57. Focusing your values aligned investing

Hi, welcome back to Spend Donate Invest! This is a podcast that’s exploring the topic of whether there might be some ways we can line up what we’re doing with our money and our values when it comes to the kind of world we’d like to help shape. Because here’s the thing, if you’re listening to this, you probably vote, you might even protest, maybe you’ve called your senator about something you want them to do. What I’m trying to chat about on this podcast is if there might be a whole other category of things we can do- specifically our money.

Where do we bank, where do we shop, where do we donate?

These are the things I wonder about, and you might be wondering about it too. If you are, you can drop a line anytime and I’ll be happy to explore it on the show. The email address is spenddonateinvest at gmail dot com. Or you can use the voice recorder function on the show’s website which is at spenddonateinvest.world and I’ll transcribe your question and read it on the air.

We’ve covered so much in the past year. Questions have come in about trying to give up brands from companies who have values that are different than yours, trying to convince your partner to switch to a more socially responsible bank, and whether or not to give that person with a cardboard sign some cash.

And in case you aren’t already familiar, I’m your host! I go by GG, that’s short for Genet Gimja and I’m a curious person. I love reading your emails because it gives me a chance to do some research, call up folks that know about these things, and then share back what I find out. In the past, I’ve worked a lot of places, I’ve worked in the private sector, I’ve worked in the nonprofit public sector. I read a lot, 50 to 100 books a year sometimes. I believe that inequality and oppression are baked into capitalism, or at least the version of capitalism that we’re doing right now. I think the entire system needs to be overhauled, and I also believe in taking the incremental steps we can as individuals for now. Like with climate change, my sense is that ultimately corporations need to be regulated and the government needs to be empowered to do that, but I’m still going to recycle my trash at home. I’m still going to wash my ziploc bags and use them again. I guess this is a good time to mention that I’m an immigrant. From Eritrea. I love being an immigrant, one thing you find out later in life is that a lot of immigrant practices can overlap with sustainable practices and financially responsible practices. Like reusing your ziploc bags. Which brings us back to the point of this show. To talk about incremental little changes we can make so we don’t feel like our societal values and our money are completely out of wack.

Sound good? Send in your topics anytime. Spenddonateinvest at gmail. Starting next week there will be a whole new set of topics to go through together. Thanks again for your encouraging messages at the podcast anniversary a few weeks ago. Let’s keep going!

One question I’ve received quite a bit is on the topic of trying to decide on a focus for our values when it comes to our money. There are so many problems we could tackle, how can we pick a issue or a small number of issue areas to focus on? Otherwise you will find yourself overwhelmed at trying to do everything all at once- climate change, racial equity, gender equality, homelessness, poverty, hunger, clean water access, religious freedom, migrant protections, I could literally go on for an hour listing incredibly important issue areas you could decide to focus on. But to avoid getting overwhelmed, and to avoid letting a pursuit of perfection paralyzing us, it can be helpful to pick a focus area. For now. And then maybe every year you rotate your focus areas. I’m gentling nudging us all to be more intentional

So how to pick a focus area? I have some suggestions for you to consider today. We’ve talked about Ellevest before, quick reminder, it is an automated investing app, designed for women by women. That’s their whole tag line. I haven’t tried the app, but I do read their literature whenever I get a chance. The way they talk about securing your financial future while keeping in mind your personal values feels seamless and they do tend to speak more directly about some of the issues that I am concerned about. For example, I just don’t see a lot of investment firms that will come right out and talk about the gender wage gap for Black women or Latinx or Indigenous women for example. Often when I read the literature from investment firms there’s a vague high level statement about “gender equity” but I’m not always sure, because my sense sometimes is- if you’re not even willing to name the problems, how do I know you’ll try to create portfolios and other investment products that address those problems.

So back to Ellevest, the automatic investing app that puts out a lot of good literature about investing according to your values. I’m going to read you what they had to say in a white paper written by Dr. Sylvia Kwan who is their Chief Investment Officer. So this is what they say:

The Ellevest Intentional Impact strategy was specifically constructed to invest in individual companies that perform better than their peers in certain focus areas that support and benefit women and Black, Latinx, Indigenous, and other people of color and screen out companies with products, policies, and practices that may harm or exclude them. The focus areas we use to determine whether an investment is appropriate for Ellevest Intentional Impact portfolios include not only leadership and equal pay, but also other factors that impact women and people of color disproportionately. So these are the kinds of factors they look at when they’re screening companies, I’m going to share them with you in case they resonate with you, maybe you want to borrow one or two of these screening criteria as you think through companies you want to invest in. Or shop from. Or work for. Our money and our values intersect in so many ways, that’s the whole point of this show. Ok, so the factors that Ellevest looks at are:

Workplace Diversity
Companies with poor diversity practices that perpetuate existing inequalities and create negative community impacts. Diversity and inclusion policies are particularly important to achieve gender equality in the workplace. In the United States, the gender wage gap is larger for Black, Latinx, and Indigenous women than for white women.

Human Rights and Community
Companies that operate in countries with controversial regimes or restrict access to basic services — and companies that operate private prisons or rely on forced labor. Women are disproportionately affected by human rights crises around the world. Disadvantaged groups, including racial minorities, are especially vulnerable to human rights infringements

Exploitative Products
Companies that rely on exploitative products and services like tobacco or predatory loans. Women are targeted for marketing. of these products. Women and Black people make up a disproportionate share of payday lending customers. Predatory lending disproportionately impacts Black and Latinx communities, with lending discrimination on mortgages currently costing Black and Latinx families $765 million in extra interest per year. Meanwhile, Black Americans are more likely to die from smoking-related illnesses than are white Americans.

