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My goal: I would like to avoid investing and banking with institutions supporting new fossil fuel infrastructure[†]. Is TD Ameritrade such an institution? (I'm hoping that, as a brokerage firm, it is not.)

[EDIT: The answer of @mikem below provides the most direct account of how most brokerages - including TD Ameritrade - DO help fund new fossil fuel infrastructure.]

I know: TD Bank, which lent $360M for the Dakota Access Pipeline, previously owned more of TD Ameritrade; but since Charles Schwab's acquisition of TD Ameritrade in October, TD Bank has only minority ownership.

I don't know:

  • how TD Ameritrade's profit relates to TD Bank's behaviors (e.g., by expanding its lending power?).
  • whether TD Ameritrade supports new fossil fuel infrastructure in some other way (e.g., is servicing purchase of Energy Transfer Partners stock not indirectly supporting new fossil fuel infrastructure?).

[†] Note: I’m aware that fossil fuels are heavily implicated in everything from corn flakes to the internet. But when I ask whether TD Ameritrade directly or indirectly supports new fossil fuel infrastructure, I mean to ask whether they 1. fund it (like TD Bank and Wells Fargo do, for instance) or 2. contribute profit to companies that use that profit in turn to fund it (does TD Ameritrade do that?).

Of course I do not mean to ask whether there is a company whose employees swear an oath against eating corn flakes, which “could” increase demand for fossil fuel and thus contribute to demand for new pipelines. 87% of humans on earth use electricity. I don’t mean to count us all as indirect supports for new fossil fuel infrastructure. So let’s imagine no new infrastructure, and that we'll then figure out how to allocate the supply available from hydro, wind, solar, AND whatever fossil fuel infrastructure is in operation until it’s phased out.

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    You being a customer of a broker owned by a bank that lent money to a pipeline is you supporting the pipeline? I don't see how this has anything to do with personal finance.
    – quid
    Jan 18 at 19:17
  • @quid, I was and am under the impression that questions about "ethical investing" fall within the scope of "personal finance." If they don't, where do they fall? (Serious question.) Thanks.
    – Brendan
    Jan 18 at 19:38
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    Sure, if you want to "ethically invest" you should invest in a manner consistent with whatever that means to you and asking about ESG funds or whatever wold make sense. I don't know what a loan by a bank that owns a broker that you're a customer of has to do with you that's any different than finding out if the barista has an uncle who works on a pipeline before you'll buy the coffee.
    – quid
    Jan 18 at 19:49
  • @quid. It's precisely because I want to "invest in a manner consistent with" my goal to not support NEW fossil fuel infrastructure THAT I AM HERE ASKING whether TD Ameritrade provides ethically relevant support for new fossil fuel infrastructure. If you intend your words literally, you might be as ignorant as I am. (You "don't know what a loan by a bank that owns a broker that you're a customer of has to do with . . .") Neither do I. If anyone has a direct answer (as opposed to rhetorical comparisons that sounds zingy but don't answer the question), that will be especially appreciated.
    – Brendan
    Jan 18 at 21:38
  • And to me this looks like your goal is controlling how other people invest and that's not relevant to personal finance as far as I can tell. Happy hunting.
    – quid
    Jan 18 at 22:03
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To answer your title question "Would using TD Ameritrade to manage Roth IRA contributions indirectly support new fossil fuel infrastructure?", the answer is simply "yes."

TD Ameritrade facilitates the buying and selling of stocks. Those stocks directly contribute capital to their respective companies. Many of the stocks on the market are for fossil fuel companies... current and new infrastructure... and TD Ameritrade offers them all.

TD Ameritrade, like most other companies, provide 401K benefits to their employees. The funds within their 401K portfolio will most certainly contain energy stocks in the fossil family. The company's obligation is to provide employees with fund choices that will produce the highest returns. Categorically omitting an entire industry as large as legacy energy producers and their suppliers would come close to violating that obligation.

As futile as an endeavor it might be, you could try to find a brokerage that doesn't offer stocks on the broader market, but I doubt you'll find one. Brokerages tend to want as many customers as they can get and not everyone has the same political leanings, so they offer the entire market and let their customers choose where they invest. So, you could say that nearly any brokerage, or Bank since most also have brokerages, in some indirect way will "support" new fossil fuel infrastructure.

Also keep in mind... lets say you found a small, niche broker that was "carbon conscious" and only offered stocks that were "green". I think you'd find that the small niche broker was bouncing trades through a larger brokerage... thus also indirectly supporting fossil fuels. And even if they weren't, they would still be submitting those trades to the stock exchanges, which offer all stocks, and thus would still be indirectly supporting fossil fuels.

