You had your best-laid plans and then COVID-19 came along and hammered the entire economy. But you’ve got this – if you have the right information. Join Rob Carrick and Roma Luciw on Stress Test, a podcast guiding you through one of the biggest challenges your finances will ever face.
ROMA: Every day we make money decisions. Veggie burger or beef? Staycation or holiday overseas. Bargain hunt online. Or buy something brand new.
ROB: But it’s not just finances driving these choices. For a growing number of Canadians, concerns about the climate impact both small choices like what to eat and big choices like where to live.
ROMA: Welcome to Stress Test, a personal finance podcast for millennials and Gen Z. I’m Roma Luciw, personal finance editor at the Globe and Mail.
ROB: And I’m Rob Carrick, personal finance columnist at the Globe. Today, we’re talking about how financial decisions are being affected by climate anxiety, the fear of looming environmental doom.
ROMA: It’s something young people, in particular, are worried about. Some are questioning where they should live, what they should be saving for, and how they should invest. Others wonder whether they should even bother planning for the future.
ROB: After the break, we’ll speak with a financial planner about this issue.
ROMA: Shannon Lee Simmons is a Toronto-based author and certified financial planner. She works with a range of clients, including millennials.
ROMA: Shannon, when you meet with your clients to talk about financial plans, how often do worries about climate change and the environment come up.
SHANNON: Every day. And it, and I’ll tell you this, it didn’t five years ago, and it comes up because there are things like, let’s say that they want to buy a home and they can’t really afford it, but they’re like, maybe, you know, maybe in ten years I can. The comment will be something like, okay, well, will anyone even have a job in ten years? Like, what about if climate change is shifting everything? Like, who knows if there’s even going to be jobs or an economy? Now, whenever I’m talking about investment advice, and this is also for people who are retiring like people who my clients are like 55 are like ten. Is a balanced portfolio something that still holds up because of what happens with climate change, and if the world is on fire in 20 years, how does that affect my risk? Like you don’t like actually. And so I really feel like it’s top of mind, and it seeps into the day-to-day conversation because so much of personal finance is projecting out in the long run. And that’s very uncertain these days.
ROMA: What specifically are they worried about?
SHANNON: Like what I’m hearing in my meetings, there is a lot of discussion around capitalism as we know it, as in investing in a stock buying ETFs, broad sweeping market, that kind of thing. In 15 to 20 years, it will just not exist. They don’t nobody knows what it might be, but it’s just not sustainable in the way that it is and that so is investing even a good idea. And compounded on that I don’t want to invest my money into something that is adding to the problem. I am so disgusted to put my money into something that might benefit me in the short run but is causing this long-term issue. So there’s also that piece around. Like, I want my money to do something. I want to keep up with inflation. I want to do all those things on a personal level. But I can’t shut my blinders off on the broader strokes here. And so that kind of social awareness is beautiful and also something to navigate. So there’s a lot of anxiety about the future. There’s so much to mine here.
ROMA: Shannon I want to start with one of the first things you said, which is that they are concerned about the structure of capitalism and the investment element. They’re specifically coming to you for help with that. How do you handle that? What kind of advice can you give someone like that?
SHANNON: I’m basically just honest. I don’t know. I don’t have the answers. I have no idea. I don’t have a crystal ball. We basically work through it together. I share that anxiety, too. I have it. I’m also a millennial. I’m an elder millennial. I feel like I need like a scroll to say that. But I feel like my big thing is I don’t have the answers. Nobody does. How much have we ever known about? It was always just the past and projections and everything like that. And we’ve always been working towards an uncertain future because the future is never in our control. So that actually is an element that’s constant in investing, is that it’s like you just try. But what I try to say is like, okay, so you’re afraid of that in 20 years. I get it. Are you afraid of that for the next five years? Well, no. Okay. So let’s operate on a very micro timeline. Let’s operate in the next five years, and then we’ll reassess which is the best that any of us can do. Truly, like nobody, nobody has a crystal ball on how this is going to play out. It’s a weird time.
ROMA: Shannon, what kind of questions are you hearing from clients that come see you that do want to invest, but want to do that in a responsible way for the environment?
