By Nancy Reid, Impact Strategist
You know it when you see it—a person or group who knows what matters most to them, and who acts accordingly. Some of them are lucky enough to have resources—philanthropic capital, investment capital, social capital, and time—to bring to bear in addressing those issues. The WNBA players on the Atlanta Dream who spoke out for voting rights in Georgia and Patagonia and its decision to withdraw its products from fundraisers for sedition-backing politicians both strike me as examples of people and groups who’ve identified what matters most to them, and acted on it with boldness and clarity.
So I’m always amazed when I have the opportunity to work with people who are taking thoughtful action to advance the issues that matter most to them through philanthropy or politics, but who haven’t applied that same lens to their investing lives. They may have clarity on how they want to use their political or philanthropic giving in order to affect change in the world. They may volunteer on projects that are important to them. And they may even drive an extra 15 minutes to buy from a store that treats its employees well, rather than shop at one that doesn’t. But when it comes to their investing, they avert their gaze.
We are all susceptible to this. Investing can be technical and obscure. It’s difficult to know where and how you can exert influence; and when we try, we fear we may risk losing all our money! But in a world in which the profit motive drives outcomes, from carbon emissions to hiring policy, those of us who own businesses bear some responsibility for actions taken on our behalf.
How can we concern ourselves so greatly with each donation, and even stand in the supermarket aisle reading the fine print on food labels, while ignoring the pressures that our investment decisions are exerting on the world around us? For those of us lucky enough to have significant investments, the footprint left by our investing activity is far greater than that left by most of our other decisions.
Like a philanthropic advisor, I have the privilege of guiding clients to greater clarity on what matters most to them, but in my practice, I help them find ways to reflect and advance those ideas in their investing lives. I’m not a financial advisor—I don’t sell investment products or recommend specific strategies. Instead, I help people identify the issues and ideas that matter most to them and then use those issues as a framework to evaluate their current financial lives. Are you a feminist whose entire advisory team is male? Do you donate to environmental organizations while your investments include multinational corporations who lobby against climate change legislation? Are you wearing a Black Lives Matter shirt, while your portfolio includes for-profit prisons?
Not everyone feels ready to face the power they hold as investors, and to take responsibility for all that’s being done in their name. In many cases our choices are constrained by family members, trusts, and limited resources. When I work with a new client, in addition to asking about their learning and decision-making style, I also often ask about their appetite for disruption. For those who aren’t ready or able to completely upend their financial life, here are a few steps to consider taking as we begin to take greater responsibility over what we own:
Before your next meeting with your financial advisor, write down a few questions you’d like to get answered and send them to your advisor in advance. There are no stupid questions. Questions like “Do I own oil pipelines?” or “Do any of my fees go to pay for lobbyists?” can be an easy place to start. If you’re feeling very brave, you can ask more difficult questions like “What’s the gender composition of the boards of the private companies in which I hold investments?” Keep in mind that these may be new questions for your advisors as well, and they may not be able to answer right away.
If you’re looking for ways to engage your adult children in the topic of investing, ask them what kinds of business behavior they wish they could see in the world. Are they concerned about carbon emissions, forced arbitration for sexual harassment claims, or hiring practices? If so, working with your advisor to research these practices among the companies you’ve invested in may be illuminating.
If you have a donor advised fund (DAF), ask your representative how the assets in your DAF are invested. Most DAF platforms have “socially responsible” investment options that you may not know about—and that even your representative may not know about. Switching to a socially responsible investment option probably won’t make a big difference in the real world, but it may send a message to others that you are interested in this topic.
I’m not here to tell clients what to do or how to invest. I am here to ask gentle questions about what matters most, to dare people to be just a little more brave than they were yesterday, and to share a vision for the impact that thoughtful investors can have on their advisors, their communities, and the global financial system.
We are thrilled to have Nancy join the Phīla Giving team as a collaborator. She can be reached via email at “nancy (at) philagiving.com”. And here are a few resources that you might find useful.
What Nancy’s reading this month:
The World May Be Better Off Without ESG Investing: "Contrary to what many investors think, most ratings don't have anything to do with actual corporate responsibility as it relates to ESG factors. Instead, what they measure is the degree to which a company’s economic value is at risk due to ESG factors.”
A stock market test for stakeholder capitalism as public benefit corporations go public: "Early data suggests publicly traded public-benefit corps. trade at a premium to other companies in their peer group.”
Where you can find Nancy teaching later this month:
Activate Your Money: Impact Investing 201