As for large Banks in particular, keep in mind they are required to offer their services to all industries (https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-8.html) so if you want to push the green objective and look for banking services that don't support fossil fuels directly or indirectly, you will need to probably use a smaller, regional bank.

The challenge you face is the "indirect" nature of your goal. That's an almost impossibly high bar to reach. You might do better focusing on direct contribution for now and as the global energy footprint changes in the future, you can change your investments as well.

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    The buying and selling of stocks in the secondary market does not directly contribute capital to companies - only the initial offering does that. It has some secondary benefits, but companies do not profit just because their stock goes up.
    – D Stanley
    Jan 21 at 16:55
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I doubt there is a bank on earth which does not one way or another indirectly support new fossil fuel infrastructure.

Banks have employees. I'm assuming all of them use a computer, and work with artificial light at least sometimes. These require electricity to run. Much of that electricity is generated by fossil fuels. The employees also probably sit in chairs, at desks, in offices. These things required energy to build. Much of that energy came from fossil fuels.

By investing with any bank, you are giving them business. They will have to hire more employees to service that business. They will have to answer your phone call, if you ever need help. And we've established employees indirectly require fossil fuels.

Will you be banking online? They'll have to run computers to service the requests you make to their website. Computers run on electricity, and consume fossil fuels.

Thus, by banking you are increasing demand for fossil fuels. This will incentivise development of new fossil fuel infrastructure.

Therefore, you can not use banking services without indirectly contributing to the development of new fossil fuel infrastructure.

Your options are:

  1. Don't bank.
  2. Convince all the governments of the world to regulate fossil fuels such that the increased demand for energy that comes from your banking activity is satisfied by energy sources not powered by fossil fuels.

These things are pretty much impossible, so you might have to settle for just being carbon neutral, which isn't quite the same as not contributing to fossil fuel development. You can offset carbon yourself by giving money to someone that will use it to reduce carbon emissions, or you can try to patronise businesses that do this.

TD Ameritrade does not seem to be one of those businesses. From their page on Corporate Citizenship:

Better for our environment

Helping the communities where we live and work isn’t just about volunteerism and money. It’s about being a good neighbor. Over the last 7 years we have increased our focus on reducing our carbon footprint by seeking LEED® Certification from the U.S. Green Building Council for real estate projects that involve renovation or new construction. We've achieved this through new construction and renovation work in nearly 40 of our corporate and branch locations.

They're not going to come out and say anywhere "we are responsible for carbon emissions", but it's a reasonable guess they are not carbon neutral, because if they were, they would say it here. Instead they just say they are "seeking" (not obtained) LEED certification, and only for real estate renovation or new construction. That's nearly equivalent to "we are putting zero effort towards reducing carbon emissions", since LEED certification just means some amount of "energy efficient", but not necessarily carbon neutral. And they're probably doing it for tax advantages or because zoning requires it, rather than some authentic corporate commitment to reducing carbon emissions.

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  • Thanks for the reply, @PhilFrost. I've worked in the divestment movement and do purchase carbon offsets. Note my question isn't about whether TD Ameritrade is carbon-neutral, but whether it 1. funds new fossil fuel infrastructure (like TD Bank and Wells Fargo do, for instance) or - to clarify - 2. contribute profit to companies that use the profit in turn to fund it (does TD Ameritrade do that?). I'm editing above to clarify the original question.
    – Brendan
    Jan 18 at 15:12
  • @Brendan Perhaps it would be more clear if your question was "Does TD Ameritrade directly fund fossil fuel development?", because "indirectly support" and "directly fund" are worlds apart.
    – Phil Frost
    Jan 18 at 15:13
  • True, @PhilFrost, about worlds apart. Although just "directly" is too limiting, I've rephrased to clarify that by "direct" I mean they fund it (like TD Bank and Wells Fargo do, for instance), and by "indirect" I mean they contribute profit to companies that use that profit in turn to fund it (so: does TD Ameritrade do that?).
    – Brendan
    Jan 18 at 15:24
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    @Brendan I think once you put "indirect" in there, the answer is yes, for any company.
    – Phil Frost
    Jan 18 at 15:41
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    @Brendan If your objective is simply to support businesses that have taken significant action on climate change, I think you already have your answer here. How much can they care about climate change if the best thing they can brag about is that they are thinking about LEED certification for a few of their offices?
    – Phil Frost
    Jan 18 at 22:14

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