SHANNON: So I think this is a big conversation around, you know, socially responsible investing and everything like that. And so there are lots of products out there that are, quote, socially responsible or sorry, but they still have, you know, they’re still holding fossil fuels in them. And so it really depends on how hardcore you want to be about it. I think that’s like the there’s a spectrum, right? So there is a spectrum of people who are like, I just want to vote with my dollars in the sense that I want to send a financial institution a message saying, Hey, you’ve made this socially responsible product, I’m going to buy that and nothing else, because I want you to know that there’s a demand for that’s cool, that’s important. Even though you might still be investing in certain industries that make you feel icky, there might be. There’s still power and empowerment in that because you are sending a message to the company is like, Oh cool, let’s make more of these, or let’s really dive deep on this. There’s money to be made there. The other pieces on the other end of the spectrum are like; I want completely out. That is a real DIY situation or almost DIY. Situation. Two to opt-out out completely of certain industries or fossil fuels or whatever. So often, I’ll find those people looking for alternative ways to invest. They often are trading there in their own brokerage accounts, for sure. And they are still buying. You know, I think it’s I think the smart way to do that is if you’re going to DIY that and try to like to forgo some in certain industries is to still use like broad-based ETFs, but maybe sector specific so you can kind of pick and choose what sectors. And then you’re not necessarily just stock selecting on your own out there. I really have seen that blow up again with some of the stock market volatility that we’ve had because it’s just not diversified. Right. So I do think that if you’re going to opt out, which I think is also great totally, just make sure that you’re thinking about the diversification piece holistically in your portfolio.
ROMA: Climate change could be compared to the pandemic in that it’s a form of collective trauma, and it’s impacted everyone to some degree. Do you think that living
through a recent event like, you know, the pandemic that’s collective trauma has changed people’s approach to money?
SHANNON: 1,000%, Yes. I feel like even at the top of the call, numbers said like, oh, I only heard a smattering of this kind of chat like five years ago. And now everybody, including people who are like retired or about to retire, who maybe, you know, their alarm wasn’t as on before. It really woke people up that life is ridiculously unpredictable. And I think I think it scared people in a way to say, well, I didn’t see that coming. Nobody saw that coming. What else is lurking down the pipeline? And I think that was the negative part of it that injected uncertainty into our lives. Right. We took a lot of things for granted as far as assumptions on what is going to happen going forward. And now, in much of the world, we’re faced with like really high inflation, interest rates that rose really aggressively after like, oh, over a decade of low-interest rates, which are really messing with people. The only silver lining about that I think it’s made people more conservative going forward. And I mean, conservatives are like, okay, well, bad things could happen, so how do I kind of protect myself against that? So not as leveraged, not as much. Debt is now becoming a conversation that is like; I’m too scared even though I could do it. I’m too scared to now because I don’t want to get it. I don’t want that to sink me later. Whereas a healthy attitude towards money that I think was distorted actually for like a decade.
ROMA: Do you ever have clients that come see you who sort of are handling or, I guess, struggling to handle their climate anxiety fears, among other worries, by sort of the bury your head in the sand approach? What’s the purpose? Because it’s all going to go up in a ball of flame anyway, So no planning is required. What do you do when someone like that is sitting in front of you?
SHANNON: Roma, they don’t come to see me.
ROMA: Yeah, fair enough.
SHANNON: So I know they’re out there. I know they’re out there from like social communities that I have and that person’s and especially cause I’m fee for service, they have to pay money. So nobody who believes that there’s no point in planning is going to pay me money to plan something that I want to plan. But if they’re listening to this, what would your thoughts for them be? I mean, obviously, I’m biased, and I think sometimes, if you believe that there is no hope, it can become a self-fulfilling prophecy. I have been saying that for years. That’s not a new thing that has to do with climate change. I’ve just seen it firsthand. When you give up or assume the worst, then every action that you take becomes that, and then the outcome is also that. So I would hate just make sure that you’re not making decisions that you’ll look back on and regret. Honestly, that’s it. And so I would often say, What’s the harm? It’s cheaper than therapy, right? Coming into one session, it’s cheaper then, and then a few therapy sessions, see what someone has to say. And if it didn’t help, then at least you know. And then you’re like, okay, I’m firm on my plan to do nothing. Or maybe it was the right thing at the right time. That could just be one habit or one shift that might just in case things end up being okay and be fine down the road. Like we figure something out, and it’s wonderful, and it’s everything that we’re all hoping for that you’re also okay in that timeline, too?
