5 ways to make a difference by investing with social justice in mind
The challenge is to identify businesses that are aligned with an investor’s values -- but resources are available to help.
Many of today’s investors want to put their money where their passion is by selecting companies that support their views about social justice. Participants in employer-sponsored retirement plans, too, are interested. In fact, offering environmental, social and governance (ESG) options in 401(k) plans may increase contribution rates, according to Schroders. Institutional investors are also joining in: A study by MSCI found that these investors are beginning to prioritize the “social” elements of ESG funds – 36% of respondents said that the pandemic has led them to seek out funds that are weighted more heavily to social factors. One challenge, especially for individual investors, is to identify businesses that are aligned with an investor’s values. The website Finder has nearly a dozen great suggestions for how to get started on the social part of ESG investing. Below are some of the ideas we found most interesting.
Here are several ways Finder suggests investors take action:
1. Invest in businesses owned by marginalized communities. Racial Justice Investing (www.racialjusticeinvesting.org) is run by a coalition of investors who aim to combat structural racism through the power of finance. The organization’s resources include ways to support organizations that promote racial equity and justice, and useful tools for investors to jump-start a socially conscious portfolio.
Another resource is Springboard Enterprises (www.sb.co), whose mission is to empower women entrepreneurs through a network of mentors, investors and partner companies dedicated to building successful women-led companies in the technology and life science industries.
2. Work with an advisor who shares your values. Collaborating with an investment advisor who holds similar personal and moral values can make it easier to find socially responsible investments.
A financial advisor can “often identify philanthropic opportunities for which clients can optimize their legacy in a socially responsible way,” said Paul Z. Shelton Jr., chief investment officer for Warwick Shore Advisors.
3. Invest in ETFs that support racial and social justice. Instead of investing in individual stocks, another option is to invest in carefully curated exchange-traded funds that focus on social justice investing.
“Think of them like investment baskets,” said Shannon Terrell, investments expert at Finder. “A single ETF may contain any number of stocks, bonds or additional assets, which means purchasing one may help diversify your portfolio/”
4. Invest in large companies leading the way in support of social justice. Larger public companies are making strides to support social justice. For example, Bank of America has pledged $1 billion to help rectify underlying economic and social disparities. Verizon has committed $10 million to social justice initiatives, including donations to the NAACP and the National Coalition on Black Civic Participation.
5. Invest in real estate initiatives that build up the local community. To prevent investing in real estate projects that drive out local communities, Tremaine Willis, an investment advisor at Mind Over Money, encourages her clients to purchase and take an ownership interest in Black communities. Aim to “elevate the quality of life in an area while maintaining affordable housing options for the existing population,” she says.
READ MORE: