Top 3 Money Moves You Can Make to Help Fight Climate Change

Earth Day is coming up on April 22, 2024, and climate change is top of mind for many people. The planet has just experienced 10 months in a row of record-high temperatures. If people cannot take action soon to fight back against climate change, we could see catastrophic consequences for the global economy, our homes, and our entire way of life.

Fortunately, there is still time to fight climate change, and the individual choices we make as consumers, as banking customers, and as investors can make a big difference. Let's look at a few money moves you can make today to help fight climate change.

1. Buy an electric vehicle (EV) or hybrid vehicle

One of the biggest immediate moves you can make to help the climate is to change the car you drive. Switching from a traditional gas-powered car to a fully electric vehicle (EV) can make a massive impact in reducing carbon emissions.

The average EV emits about 2,727 pounds of CO2 equivalent per year, compared to 12,594 pounds of CO2 equivalent from a gasoline car, according to data from the U.S. Department of Energy. Switching from a gas car to EV can reduce your everyday driving's climate impact by 78%!

In case you have "range anxiety" and aren't ready to commit to a fully electric vehicle, that's fine too. You can choose a hybrid vehicle or plug-in hybrid (PHEV). The average hybrid car emits 6,898 pounds of CO2 equivalent per year, which is still a 45% carbon reduction compared to a standard gas-powered car.

You can cut even more carbon emissions and avoid range anxiety with a plug-in hybrid vehicle. These zippy, fun-to-drive cars (disclaimer: I drive a Toyota Prius Prime plug-in hybrid, and I love it) only emit about 4,763 pounds of CO2 equivalent per year -- that's a 62% carbon reduction compared to a regular gas car! And some plug-in hybrids can qualify for a pre-owned EV tax credit of up to $4,000 -- making them an even better deal for your budget and the planet.

2. Get solar panels for home energy

What if you could replace your monthly energy bill with the power of the sun? Installing residential solar panels, also called solar photovoltaic systems, can make this a reality. The exact amount of reduction in carbon emissions will vary based on the size of your home and how your local power grid is fueled; if your local grid is mainly powered by coal-fired electric plants, your carbon savings will be bigger by switching to solar.

The biggest immediate impact on your personal finances from going solar is that the federal government is offering a generous tax credit for installing residential solar. If you install solar panels on your home, you can qualify for a tax credit of up to 30% of the cost. For example, if your solar photovoltaic system costs $15,000 to install, you could get a tax credit of $4,500. See more details at the U.S. Department of Energy website.

Here's another fun fact about going solar: it can make your home more valuable! Data from the U.S. Department of Energy finds that solar panels increase the value of a home by an average of $15,000.

3. Invest in ESG or "green funds"

If you want to put your money into a more climate-friendly direction, you can invest in a mutual fund that lets you buy stocks in solar energy and other renewable energy companies, or companies that do not produce fossil fuels.

Some "green funds" are designed to exclude fossil fuel companies. Others choose a mix of stocks of companies that rate highly for their environmental, social, and governance (ESG) practices, or that have a special mission to benefit society.

A few examples of climate-friendly, ESG, or "green" investment funds include:

Amalgamated Bank Fossil Fuel Free Portfolio

If you want to buy stocks in companies that are not creating more fossil fuels to be burned, Amalgamated Bank offers a special investment option. Its Fossil Fuel Free Portfolio helps you buy stocks in a diversified mix of companies that are directly involved with producing renewable energy, reducing carbon emissions, improving efficiency of water usage, supporting sustainable farming, and more.

Aspiration Redwood Fund

This mutual fund is offered to customers of Aspiration, a fintech that provides banking services and investments. The Aspiration Redwood Fund is designed to invest in companies that Aspiration believes have strong business fundamentals, as well as sustainable long-term environmental, social, and governance (ESG) practices. The Aspiration Redwood Fund requires a minimum investment of just $10, and has a goal of meeting or beating the performance of the S&P 500 index.

Vanguard Baillie Gifford Global Positive Impact Stock Fund

This Vanguard mutual fund is invested in companies that intend to deliver positive change by contributing to a more sustainable and inclusive world. As of Dec. 31, 2023, some of its 10 largest holdings included semiconductor companies, e-commerce companies, Moderna, and Duolingo. This fund doesn't own any energy stocks, which makes it fossil fuel free.

To find more investment funds that don't buy stocks in fossil fuel companies, check out FossilFreeFunds.org.

Bottom line

Changing the way we spend and invest our money can make a big difference in the climate change fight. Buying an electric vehicle (or hybrid, or plug-in hybrid) can significantly reduce the carbon emissions of your everyday driving. If you put solar panels on your home, the federal government could give you cash back at tax time. And investing in green funds can help your retirement savings while fighting climate change.