ROMA: Well, in many ways, living an environmentally friendly lifestyle can complement living economically. A smaller house? Fewer cars, potentially. Travel or more local travel. So in some ways, making these decisions can empower someone.
SHANNON: Yeah, I think so too. I think that there’s so much to be empowered about, and we do vote with our dollars. And I think that using your money in a way that aligns with your values on every front, so not even on your day-to-day transactions but on the major decisions of your life. How, how, and where am I going to live? How and where am I going to get around? What am I going to do for money? These are all decisions you make with your money that say something about what’s important to you. And so if you’re in a situation where you’re scared, and you don’t know what to do, even just like. Thinking about those kinds of things as being like voting with your dollars and like it is empowering to think about what you’re doing with your money matters. It does everything that we do with our money matters because that’s how right now the system is. The system is set up.
ROMA: Thanks to Shannon for these insights. After the break, we hear from a millennial who puts climate concerns at the forefront of his decision-making.
ROB: Our guest today considers the climate in every financial decision he makes.
DAN: So my name is Dan. I am 36 years old, and I live in downtown Toronto.
ROB: There is behavior is shaped in part by his career as a high school science and biology teacher.
DAN: When I began my teaching career in earnest, the first time I taught Grade ten science, there was actually an entire unit devoted to climate and climate change and to do the best job possible for my students. I really delved into the information, the research that was out there. Understanding the causes, the effects, and of course, the consequences of climate. And I think that was definitely a tipping point for me because I really fully began to appreciate just how serious the issue is. And I began to see how, you know, each and every one of us as individuals do have, albeit a small role to play in sort of doing our part to mitigate, to prepare, and to sort of respond to climate change and how that’s going to continue to only get more exaggerated in the future.
ROB: He didn’t always prioritize the climate in his financial decision-making.
DAN: Like many people sort of in their mid to late twenties, just having a reliable, steady income and just, you know, paying the bills, paying rent. Was sort of my priority for quite a long time. But as my, you know, income became more consistent and reliable, I did begin to sort of really focus on how I was spending that money. I think I’ve always been a fairly eco-conscious consumer, but in the last several years, and especially somehow, it’s been sort of amplified by the pandemic, I’ve really thought, you know, how I spend my money and what the impacts of that are on my finance. And so to the point where, you know, all of the decisions I’m making around money are in one way or another sort of impacted or shaped by how I feel about what we are or what I as an individual need to do to play my part in making a more or making a sustainable future here on planet Earth.
ROB: Dan grew up on a small farm in rural Ontario. When he moved to Toronto 12 years ago, he had no intention of staying for the long haul. But now he can’t see himself leaving, in part due to environmental concerns.
DAN: I look at the lifestyles of people that I, you know, went to high school with, even my family that do still continue to live the in the country. And just the amount of space that they occupy and that they feel that they need. Their constant complaints about their energy consumption always make me chuckle because, well, yeah, you have this massive building or this home that you, you know, you’re heating and, you know, feeding electricity to all these rooms that you don’t even occupy. So, you know, living in the city, you don’t have a lot of choice about how much space you have. I do not subscribe to this Canadian obsession with home ownership. And I’m happily renting, and I could see myself doing so for the rest of my life. I, I enjoy sort of sharing a space with other people so that you can better utilize it, whether it’s a house or, you know, a condo building. And so I’m very content to live in a smaller space, but in a community where you have access to parks and all of the amenities, restaurants, bars, shopping, etc., like I can do everything I need within my, you know, within my five-kilometer radius. And so that’s something that, you know, we in the cities have to our advantage. But I also think it’s like it’s really valuable and important for the environment that we live a little bit more. You know, local on a smaller scale.
