In Election Season, Your Investments Are The Vote You Didn’t Know You Had
Here’s something you already know: Voting in political elections is important. It’s how you use your voice to help shape the government and its policies. Through voting, you can support candidates who represent your values. It’s your fundamental right, and by participating in elections you help influence a wide range of issues including human rights, environmental concerns, social justice, and international affairs. Not voting is giving up a chance to add your voice to those looking to change the world in ways that are meaningful to you.
Here’s something you might not know: Your investments can speak to the world just like your vote. Investing in companies that share your values can be just as important as voting in an election. It’s how you use your money to shape businesses and the way they affect the world around us. Through your investments, including your retirement savings and mutual funds, you can support businesses that reflect your values. It’s your fundamental right as an investor, and by investing with your values in mind, you can influence a wide range of issues including human rights, environmental concerns, social justice, and international affairs. Not investing responsibly is giving up a chance to add your voice to those looking to help change the world in ways that are meaningful to you.
How can you reflect your political opinions through your retirement portfolio? Let’s look at impact investing with a focus on a couple of key issues:
Climate Change
With rising temperatures, increased occurrences of extreme weather, and disappearing winters, climate change is at the front of many people’s minds. However, without investing sustainably, odds are those same people are invested in the very companies that are contributing to the problem through the extraction and use of fossil fuels. Over 5% of the S&P 500 is made up of fossil fuel producers, with Exxon Mobil and Chevron being the largest ones on the list. But you don’t need to be one of the many banking your retirement savings on the financial gains of major polluters. 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. By investing in fossil fuel-free mutual funds, you’re aligning yourself with investment managers and businesses that are looking for solutions to our climate crisis.
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 still important and impactful, is how the largest corporations in the country address these issues—or don’t. How corporations address social justice can be seen in many ways, from representation of women and minorities in the C Suite or on the Board of Directors, to how they pay their employees, to the benefits they offer partners of LGBTQ workers. Many mutual funds with a sustainable focus will also incorporate social values into their analysis of companies, believing that those companies that are inclusive are better suited for long-term success. The same funds will have managers that vote for more diversity and inclusiveness on Boards of Directors. By doing some ethical investing with these issues in mind, you’re helping to advance social justice issues in the boardroom, just as your vote advances these issues in the statehouse.
Human Rights and International Affairs
A key topic in any national election is how the United States advances its priorities in the international community. Political parties have vastly different opinions on how to use diplomacy, funding, and advocacy efforts to address key issues like human rights, poverty, and religious freedom. Companies acting in the international community face the same challenges, albeit less in the spotlight. Managing international supply chains that weave through poverty-stricken countries with lax labor standards, handling rules and regulations from corrupt regimes, and navigating countries at war are just some of the issues dealt with by these large corporations—and how executives decide to handle them is largely driven by a sense of ethics and responsibility. Values-based investment managers are watching and working with the international community and NGOs to better understand the impact these companies are having on the communities in which they operate. Working under the logic that companies who can be profitable without causing harm to troubled international populations are set up better for long-term success, socially responsible investing is a great option for those who care deeply about these global issues.
Investing responsibly has become more accessible in recent years, and most major mutual fund providers today offer a values-based option. These funds are often labeled with Sustainable investing or ESG investing—meaning funds with an Environmental, Social, and Governance focus. Looking for a place to start? Our ESG Fund Manager Profiles highlights some of the most popular funds from both mainstream and specialty providers for those looking for good ESG investing opportunities. Having your say in the voting booth is vital. Having that same say with your investments is another step in that direction.
