Vol. 19 - Socially Responsible Investing
If you’ve ever felt like you don’t have the power to change the world, I’m here to tell you, YOU DO! Changes can be made by growing your wealth and investing in the people and causes you believe in. You also affect change by not investing or pulling investments out of companies that aren’t serving or are doing harm to our communities. We discuss.
What socially responsible investing is
How to get started now
Why this is so important
Narrowing the wealth gap
Liesa's Podcast episode with Michael Kramer
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TRANSCRIPT:
Naseema McElroy (00:01): All right, nurses on fire. I have the honor of having Lisa back. Lisa is back. Thank you so much, Lisa, for being here. Okay.
Leisa Peterson (00:10): Thank you for having me.
Naseema McElroy (00:12): All right. So we are going to talk about an issue that's really important to me because as of recently, I've really been looking for ways to, that we can personally affect change in our community and how we spend our money. And the way that I personally feel like we can affect change is two ways. Like either we can build up our own pockets by building our wealth and or divesting in those companies that has have systemically hurt us are held us back financially. And so the last couple of podcasts, we have talked about socially responsible investing. And so this episode is going to be dedicated to speaking about that. And thank you, Lisa, for even bringing this to my attention. Not that I didn't know about it, but I wasn't thinking about it in this context of what we can do to affect change. And I think that it's super important that collectively our money goes somewhere that is not harming society, harming them barment but as we, as it is aiding us in building our wealth, it's also investing in companies that have historically been underserved or investing in environmental issues to help us have a better planet for our kids.
Naseema McElroy (01:36): And so I love that these investments exist and I don't think enough people know about it. So let's talk about it.
Leisa Peterson (01:45): I think that we can be thinking about investing a little differently than maybe the traditional way we think, Oh, I'm just going to put my money in a fund, or I'm going to put my money in an index. In this case, we are deciding to who consciously vote with our money, with our savings of how we want the world to look and we're going to make different choices. The funny thing is, is we do this already with our spending, right? And in reality, our spending is an investment. We are investing in a company when we buy products and services from them. And how many people have made choices recently, especially to say that company isn't really the company I want to be supporting. And so I'm going to pull my money from them because we're investing when we spend, but we're also investing when we spend money on ourselves.
Leisa Peterson (02:33): So like buying a book, that's going to get us stronger, better understanding of investing is it's also an investment. So choosing the books that we buy, choosing the things that we invest in choosing the companies that we do business with, but also we can broaden that to these sustainable companies, you know, that are focused on maybe making better choices, you know, how they hire, what kind of damage or lack thereof they do to the environment. What are their policies about equal pay for equal? You know, no matter who you are, if it's for the work that you do, you're getting paid for that work. There isn't a gap in there. Companies are refusing to allow gaps to be existing for, you know, whether you're the sex or your racial identity or your gender identity. I mean, like all of these things have been kind of systemically worked into the system.
Leisa Peterson (03:32): And what I think we're all trying to do is say, Hey, I want to work or invest in companies who are consciously aware of how they are hiring. Are they paying attention? Does the company reflect the true reality of the society that we live in? Or does it look very skewed? And this is coming out all over the place. So environmental choices about human rights and justice choices about consciously deciding, like we were just looking at a fund here in Boston. And this is a great example because I think people can really resonate. So this fund called the Iijima fund was originally launched in bottles Austin in 2017, as an outgrowth years of organizing for racial and economic justice. And so this fund was created to, uh, comprised of more than 250 working class people of color living in Boston. The membership originally was, was created from that in each person had a vote of how the money was going to be invested.
Leisa Peterson (04:42): So they're pulling 250 people in this case, we're pulling their money together to decide who do we want to invest in and how can we make sure that it is going to go into causes or into companies that we want to support. And we want to see grow, right? I don't know if people always realize that when you invest in a company you're buying shares in a company, and then the idea is, is those shares your, you own a part of that company, meaning you have a voting share of that company and you, you know, essentially the ideas, it doesn't really feel this way, but that vote means something. So if the policies in that company, they aren't what you want them to be. One vote is probably not going to change the schematic. But if you have a fund coming in and they're donating millions of dollars into one company, all of a sudden they can say, Hey, we don't want you to engage in that practice.