ROB: He’s also staying more local when he travels.
DAN: I would say that my travel, especially in the last few years in light of the pandemic, has become very eco-conscious. I have not left Canada, and I feel fairly confident that, I would be perfectly happy never leaving Canada again. I know that sounds very sort of, almost like close-minded, but we have this incredibly beautiful country, and I’m perfectly happy to travel domestically. I you know, I mentioned the Rocky Mountains, which I have you know, I have made my one trip each year, you know, two weeks to the mountains to get lost in Banff for Jasper National Park. Previously, I’ve gone to Vancouver and Vancouver Island, which is beautiful, on the east coast of Canada, the Cabot Trail. So there are so many places within Canada that although the world is a big and beautiful place, I don’t ever want to say that traveling and seeing more of the world is something that I would sort of do. Actively, you know, say that people shouldn’t do. But I personally now feel that I can get that wanderlust, and I can be satisfied with domestic travel here in Canada. And even, you know, without getting on a plane, you can drive, you know, an hour and a half north of the city, and you can be in very rugged, not natural beauty in northern Ontario.
ROB: It isn’t just changing where he travels, but also how he gets around when he arrives.
DAN: So the first couple of times that I went out West, it was sort of a no-brainer to rent a car to get around. The very first time I went out west, I remember clocking like 3000 kilometers on the rental car that I had for two weeks. The second time I went back, I kind of thought about that, and I was just like, Well, maybe it would be better to just sort of stay a little bit more local and explore a particular region. I still rented a car, but I think I traveled a fraction of the distance. And then last summer, and I’m honestly, I’ve never had an experience. I’ve never had a trip that I’ve enjoyed more. I actually opted not to rent a car, and I was able to rely entirely on public transit, which can more and bounce in Lake Louise. They’ve done an amazing job of investing in their local little public transit system. But you can get around to all of the major attractions. And I think other places are sort of catching on because they don’t just want those like those full parking lots of rental cars. Right. That’s not great, for that’s not good for the environment. And it takes away from the beauty of the natural environment. And so now, going forward, I’m trying to think about, well, how can I travel? And, you know, again, still reduce my ecological, environmental footprint by relying on public transit, supporting, you know, very local small businesses like B&Bs and things like that. I try not to stay in big hotels. I do occasionally camp, but I know that’s not for everyone. So even when I travel, I’m trying to think of ways to sort of reduce my impacts.
ROB: Another big way Dan tries to reduce his environmental impact is through his diet.
DAN: I’ve been sort of an on-again-off-again vegetarian for the better part of like 15 years. I’ve been taking that more seriously, trying to find ways to reduce the consumption of animal products, particularly beef, pork, dairy, and things like that. And so, on the one hand, I feel like I’m actually saving money, right? I hear about people spending, you know, their grocery bills on, you know, eggs and meat. And I can only imagine how expensive that is. I don’t know, because I don’t buy those products. But all of these companies that are trying to cater to people like me and are coming up with these plant-based products are not cheap. And so when I go, and I buy Beyond Meat burgers, or I try vegan cheese to put on a pizza, I mean, that definitely is not cheap. And that definitely adds to my grocery bill and my living expenses. So I don’t wonder if I probably come out more or less the same when it comes to the finance financial side of how much money I’m spending on my grocery bill. But I can feel good about that expense because, again, I feel very strongly that that not necessarily being vegetarian but being a flexitarian and reducing animal and meat consumption is an absolute no-brainer when it comes to the environment because big ag has a disproportionate effect and contribution to greenhouse gas emissions. And climate change is something like 20% of all emissions come from agriculture, particularly energy-intensive sectors like beef consumption.
ROB: He also changed how he shops.
DAN: I went almost two years during the pandemic without buying absolutely anything new. So I’m a huge fan, and I’m a proponent of repurposing, reusing. I know that with Facebook marketplace and with Kijiji and with so many others where like, there’s no real reason to buy new things, to be perfectly honest. There are so many people that are trying to get rid of perfectly good stuff. And so I’m thinking about that when it comes to the clothes that I’m wearing, when it comes to the furniture that I’m buying, even plants, you can find entire websites where you can like get people’s plants because they have too many of them by now.
