So you wanna green your investment portfolio

Summary

Marketplace Morning Report: "So You Wanna Green Your Investment Portfolio"
Release Date: June 20, 2025
Host: David Brancaccio, Marketplace

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1. CFPB's Financial Literacy Funding at Risk

Timestamp: 02:02 – 03:16

David Brancaccio opens the episode by addressing concerns surrounding the Consumer Financial Protection Bureau (CFPB). Henry Epp delves into the proposed changes affecting the CFPB's funding for financial literacy and consumer education.

• Key Points:

  • The CFPB, established post-2008 financial crisis, plays a crucial role in regulating consumer financial companies.
  • Proposed Rule Change: The Trump administration aims to prevent the CFPB from allocating funds from its civil penalty fund to financial literacy and consumer education programs.
    • Henry Epp states (02:40): “Its proposed rule change would mean the CFPB could no longer use its civil penalty fund to pay for consumer education efforts.”
  • Impact: Reducing funding could limit the bureau's ability to educate consumers, potentially increasing financial vulnerability.
  • This move is part of broader efforts by the Trump administration to scale back the CFPB’s influence, including a halted attempt to downsize its workforce.

• Insights & Conclusions:

  • The reduction in financial literacy funding could undermine efforts to improve consumer financial knowledge.
  • Public response is encouraged as the rule change is open for comments until July 18th.

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2. Consulting Industry Faces Downturn Amid Reduced Government Spending

Timestamp: 03:16 – 06:33

Stephanie Hughes reports on the current state of the consulting industry, with a focus on Accenture’s evolving business amidst economic uncertainties.

• Key Points:

  • Accenture’s Challenges: Once buoyed by extensive government contracts, the firm now grapples with decreased spending as the U.S. government cuts back.
    • Stephanie Hughes notes (04:15): “More companies are trying a DIY approach to problem solving. So they're saying, well, this is our job.”
  • Shift in Corporate Strategies:
    • Companies are increasingly relying on in-house expertise and artificial intelligence (AI) to address challenges, reducing dependence on external consultants.
    • Brian Bergen, TD Cowen analyst, highlights (04:19): “Companies have been spending a lot on artificial intelligence. That leaves less room in the budget for advice from humans.”
  • Economic Uncertainty: Ongoing trade wars and market volatility make long-term strategic planning difficult, leading firms to adopt a more self-sufficient approach.

• Insights & Conclusions:

  • The consulting boom experienced during the pandemic is cooling off as businesses reassess their reliance on external consultants.
  • Investment in AI and internal capabilities is reshaping the landscape, potentially signaling a shift in how companies approach problem-solving and strategic planning.

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3. Green Investing: Divestment vs. Engagement Strategies

Timestamp: 06:33 – 10:21

Amy Scott from Marketplace's "How We Survive" delves into the effectiveness of divesting from fossil fuels as a strategy for climate-conscious investors. The discussion explores whether divestment can significantly reduce greenhouse gas emissions or if alternative approaches may yield better results.

• Key Points:

  • Divestment Movement: Over 1,600 institutions managing assets worth more than $40 trillion have pledged to divest from fossil fuels.
    • Amy Scott explains (07:05): “Some have committed to selling stocks or bonds or other investments in any fossil fuel related business.”
  • Effectiveness of Divestment:
    • Potential Benefits: Divestment can increase the cost of capital for fossil fuel companies, potentially reducing their ability to invest in new technologies or pollution control measures.
    • Counterarguments: Research by Kelly Hsu of Yale School of Management suggests that higher costs of capital may lead brown firms to pollute more, as they seek ways to generate revenue.
      • Hsu’s Findings (07:41): “Brown firms have experienced a higher cost of capital in the past, they actually go out and pollute more per unit of capital because that's the way they get cash right now.”
  • Alternative Strategies: Engaging with companies to push for cleaner energy investments and voting for climate-friendly board members may be more effective.
    • Brad Lander, Controller for New York City (09:35): “Where we can engage and get people to move and make real plans for transition.”
  • Case Study - New York City:
    • The city’s public employee pension system aims for net-zero emissions by 2040, combining divestment from thermal coal with active shareholder engagement to encourage decarbonization among major emitters.

• Insights & Conclusions:

  • While divestment sends a strong ethical message, its direct impact on reducing emissions is debated.
  • Engagement strategies, such as influencing corporate behavior through shareholder activism, may offer more tangible environmental benefits.
  • Investors are encouraged to utilize tools like fossilfreefunds.org to assess the fossil fuel exposure in their portfolios and explore greener investment alternatives.

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Additional Resources

• Climate Podcast: For more in-depth discussions on climate and finance, listen to Amy Scott's podcast "How We Survive," available on all major podcast platforms or marketplace.org.

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Conclusion

In this episode of Marketplace Morning Report, David Brancaccio navigates listeners through critical financial and environmental issues. From the potential scaling back of the CFPB's consumer education efforts to the shifting dynamics in the consulting industry, and the nuanced debate over green investing strategies, the report offers comprehensive insights into the intersection of finance, policy, and sustainability.

Transcript

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[David Brancaccio]

Money to educate consumers could be in shorter supply. I'm David Brancaccio in Los Angeles. The acting head of the Consumer Financial Protection Bureau has a plan to cut funding for financial literacy and consumer education. The bureau, set up in the wake of the 2008 financial collapse, is decidedly out of favor in this second Trump administration. Here's Marketplaces. Henry up.