Leisa Peterson (05:37): So we want you to change your hiring policies, or we want you to no longer cause this pollution for our local environment, or we don't want you to be investing in prisons, or we want you to divest and no longer the, you know, there's a lot of money that can be made by products that are sold to families inside of the prison system. It's a horribly disgusting system. And it's just so corrupt is horrible to even believe what gets done, but like that company could say, Hey, we don't want you doing business with those companies that do engage in the prison system. For example, like it's a trickle down where it can actually start to make huge impacts all because of one you're investing in company who are making these choices, or you're pulling your money together, investing with a group of people that are making different choices about what they want the world to look like in the future.
Leisa Peterson (06:32): And so I kind of went deep, but I'm guessing that you were just giving an example now in the past investing in these sorts of things, hasn't been always available to people, right? So that's a challenge. We don't even find out about these choices being available. However, you know, at the simplest level, there are mutual fund companies and there are electronically funded a trade account. So they do have these that anyone can buy for a very small amount of money. And it's a great way to start by looking at these, these mutual funds or these other electronically traded funds. But eventually you could be opening the door to like making even, you know, more yeah. Conscious choices where you're getting way more involved in the process, which is, I think a lot of us, we want that we want to be more involved in the process. Ultimately,
Naseema McElroy (07:28): It might be hard for us to wrap our heads around. Why should I be worried about this? Like, but people are always asking about ways, like even without a lot of money, how you can affect change. And these are ways that you can affect changes in your community. It's the way that the business, for example, most, uh, lower cost communities have the highest incidences of asthma. And that's because, you know, it's investments in companies in that area that pollute. And there is nobody saying that, Hey, you know, the pollution levels here are a little bit too high. So I'm, we're going to pull our funding out until you fix that. No, because those people don't live in that neighborhood. So they don't have an interest in it. And so this is the way that you can start really affecting change. That's going to help you and your community.
Naseema McElroy (08:25): And also like, I like what you said, like when you're investing in these businesses, you're not just investing and like a home Depot where it's going to go into this big conglomerate you're investing in families, you're investing in generations of people being able to have more opportunities. And that's just with your money, like your little bit of money that you think is doing nothing. Okay. But collectively, collectively, if we have collective voice, we can affect so much. And that's why I love that these investments exist. I also love that you get the same returns as every other company, because historically I have been told that, Oh, is great. Like you're kind of doing like investing in socially responsible causes are so socially responsible funds. It's kind of like charity, like you're not getting the, you're not going to get the same market returns as you would.
Naseema McElroy (09:26): It's just, you just invested in an index fund, which, you know, people say historically, you know, you get returns of about 7% over the course of your, you know, investment on average. Right. So, you know, I had been brainwashed honestly, to think that, you know, first of all, it doesn't really matter. It's not really gonna affect me. These causes, you know, are going to save, you know, whales, something like that. Something that doesn't have any direct impact on me until I really started looking into it. Like I said, it affects the pollution. It affects the prison pipeline. It affects funding, you know, guns for military. And you know what I'm saying? Like all these things that have systemically been used to hold us down and hold us back and make us sick and are things that, you know, causes us to have a higher morbidity or mortality, just for the simple fact of our skin tone and where we're concentrated, you know, just location wise.
Naseema McElroy (10:30): So I'm really passionate about moving in the direction of making sure all my money is invested in socially responsible funds and social responsible causes. And I like the information that you share with me about this is the company that you're working with because they're actually going in and making sure that the boards are doing the right thing, that, like you said, that there's equal work for equal pay. They're bridging that, that wage gap. Even in that, I want people to understand the power that this has over a community, because even in, when you talked about the Iijima fund, they were saying that the median net worth for white households in Boston is $247,000. While the median net worth of black households is $8, $8. You guys. So these funds can really, really impact changes in the way that we function in society. I mean like $8 versus 200 and something thousand dollars, that is a huge wage gap, you know?
Naseema McElroy (11:43): So when people say, and you know, Lisa, I'm not talking about you, that's okay. I can take it. But honestly, like when people say that you guys are blaming me for slavery, that doesn't have anything to do with me. I can't, I'm not benefiting from slavery. Nobody in my family has ever benefited from slavery. These gaps go back 400 years. They go back there. And the only way that we can affect change, the only way that we can, I don't even, it's hard to narrow a 400 year gap, but the way that we can try, I don't know if we can totally bridge it, but we can definitely narrow it a lot is by making sure that we are investing and investing in companies that have our best interests at heart.