ROB: You won’t be surprised to hear that Dan invests in ESG stocks again.
DAN: I made that decision purely because I believe it’s the right thing to do. But in the long term, I also think it’s an economically valuable thing to do. I think we are again, we are slowly, far too slowly. We are transitioning to a greener economy. And so I think by choosing to invest in environmentally conscious stocks and bonds and things like that, I think that the long-term perspective for those returns, in the long run, will likely. We’ll likely soon exceed sort of more traditional or standard investing practices.
ROB: Diet, shopping, and even investing are minor considerations compared to family planning. That’s a massive financial and personal undertaking that Dan has shelved due to climate concerns.
DAN: I love children. I’ve chosen a profession where I get to work with children, but I can say with some degree of confidence that I never plan to have children of my own. And part of the reason is that children have a massive impact on the environment. They change our entire lifestyles. Yes, we need them. But I personally feel that having children is something that I wouldn’t want to do. I’m also legitimately concerned for the world. A child born today is coming into I don’t know what this world is going to look like ten years from now, 25 years from now, 100 years from now. And, you know, without being too cynical, like I’m a little bit worried about what that world looks like. And I don’t think that we are doing our children’s generation any favors in how we are continuing to sort of live our modern-day lives. And so, yes, I would be very concerned about bringing children into this world. And so I’m choosing not to do it.
ROB: It’s not an exaggeration to say climate concerns factor into every decision Dan makes. So how does he grapple with climate anxiety and his own hopes for the future?
DAN: There are certainly days where I do feel very, very cynical and pessimistic, and I see people around me living, you know, lavish lifestyles and not environmentally, you know, making not making environmentally conscious decisions. And I want to throw my arms up and say, well, why don’t I do that, too? Why don’t I just, like, live in the moment and, you know, let it burn, right? I mean, why can’t I enjoy it while I’m here? But I don’t agree with that. That doesn’t align with my values. Like I do believe that I’m a prudent person. I do think very carefully, and I want to be a role model as a teacher, as a family member, an uncle, etc. I want to model what I believe is good behavior when it comes to consumption and when it comes to appreciation of the natural world. I wouldn’t say that I’m an optimist, but I am slowly coming on board. I understand that you know, we humans are extremely adaptable. And I don’t wonder if when this crisis becomes sufficiently severe, we will meander our way out of it. I’m not an I’m not a technophile. Some of my best friends is a technophiles. He thinks we’re going to come up with some sort of creative solution to get out of this. I think it’s going to be a little bit more nuanced than that, but I wouldn’t put it past, you know, our species to, like, figure out a solution that allows us to continue to live for better or for worse, the way we currently are. I fear the damage that we’re going to do to the natural world in getting to that place when it comes to our oceans and our rainforests and all of these naturally beautiful species that, you know, are going extinct, that, you know, record-breaking pieces; there are already severe consequences of our behaviors. And those will only get worse. But somehow, I think we humans will probably be okay.
ROB: Dan clearly prioritizes the climate when he’s making financial decisions, big and small. I know most of us don’t do that, but it is prudent to think about risks when you’re planning for the future. And climate change does inject risk into all of our lives. Roma, what are your takeaways from today’s conversations?
ROMA: 1) No one knows what the future holds, but taking even small steps like starting an emergency fund or building up some savings can give you a greater ability to make choices that align with your values. 2) When it comes to investing, where you allocate your money can make a meaningful contribution to the fight against climate change. Investments that target companies doing well in environmental, social, and other areas are easy to find today. 3) With the COVID pandemic, high inflation, and soaring housing, we’ve all been through a lot. But one way to alleviate your worries is to come up with a plan when you can adjust every five or ten years. That would help me sleep better at night.
ROB: Thank you for listening to Stress Test. This show was produced by Kyle Fulton and Emily Jackson. Our executive producer is Kiran Rana. Thanks to Shannon and Dan for joining us.