[Henry Epp]

The CFPB can charge and collect penalties from consumer financial companies that it finds violate federal laws. Some of that money goes to its civil penalty fund. That fund is primarily used to compensate victims. But if those victims can't be found, the CFPB can use the remaining money to help pay for its financial literacy and consumer education programs. The Trump administration wants to stop that. Its proposed rule change would mean the CFPB could no longer use its civil penalty fund to pay for consumer education efforts. The rule is open for public comment on the Federal Register until July 18th. It's the latest move by the Trump administration to limit the CFPB's work. It previously attempted to fire most of the agency's employees, but those layoffs were paused by a federal judge in late April. I'm Henry Epp for Marketplace.

[David Brancaccio]

We'll get profits and revenue from the consulting firm Accenture later this morning. The company, based in Ireland, years ago branched off from its parent, Arthur Anderson Accounting. The consulting industry is under pressure with reduced spending by the US Government these days. Marketplaces. Stephanie Hughes has more.

[Stephanie Hughes]

During the pandemic, lots of companies were turning to consultants to figure out how to deal.

[David Brancaccio]

So it was a really big boom of spending.

[Richard Karn]

It was abnormal.

[Stephanie Hughes]

Brian Bergen's an equity analyst with TD Cowan. Nowadays, companies are dealing with economic uncertainty in a trade war. And while some are turning to consultants to help them cut costs, others are less interested in paying outsiders to tell them what to do.

[David Brancaccio]

You may not know what your supply chain's gonna look like in six 12 months from now for you to then say, okay, I'm gonna make this multi year strategic decision.

[Richard Karn]

It's very difficult.

[Stephanie Hughes]

Meanwhile, Harvard Business School professor Sunil Gupta says more companies are trying a DIY approach to problem solving. So they're saying, well, this is our job.

[Amy Scott]

Why should we outsource it to somebody else? We should be thinking about strategy anyway.

[Stephanie Hughes]

Also, TD Cowan analyst Brian Bergen points out companies have been spending a lot on artificial intelligence. That leaves less room in the budget for advice from humans. I'm Stephanie Hughes. Marketplace.

[David Brancaccio]

Likely the first contract for the outfit that became Accenture, a study in the 1950s to help General Electric decide whether to install one of those massive contraptions called a computer. I just looked at a piece indicating it was the first commercial use of one of these computer things.

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[Richard Karn]

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[David Brancaccio]

On a campaign for big investors to pressure fossil fuel companies using the power of the portfolio. It could work, but some argue there are better ways for climate conscious investors to make a difference. Amy Scott from Marketplaces How We Survive team has been reporting on the connections between our money and our climate. Hey Amy.

[Amy Scott]

Hey David.

[David Brancaccio]

How do we start to understand the scale here?

[Amy Scott]

There is a group called stand.org that has counted more than 1600 institutions worth more than $40 trillion collectively that have committed to divesting some or all of their assets from fossil fuels. And that list includes faith based organizations, colleges and universities, pension fund. Some have committed to selling stocks or bonds or other investments in any fossil fuel related business. Others though have just pledged to get out of, you know, the dirtiest energy sources like thermal coal and tar sands. But there is some debate about how effective divestment is at actually reducing greenhouse gas emissions?

[David Brancaccio]

Well, I want to ask you about that. I mean, divestment is credited with contributing to the end of apartheid in South Africa. But does this divestment movement involving energy have the potential to have real world effects? I mean, I'm talking about lowering greenhouse gas emissions.

[Amy Scott]

Right. It can be very effective. But how we survive. Spoke with Kelly Hsu, who teaches finance at the Yale School of Management. And her research has shown that the strategy can actually backfire because it makes it harder and more expensive for so called brown companies to raise money. And that makes them less likely to invest in new technology or abatement efforts. Efforts. And what we find is empirically, when brown firms have experienced a higher cost of capital in the past, they actually go out and pollute more per unit of capital because that's the way they get cash right now. And Xu says climate conscious investors may have more impact by engaging with the companies to push them to invest in cleaner energy.

[David Brancaccio]

All right, engaging shareholder resolutions like that.

[Amy Scott]

Exactly. Or voting for more climate friendly board members. New York City is one example. It's public employee pensions system has a goal of net zero emissions in its portfolio by 2040. To get there, it has divested from thermal coal and fossil fuel reserve owners and stepped up its investment in clean energy. But it's also using its power as a big shareholder to pressure other big emitters like utilities to decarbonize. We spoke with Brad Lander, who's controller for New York City. I should also say he's running for mayor. Lander says the city sees both engaging and divesting as tools in its climate efforts.

[Richard Karn]

Where we can engage and get people to move and make real plans for transition like we're working on with those utility companies or with car companies.

[Henry Epp]

Great.

[Amy Scott]

And Lander says the city's engagement is actually more effective because companies know it's serious about divesting if they don't make enough progress.

[David Brancaccio]

Now, individual investors will decide for themselves on this issue, but there are essentially calculators to at least help them see what they own.

[Amy Scott]

Yeah. A good place to start is the website fossilfreefunds.org where you can look up your individual mutual funds or ETFs if you have a retirement account, for example, to see how much fossil fuel exposure you have and compare greener alternatives.

[David Brancaccio]

Amy Scott hosts our climate podcast How We Survive. You can catch it wherever you get your podcasts [e-mail] Amy, always great to catch up.

[Amy Scott]

Thanks, David.

[David Brancaccio]

And we got the Solstice coming up tonight. I'm David Brancaccio, Marketplace morning report from APM American Public Media.

[Richard Karn]

Hey there, it's Ryan, co host of Million Bazillion, a podcast that answers your kids big questions about money. From slam dunks to home runs, some professional athletes make a lot of money because it turns out if you have.

[Amy Scott]

A star player, everyone wants to pay you more.

[Richard Karn]

This week on the podcast, we keep score of how pay works in the world of sports. Listen to Million Bazillion wherever you get your podcast.