Now, more than ever, it is time for each of us to make sure that our assets are working for us. Strategically invested, each dollar can help us achieve all of our goals: financial, as well as social and environmental. Some of us are going to make these shifts because we are learning that every dollar counts and that every investment has impact. Things we care about (such as issues of climate change, or social justice, the Dakota Access Pipeline, our local community, for example) are all influenced, affected by, or funded in some way by our investment assets and by the banks we choose to patronize.
This year I have already written about taking steps to be bold individuals, as well as coming trends in impact investing. I would be remiss in beginning the new year If I were not also to put a specific plug and a call for aligning our assets with our core values. 2017 is the year when we all need to engage with our finances and become conscious impact investors; leveraging our investment assets to help build the world we want to see and be a part of. Last January, as a way to kick off the year, I wrote about the importance of financial fitness and banking with values. This year I add to that call with a few more tips and words of encouragement on how and where to move our money.
Many of us who voted in November want to keep voting for the world we want to see. Knowing we are choosing to invest in companies with diversity in leadership is part of our strategy to ensure an inclusive economy. Others of us are going to consciously move our money to new institutions and new investments because we see this shift simply as smart investing. We have seen the research stacking up about women-led companies outperforming their male counterparts. We have been paying attention to the studies that show diverse teams are more innovative than non-diverse groups, so while we might like the idea of supporting inclusion, we also know it is good for the bottom line. We have followed the attention that renewable energy is receiving from consumers, climate activists, leading governments around the globe, and from leading investors. As investors, we want part of the action and the upside that companies working to transition us to a clean energy economy can offer.
Some investors moving their money follow the Next Economy thinking by those of us at Nia Global Solutions, and at Green Alpha Advisors, embracing the investment philosophy that we want to invest exclusively in those companies working on the solutions needed for people and planet; those companies that will be needed for the next, fair, just, sustainable economy. Some of us get that Modern Portfolio Theory is considerably outdated and that instead of infinite growth, we are actually living on a planet with finite resources, and that those companies that are addressing and solving for our key risks are those that will be rewarded by the market.
Others of us are joining the growing divest-invest movement. Originally started on college campuses, this organization is building momentum, encouraging individuals and institutions alike to both divest their assets from fossil fuel related companies and then to re-invest those funds in companies working on the solutions needed for people and planet. These investors recognize that, aside from ethical reasons, there are significant financial reasons to divest from fossil fuels and they want the upside that some of the Next Economy companies can offer.
Still others are excited to invest in our local economies, and because of recent crowdsourcing laws, and great platforms like Investibule, we are now able to source individual investments offered by entrepreneurs in our communities, at minimums as low as $100. Never before have we had the opportunity to sort investment criteria by location and, or “women,” “people of color founders,” “health and wellness,” “education,” etc. Investibule is doing wonders to provide access to exciting investments and to democratize the investing with values movement.
Some of us who already consider ourselves impact investors think we’ve got this. Though (and I am going to call some of us out here) in recent data collected by TONIIC, a majority of self-defined impact investors have yet to deploy their cash in meaningful ways. Please, don’t anyone be fooled that your cash does not make a difference. It does! If you saw the film The Big Short, you saw how many of the big banks used our deposits to cause the recent mortgage crisis. If you are not yet convinced that aligning your cash with your values is important, you might want to look at the work that Rainforest Action Network (RAN) has published on our big banks in relationship to funding coal extraction. They have compiled a comprehensive list of coal mining companies as well as a scorecard of banks that finance coal mining, and mountaintop removal. In a similar vein of activism, Yes Magazine recently published a fantastic list of all of the banks that are funding the Dakota Access Pipeline, as well as information on how to contact the leadership at each bank. And on the flip side, banks like Beneficial State Bank, New Resource, and organizations like RSF Social Financeare providing loans to reduce homelessness, to fund female entrepreneurs, and local green businesses. If you have not yet moved your money to your community bank, now is a great time to do that.
The Bank Local website has some great resources, including a helpful list of things to do to move your account. My bank, Beneficial State, also offers a toolkit on how to move your checking account and your credit card. May 2017 be the year that our banking relationships become a priority!
Despite the valid reasons to do so, some of us are going to find the concept of moving our money into alignment with our values daunting, and are going to need to know where to start. Here are a few simple tips to get you moving: One way to start is by figuring out what you own. We all know where we bank, so that is an easy one. If you are already banking at your local community bank or credit union you are in good shape. If you are still at a big bank, you are right to be concerned that your deposits are being used to fund destructive projects. Check this list by Yes magazine to see those banks currently funding DAPL. For those wanting more advice on basic personal finance, Carrie Schwab is hosting a financial cleanse beginning this month.
For investors who would like help figuring out how their current investments stack up, Paul Herman and his team at HIP Investor have developed rating systems for many companies and investment funds. They are ready to help you get started in understanding how your current investments stand up to your criteria.
Then, as far as retirement accounts or other mutual fund investments, our Oakland neighbors at As You Sow recently released a “Fossil Free Funds” tool to help you determine whether your mutual funds have fossil fuel companies. They conveniently also published a list of fossil-free mutual funds which is a good place to get started. Ideally, your investment advisor knows of these tools and more, and yet part of our job as investors in these times is also to educate our financial advisors on the issues we care about and those that will be relevant to our portfolios for the long term.
We as investors (and yes, if you have a bank account or retirement account you are an investor!) have significant power to promote the status quo, or, with each dollar we move, we can refuse “business as usual” and promote something better; voting with our dollars for a world we want to see. In doing so, we are gradually and collectively transforming our economy to one that will work for more people. With the multitude of reasons and attractions to this movement, 2017 is the year we will get up off our assets and become conscious, impact investors. My hope is that each one of you will find something you are excited about doing. Do let me know what moves you decide to make. I’d love to hear from you!