Firearms Companies that produce and sell firearms. Black Americans are disproportionately likely to be victims of gun violence in the United States. Firearms also play a significant role in deaths due to domestic violence.

Excessive Remuneration Companies with weak pay structures and companies that incentivize short-term performance at the expense of long-term financial health. Gaps between the highest-paid executives and the average worker salary are associated with a country’s income inequality, which strongly impacts Black workers.

Waste
Companies that inadequately manage their toxic waste, e-waste, packaging material waste, and air pollution, potentially causing negative health and environmental impacts on the communities they serve. Along with greater exposure to overall health risks associated with hazardous waste, women also face pregnancy risks. Air pollution disproportionately affects vulnerable communities, including Black, Latinx, and Indigenous communities, and those communities are targeted for hazardous waste sites.

Greenhouse Gas Emissions
Companies that emit substantial volumes of greenhouse gases, either through the combustion of fuels in company operations or through purchased electricity, as well as companies that are inefficient with their energy usage — thereby contributing to global warming and other ecosystem impacts. The UN has reported that climate change disproportionately affects women. The impacts of climate change are also expected to be most acutely felt by people of color in Africa, Southeast Asia, and Latin America.
Water
Companies that produce water pollutants that may harm ecosystems and have negative health impacts on humans and animals. Women bear greater responsibility for water collection worldwide, leaving them more vulnerable to health risks. There are racial and ethnic disparities in access to clean water globally. In the United States, minority communities bear disproportionate health risks as a result of disparities in access to safe and reliable drinking water.

Product Quality and Safety
Companies with product safety concerns that may be at risk of harming consumers, incurring fines, or losing market confidence. Women are affected by safety concerns when products are not designed for them, and are vulnerable to data security issues in particular due to risks of harassment. Likewise, personal data from vulnerable groups, including racial and ethnic minorities, can inform discriminatory practices like voter suppression, digital redlining, and targeting job ads away from Black people.

Ethics and Fraud
Companies with poor accounting practices, internal controls, and ethics records. Wage theft is a form of accounting fraud perpetrated disproportionately against disadvantaged groups, including Black and Latinx workers in the United States. Women are more frequently impacted by wage theft and fraud.

Working Conditions
Companies with poor working conditions that may put their workers in physical jeopardy, resulting in high risk of productivity loss, labor disputes, and regulatory penalties. Poor working conditions disproportionately affect women. In the United States, Black and Latinx workers are disproportionately likely to suffer workplace injuries.

Labor Relations
Companies with poor labor relations practices that fail to adequately engage with their workforce and face risks from low worker retention, labor unrest, and work stoppages. Good labor practices can help equalize the gender pay gap. Poor labor relations practices can put additional burdens on already disadvantaged groups, including Black and Latinx communities.

War
Companies that produce landmines, cluster bombs, or other controversial weapons have disproportionately negative impacts on civilian non-combatants. Companies that engage in military weapons contracting are incentivized to increase global conflict and face substantial reputational and regulatory risks. Armed conflict exacerbates gender inequalities. Globally, many conflicts perpetuate existing racial or ethnic inequalities

So what do you think? Do any of these resonate with you? Some of the ones that really caught my eye were war, water, exploitative products, I mean, it’s tough. I care about all of these issues and I believe they are critical to making our world more hospitable, but again this exercise is about identifying some focus areas. So this is just a list that I happened to like that you can use to pick your focus areas.

I’ve also heard of people using the United Nations SDGs- those are the Sustainable Development Goals, I’ve heard of people using those to pick their focus areas for their investments. And it’s a great list too, in fact I’ll link it in the show notes in case that speaks more to you, but what I liked about Ellevest’s focus areas is that it makes the connection between the societal problem and how specific companies are either part of the problem or part of the solution. You don’t have to do that extra mental step of thinking OK well I care about women and girls, so how do I invest in companies that are less harmful and potentially beneficial to women and girls. Sometimes trying to make that mental leap takes more than the capacity we have in our day to day lives.

So take a look at these focus areas,I’m going to link them. Let me know if you decide to select any of them for your focus areas.

Thanks for joining for today’s discussion. It can be easy to get overwhelmed by everything that is wrong in the world, and difficult to pick focus areas to chip away at. So hopefully today’s discussion sparked some ideas. I’m very curious to hear your thoughts on this, so get in touch anytime, you can email at spenddonateinvest@gmail.com or you can send a DM through Twitter at spenddonatevest. You might have a different question about being an investor who screens for their values and ethics in addition to trying to maximize your financial returns, or maybe you’re interested in a different topic related to lining up your personal values and your money. Please send your questions in. Please share this episode with someone who you think might find it interesting. Thanks to those of you who have left reviews for the show. You can do that pretty easily at the show’s website spenddonateinvest.world Some great questions have come in recently, I’m looking forward to getting those out to you. Have a great day and let’s talk again soon.

Link from today's episode:
https://assets.website-files.com/5e6a6600949076ab67ab2487/5f7f692105c2ca31424ad6ce_Ellevest%20Private%20Wealth%20Management%20Whitepaper%20July%202020.pdf