to us. We believe that data is very powerful as it was giving us a 1.5% sign up rate, which is evidence that people are prepared to do this and that the hit rate is already over 1%. For an unknown organisation with no publicity, we thought that was fantastic. That encouraged us to gear up for the launch and refine our message and marketing. It’s early days but we’re very optimistic.

We know that there is an increasing number of people wondering how they can contribute in the fight against climate change. We wanted to give people an easy answer. Something they could do at scale - to make it worthwhile. We had been discussing the divest movement, which has involved individuals and companies divesting from fossil fuels and investing in ESG, but why not divest, invest and reinvest in Earth? In other words, give something back to projects which are helping protect our natural systems.

There has been an explosion of ESG activity, and green bond markets, and everyone falling over themselves to burnish their sustainable credentials. We believe that if the financial services companies want to do something about climate change, we’re providing a service that doesn’t cost them anything at all.

The service is very simple and is familiar. It’s deducting a fee-like percentage from a portfolio and sending it somewhere. That’s bread and butter for any financial institution. So from an implementation point of view, and a regulatory point of view, this is easy.

There is a global figure of $140trn of private individual savings. That’s money that isn’t in sovereign wealth funds, it’s not in insurance companies, corporate asset management, or in defined benefit pension plans. Its controlled by individuals. If we ask people to give a quarter of a percent of their savings and investments every year, that’s $350bn a year. Clearly, the project won’t appeal to 100% of people. But what if we could eventually get 3% of people? That equates to $10.5bn because we’re dealing with such vast numbers. We think considered how to achieve such a level of penetration, and the answer is through the financial institutions. They are the custodians of those assets.

We mentioned a figure of 5,000 individuals, but that is arbitrary. We just want a lot of people. If you have 5,000 people, according to the scenario we have run, that will probably equate to around £10m ($13.2m) a year.

Previously, there has been investment and philanthropy and they have been in completely separate buckets. What we’re saying is that there is a category here which is slightly different. It’s connected to investment and philanthropy, but it’s new. It’s reinvesting in earth. If you’ve got savings and investments, those investments can have an impact on the real world. Every investment decision has an impact on the real world. The future you’re saving for is going to be affected by those investments. If you can take a little bit of your savings and investments, and reinvest in earth, then surely that’s a sensible and desirable thing to do.

Economists love to talk about externalised costs – reinvesting in earth is an externalised benefit. The benefit is real and identifiable; you’re just sharing it with everyone. That’s why we called it the Global Returns Project.

The reason we’re not framing it as a donation in the typical sense, is because we think it’s important to think about the climate crisis, in proportion to your wealth. We think it’s important to think about it in the context of your investments, because they are for the future. When you’re thinking about that future, what is going to look like unless we all take responsibility for the impact of our investments on that future. That’s our approach. That’s the background philosophy.

From a behavioural perspective, we’re all too busy. Even if people possess the best will in the world, unless it’s normalised and you make it easy – you remove the friction – very few people actually get round to doing the things they think they should be doing.

However, if you present it in the context of someone’s wealth manager, private bank or online brokerage account offering a tick box option “Do you want to Reinvest in Earth this year?” then it’s easy. The money goes out automatically and you don’t have to do anything else. So from a behavioural point of view, the proportion of people that are likely to take that up is massively increased. That’s the power of linking it to financial planning or financial advisors.

There is a group of projects that we have researched and curated which are doing climate mitigation. Currently there are five but we will be adding more. They are Trillion Trees, Rainforest Trust, Ashden, Client Earth and Global Canopy. 100% of the money goes to these charity partners. The person who reinvests in earth has the choice of how they want to split their investment – equally amongst all five, or on only one organisation. Our core costs are funded separately.

Market solutions will only get you so far. There are loads of issues that need to be addressed by philanthropy: protecting the rainforest; suing the polluters; and getting renewable energy to the billions of people that have no access to energy at all. The people doing this work are not-for-profit organisations. They aren’t going to be funded by somebody’s ESG fund or impact investing.

There is a whole process involved and we have investigated over 120 organisations in detail. We’re looking for those drawing down CO2, protecting natural systems, those working on clean energy solutions and also in advocacy. The latter is particularly important because without good policy, or policy change, it’s very difficult for any of this to work.

Then we identified any firms that have a basic level of finance, we look at their size, how long they’ve been running, and that they’ve been properly registered and organised. Once they’re through the first stage, we look at who has the greatest impact. After that it’s an analysis of the other benefits arising from their work. We look at scalability and at appeal, because people need to get it. We score all organisations on those variables, then the highest scoring ones at the end are selected, and those are the five you can see on the website.

All the organisations are registered charities. So the money comes into us and we grant it on to the partner charities they produce impact reports on their progress, so they report to us. We have a fortnightly newsletter, it has periodic updates on charity partners, and then we will do a 6-month impact report on our specific progress, documenting how much money we’ve raised, how many people have reinvested in earth. The three key benchmarks are: how many people have reinvested in earth; how many financial institutions have joined the project; and how much money we’re raising. Within the last benchmark there are impact reports – what impact is that money having?

We’re having conversations. Since we launched, three have approached us, outlining their interest and they want to engage with us in a discussion. About a year ago, we had some discussions with a number of firms and what we got was vague encouragement. What we could see from those meetings was that there is a huge amount of corporate inertia here. It’s all well us having the idea, but it would be very easy for someone in the board room to shoot it down.

Why do we think anyone would want to do this? Well, we already have 100 people that have done it. That’s why we decided to launch it as a public campaign first, because we thought we needed to prove the concept. We need to have data and people. Once we have that, we already have influence. Those individuals are already writing to their wealth manager saying, “I’ve just done this, you should be doing it too”. That’s the purpose of the campaign, to get a large number of people to make it real. That way it’s very easy to find that early adopter within the financial system.

One of our advisors is Dr Claudia Schneider who is a behavioural psychologist. She’s done a lot of work on communicating climate change, motivating people to take action and what the barriers are. From this, we understand there are points you need to hit. Firstly, you need to normalise it. People don’t like doing things if they think they’re on their own. If the project is presented in the context of looking at your portfolio by your banker or wealth manager, that immediately normalises it.

Secondly, you need to reduce friction; you have to make it easy. Finally, you have to create the impression of a dynamic norm. People will be willing to change their behaviour even if it departs from current norms, so long as they believe the current norm itself is changing. Also, because of the laws of large numbers, we don’t need big uptake to raise a significant amount. I’m personally convinced that as the climate crisis becomes more real, present and apparent to everyone, there will be more people who want to contribute. There are barriers, but the plan has done its best to reduce those barriers.

In ten years’ time, we want to be raising £10bn a year. The way we will reach that target, is if the private banks and the asset managers are doing this as a matter of course. Asking their clients, do you want to tick this box? We’re not imagining that all this money is going to come through us. It has to go through the custodians of the money. If we have a conversation with a global wealth manager and they ask “Why should we use you when we can do it ourselves?” Our answer will be, fantastic. Do it yourself, but make sure you do it!