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The Aha Moment: Your investments are the vote you didn’t know you had

The Aha Moment: Your investments are the vote you didn't know you had

When it comes to advocating for your values, political elections get all the attention. Ads are everywhere. Text messages pop up on your phone. People vote for their candidates and maybe even donate or volunteer. It’s a fine civic experience. But there’s a downside – sometimes your candidate loses.

If you’re feeling like your values aren’t being represented in politics, here’s an Aha Moment for you: your investments can represent your interests, just like your vote. 

Investors have influence

As Ben Vivari, my partner at Till Investors and an advocate for sustainable investing, recently posted: “Investing in companies that share your values can be just as impactful as voting in an election.” Your investments fund the growth potential of the firms you think do things the right way. And as a shareholder, you have the legal right to vote by proxy on a company’s board of directors and key business policies.

Think of it this way: Big Business is cutthroat, and there is always ample pressure to cut corners or juice short-term results in ways that aren’t healthy. Large companies benefit when investors demand, and vote for, more sustainable practices that can fuel growth in the long-term. For most large companies, being sustainability-minded means considering issues like labor rights, environmental concerns and social justice.

You don’t have to be a big money investor to have that influence – if you have an IRA, for example, you can choose mutual funds or ETFs that reflect your personal values. Here are a few ways that can work.

Climate change: With rising temperatures, increased occurrences of extreme weather and disappearing winters, climate change is at the front of many people’s minds. But if you’re not investing sustainably, odds are very good that you’re putting your money behind the fossil-fuel companies that are contributing to the problem. 

Over 5% of the S&P 500 is made up of fossil-fuel producers, with Exxon Mobil XOM and Chevron CVX being the largest ones on the list. Any broad index fund, and the majority of actively managed funds, include large fossil-fuel investments. But there are many funds that specifically exclude fossil-fuel companies or that actively seek to invest in the alternative energy producers of the future. 

A good tool to start with is fossilfreefunds.org, which will show you just what’s in your retirement portfolio—and give you some suggestions for places you can move your funds that are more environmentally friendly. 

Social justice: Systemic social justice issues like racism, gender inequality and economic disparity are on full display in political elections, as candidates draw clear lines between themselves and their opponents on these key topics. Less obvious, but just as impactful, is how large corporations address these issues — or don’t. 

There’s a simple way to tell how much a company values social justice – you can look at their DEI record. In the business space, diversity, equity and inclusion is a straightforward set of practices designed to improve access and success for women and minorities, and an easy program to measure.

DEI measures can show you, for example, whether there are women and minorities in the C Suite or on the board of directors, or whether there are pay disparities among employees, 

There are mutual fund and ETF investments that prioritize this kind of data in their investment decisions on the belief that diverse companies are more resilient and do a better job of balancing the concerns of their many stakeholders. The Adasina Social Justice All Cap Global ETF comes to mind.  

But many other mutual funds and ETFs, especially ESG funds, review DEI data as part of a wider commitment to going beyond financial bottom lines in their investment process. They may also actively vote proxies on behalf of their shareholders to encourage more diversity on boards of directors. 

Get out the vote!

These are just a couple examples – there are many funds and ETFs that have sustainable investing or ESG labels (ESG meaning funds that evaluate environmental, social and governance related data). You can find more information about funds like these with Equities.com’s Fund Finder.

Having your say in the voting booth is a fundamental right. Having that same say with your investments is a right that investors are often surprised to learn that they have. By looking at funds and ETFs that prioritize sustainable investing, you can advance the values you care about in the boardroom just as your vote advances these issues in the statehouse.

More of The Aha Moment: How investors can support veterans

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