28 BARRON’S August 5, 2019
Jason Smerdon finds he can’t be 100% pure in his investments. That means he
balances his ideals with saving for retirement. BySophiaCai
HowaClimateScientist
GrapplesWithInvesting
WHEN JASON SMERDON OPENED UP A RETIREMENT
account as a postdoctoral fellow a decade and a
halfago,hegravitatedtowardsociallyresponsible
stockfunds,despitethepossibilityofweakerre-
turns.Hefiguredhisidealsweremoreimportant
than investment performance.
Fast-forward 15 years, and his investment phi-
losophy is no longer as black and white. Since the
economic downturn a decade ago, he has moved a
majorityofhisretirementportfoliointoaggressive
growth funds and only factors environmental con-
cernsintotheequationwheninvestinginindividual
stocks.
Smerdon, 43, who lives with his wife and two
children in New York, is juggling his conscience
alongwithhisfamily’sfinancialhealth.“It’sthekind
of thing where you start building wealth and you
say, ‘What’s being stupid and what is not?’ All of
thatconsciousnesscamein2008and’09whenIreal-
izedIdon’twanttobecaughtinaconservativetrap
where I’m not beating inflation.”
Smerdon isn’t an ordinary investor worried
aboutthefutureoftheplanet.He’saclimatesci-
entistatColumbiaUniversity’sLamont-Doherty
Earth Observatory and co-director of the Earth
Institute’sundergraduateprograminsustainable
development.
He does his part to save the planet, powering
his home with renewable energy and saving the
biodegradable salad bowls he uses at lunch to
compostathome.Buthealsorealizesthatthings
aren’talwayssosimple.Giventheconstraintson
histimeandresourcesandlimitedinvestmentop-
tions, it’s hard to be 100% pure.
ForSmerdon,thatmeansrelinquishingsomeof
thoseidealswheninvestinginbonds,realestate,
andanyvarietyoffundswhileconstructinganon-
linebrokerageportfoliotoincludespecificcompa-
nies whose core businesses are more in keeping
with his work and his values.
“There is this tension between the kinds of
things that make sense as an investor and how
youcanbestinvestforyourvaluesandyourcon-
science,”saysSmerdon,whosayshehasseenan-
nualizedreturnsinthemidteenssincehefirstbe-
ganinvestingin2013.“Iliketothinkthosethings
balance out in some kind of compromise.”
Some of his colleagues are more rigid in their
investment philosophy. Satyajit Bose, associate
director of Columbia’s Program in Sustainable
Finance, says he avoids stocks such as defense
companies. He also shuns stocks on the Norwe-
gian Pension Fund’s list of investments that are
excluded from the country’s $1.07 trillion govern-
ment Pension Fund Global due to ethical reasons.
StevenCohen,formerexecutivedirectorofthe
EarthInstitute,doesn’tdoverymuchinvestingof
hisown,butbelievesthatcompletedivestmentfrom
fossil fuels isn’t the best approach. “[Climate
change]isnotgoingtobesolvedwithouttheprivate
sector,soIwouldtakethemon,”hesays.“Iwould
engage with them. I’m not big on divestment.”
Smerdon,Bose,andCohenareamongseveral
hundredscientists,economists,andotherbusiness
and policy experts at the Earth Institute and its
16 academic and research centers. Among their
findingssofar:“Humanactivityandthedesirefor
economicimprovementarestrainingtheplanet’s
resources,threateningthehealthofourenviron-
ment and ability to thrive.”
Smerdon, who reads stock assessments while
puttinghiskidstosleep,nowbelievesthatputting
hismoneyintomutualfundsmakesalotofsense,
but that has forced him to adjust to having less
controloverthespecificcompaniesheinvestsin.
“Withinmyretirementaccount, I’vebasically
givenuponanykindofidealizedinvestmentprin-
ciples”becausewithinthetraditionalfundoptions,
he’sunabletoweedoutstockshewouldotherwise
prefer not to put money in. Oil companies are
virtually impossible to avoid, he says.
Even the exchange-traded funds that come the
closest to aligning with his background in climate
change—the “low carbon” ETFs—frequently in-
clude oil and defense stocks that run against his
conscience.
In2013,heopenedanE*Tradeaccount,which
gavehimleewaytoselectindividualstocks.Since
then,gainsinindividualstockpurchaseshavedi-
minishedhisETFshare.Exchange-tradedfunds
likethe iSharesMSCIKLD400Social (DSI)and
VanguardMid-Cap (VO)stillmakeup15%ofhis
funds portfolio, but that is a far smaller share
than in the past.
Smerdon’s work as a climate scientist inevita-
bly seeps into the construction of his stock port-
folio. His climatological research has shown that
the Southwest and Plains states may face global-
warming megadroughts—droughts that last for
several decades—as early as 2050. He owns
shares of Pennsylvania-based water utility Aqua
America (WTR), but says he’s skeptical of invest-
ments “that depend on the minimal and fickle
water resources in the West,” such as the agricul-
ture sector.
Smerdon also holds positions in companies
thathaveintegratedrenewableenergyintotheir
core businesses— NextEra Energy (NEE),
Brookfield Renewable Partners (BEP), and
First Solar (FSLR).
Climate-relatedopportunitiesandrisksaren’t
the only things that Smerdon considers when
pickingstocks.Nostalgiadriveshisinvestmentin
AbbottLaboratories (ABT),thesubjectofinvest-
menttalkheheardaboutatthedinnertablewhen
he was growing up. Smerdon’s parents own the
familystockthathasbeenpasseddownfrompre-
vious generations, but Smerdon bought his own
shares.
“With the baby boomers aging, it’s probably
stupid not to be in health care in some form or
Photograph by Lissy Elle Laricchia another,” he says.
“There is this
tension between
the kinds of
things that make
sense as an
investor and
how you can
best invest your
values and your
conscience.”
Jason Smerdon
Climate scientist