Leisa Peterson (12:39): Definitely, definitely. I think that one of the things we'll see more and more of, and I think it's helpful to just let everybody know that new products and new solutions are being created all the time. And I would expect to see some really exciting opportunities come in the coming year because there's intention and people wanting to invest differently as a result of what's been going on, which is awesome. But one of the cool things I have participated in, in the past, which really suits this is these kind of investment clubs, or kind of like crowdfunding, where you still have your account. It's your ma honey, but you're pulling resources. It says to be able to make bigger changes in the world and you know, you and I can create something like that. Like he, the possibilities are endless of how we can work together to bring more money, to be directed into powerful places that help who's being that we're investing in and also help ourselves by getting a great return on investment.
Leisa Peterson (13:40): And some of these investments have less volatility than the stock market because they don't, they're not playing the stock market. They're playing like what it is you're investing in. Maybe you're investing in black businesses, right. That wouldn't be able to get funding any other way. And these folks are not just being given money. You know, like everybody gets money. They're going through a rigorous process too, show that you invest in their business. It's a good investment, right? It's it's like, you're still got those assurances, but they're just being more focused on these populations that just haven't been able to get the financing in the past. So there's so many possibilities of when someone opens their eyes and says, this is important to me. It is just a matter of time before your life starts to change. And those opportunities start coming to you. And I think this is, you just said it right. A week ago, or two weeks ago, we talked about some of this. And all of a sudden, all these things started coming into your awareness that you were like, Oh my gosh, there's opportunities here.
Naseema McElroy (14:42): Yeah. And there's so much, like you said, Lisa, there is going to be even more opportunity. I think companies are really starting to take this seriously because they, to now, I mean, there's people having to step down in major leadership positions because they have ignored these things for way too long. And so I love that this is happening, but this is our opportunity. Don't sleep on this. You guys, this is our opportunity to really pull up, pull up our community, to pull up ourselves, to invest back. And this is how we grow. And this is how we can really become a force to be reckoned with. And so I really think that, you know, this is the new way. These are the things that we should, should be exploring. And most people are like, Oh, you know, I'm new to investment. I'm just trying to learn how to invest.
Naseema McElroy (15:38): This is just as simple as, you know, you making sure are you talking to your HR person or whoever handles your investment at work and asking, you know, do you have these kinds of funds available so I can invest in them? And it doesn't take a lot. You can buy these through Vanguard or through other companies, like you said earlier, like if you just want to get started with, you know, like without having to go through a big investment firm, which might have, you know, minimums. So start where you are. You guys start where you are. Don't think you have to wait. Don't think you have to get to a certain amount of net worth a certain amount of money in the bank. Most of us are investors. If you have a 401k at work, if you have an IRA, if you have any money set to the side, you are in control of how those things are invested. And I really want you to use that to your advantage and to think about how is helping or hurting your community because of what your money is invested in. So this is just some food for thought, Lisa, if I owe it to you, because you brought this up, you really brought this to my awareness. I wasn't even thinking on this level, but it's really, it's about damn time. We have these conversations. Like I am here for it. I'm here for it. Okay. What else? Lisa?
Leisa Peterson (17:04): We gave him a live one, thought that if you're interested, I had Michael who runs this one from this investing firm. I had him on my podcast a while back and I thought we could give them a link to that conversation because you will go into more detail of like how it's constructed, how they think about the strategies. And we want people to start thinking about it. He's got a great book called the resilient investor, but, but let's just open our eyes and our ears to the possibilities of learning more about this. And it's a journey. It's not a sprint, you know, it's okay if it takes time, but let's go ahead and take some action.
Naseema McElroy (17:40): Yes. I love it. So the link to that will be in the show notes. Yes. And we will have more conversations about this to come. Hopefully we can get, um, somebody from that organization had come on the podcast and talk about socially responsible investing as well. So, all right, you guys that's it for this episode. Let me know if there's some other things that you want to learn about investing things that you don't know, um, because this is super important. This is how we build wealth. You guys, we have to invest, but our investments need to go to things that are building up our communities and not hurting us. So. All right. Thanks, Lisa.
Hey there I’m Naseema
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