Before my aunt died of cancer last fall she became fanatically philanthropic. She asked for donations to NARAL instead of flowers at her memorial, and spent her last few weeks—when she was still strong enough to force my mom to put her on FaceTime with everyone she knew—giving away money to people who had touched her: the neighbor who always brought in the trash cans, the guy at the local deli who had catered her birthday once.
So when the bulk of her remaining inheritance went to my brother, my cousin, and me—all of us members of the generation that’s slowly accruing wealth from boomers—I felt a combination of luck, pressure, and guilt from a windfall I wasn’t expecting and hadn’t earned.
But I was nervous about what to do with that windfall. I had a vague socially-enforced idea that growing up and being financially responsible meant using your money to make more money. That investing was the good and smart thing to do. And that if kids were making money off of GameStop, I could probably figure out how to do it, too. But just throwing dollars at whatever was most profitable didn’t feel quite right. Given the immense privilege of generational wealth, I wondered, could I invest it for good? For me, and for my aunt’s memory.
As I started to try to figure that out, two things felt daunting. First, the confusion and fear of losing money or getting screwed that feels baked into the veiled, jargony world of investing. “It can be hard to have context on what’s happening out of your control, which can come with a lot of self judgement and shame,” wealth coach Leah Davis told me. Second, I was nervous about the questionable ethics of the financial industry as a whole, and the stock market in particular, which makes money without any sense of morality or value system beyond getting richer. I don’t want to miss a chance to build wealth for my future, but I also don’t want to be complicit in a system that seems to be shoveling the bulk of its power to rich white dudes on Wall Street and their bros in the fossil fuel industry or at big tech companies.
It turns out I’m not the only one thinking about this. Investing in line with your values—which you might see called impact, sustainable, ethical, socially-responsible, or ESG (environmental, social governance) investing—is one of the fastest growing segments of the market. It means that investors invest in places like Fidelity Women’s Leadership Fund, a mutual fund made up on women-led businesses, and avoid ones like weapons manufacturer Smith and Wesson. In 2020, socially responsible investing accounted for about one-third of U.S. asset management, and it’s particularly popular among younger investors and women. “Our generation is saying, ‘We want our dollars to create the future we want to live in,’” says Catherine Berman, the CEO of CNote, a women-led impact investment platform.
That sounds great in theory, but in practice it’s blurred by jargon and fuzzy targets. There’s no industry standard for what counts as ethical or responsible, so the onus is on the investor to make sure they’re not funding organizations that don’t align with their goals. And like Davis says, that feels scary when you’re on the outside and don’t speak the language.
I wanted to know how I could legitimately filter for my lofty goal of getting rich, while saving the planet. The obvious first stop in figuring that out was Steve, my aunt’s financial advisor, a nice, old-school manager, with an unfortunate Eric Trump countenance.
Over Zoom, I tried to express how I wanted to invest. For me, curbing carbon feels crucial to maintaining civilization, so I told him that I only wanted to fund companies that were doing good, environmentally. He was dismissive in the face of my desires, “When you get down to it, no company is totally green,” he told me. “Some of them are doing well, but they’re not really making money as a whole.” He told me my best bet for investing was to follow index funds—a group of stocks built to track a financial market index, like the S&P 500, because they tended to safely appreciate over time.
I left the Zoom drained. Was he right to be that skeptical? Was I being an idealistic baby to think that my little pot of money could be a lever in a broken system?
Turns out, Steve’s a cynic, and a reductive one at that. Yes, there is abundant greenwashing in the financial sector and when I started to search green funds and green investing, drilling into funds into that claimed to be ESG focused, like the 1919 socially responsive balanced fund (the top of the list when I Googled), many of them were made up of stocks like Amazon and Microsoft—whose business practices are not exactly sustainable—and I had to dig into the reports of their holdings to find what the funds were comprised of.
But plenty of companies, from home good manufacturers to utilities that aren’t alleging false principles are doing well, and that cadre is growing. According to an April report from the International Energy Agency and Imperial College London, investments in renewable energy have seen a 367% greater return than fossil fuels since 2010. And according to Morningstar, so-called sustainable funds are outperforming comparable traditional funds. But it felt hard to fight through the opacity of which companies actually provided social or environmental good. So to try to narrow down to truly environmentally sustainable stocks, I called Annie Seelaus, the CEO of mission-driven asset management firm R. Seelaus and Co. to see if she could help me decide where to put my money.
Seelaus says that the world of impact investing is rapidly becoming more transparent because companies are being clearer about their values, thanks to pressure from consumers and stockholders, and the industry is realizing that a growing number of investors won’t put money into companies and organizations they don’t believe in morally. She advised me to look at traditional investing with an impact lens and set parameters. For instance, one of her goals is to invest in companies that prioritize gender diversity, so when she looks at potential businesses to buy stock in, she looks at their board and leadership to make sure they have women at the top. “That’s just one metric of gender diversity, but it’s a place to start,” Seelaus explains. She also says there are some investing platforms, like Betterment, that will let you sort for sustainable, or ethically managed stocks. I started by digging into renewable energy, which is currently the fastest growing sector of the energy economy, and is primed for an upswing thanks to the president’s infrastructure plan.
If picking individual stocks feels too risky or time consuming, Seelaus says that mutual funds can be easier for investors, because those funds aggregate and monitor stocks for you, but you do have to do initial research about how they pick investments and define their values. She told me that there are two ways that funds tend to structure their ESG investments. Exclusionary investing, where they don’t spend money on things like guns, or tobacco, and eliminate any of those from your fund. And inclusionary or impact investing, where they only bring in positive things, like renewable energy or funds related to water, for instance. She told me to use that ideas as a guideline for looking at funds, because it immediately helps narrow down your options. I decided I only wanted to consider funds that were inclusionary, just excluding, say, gas companies, didn’t feel like a strong enough stance.
Davis says you don’t have to have all the answers, especially if you’re newly diving in. “If that feels like a lot, remember that you don’t have to do it on your own,” she says. “Take it seriously, meet with a professional and don’t be embarrassed.”
But even when I talked to professionals like her, I still felt intimidated by and uncomfortable with large publicly traded companies, so I wanted to see if there were other avenues. I soon learned the stock market isn’t the only place to put your money. There is a growing number of direct-lending organizations that will help you find places where you can give loans to small businesses, and then receive returns through investment. That’s a big part of what CNote’s Berman does. Her organization finds small businesses and organizations that need funding, and essentially crowdfunds their loans. The idea was to be the bridge between potential investors and companies or groups that have traditionally struggled to get funding form big banks. She says the space is growing fast, especially because online platforms make it easy, and other organizations like Kiva or Lending Club are doing similar work. “You can take a small amount of money, invest in, say, black women entrepreneurs or housing unit for families in a low income community in a way that is low-risk and proven, and makes money back with interests,” Berman says.
That sounded pretty appealing to me, and once I started to understand where I could put my money, I began to think about how to make sure it continued to be impactful. Seelaus says that when you do invest, you shouldn’t be scared to directly contact the company directly. That’s part of the contract of investing: when you buy in, you have a voice, and the company is beholden to hear your concerns. “Through the lifecycle of the investment you want to know: what’s the measurement of accountability and how do you have a baseline?” she says. “There’s not just one answer, but if you are an investor it’s important to ask: ‘What are their reporting requirements and how do I get the data?’ And you should feel empowered to ask those questions. The investors themselves hold the companies accountable.”
In the end, I found some companies that I feel good about supporting, putting my money into renewable energy, recycling (trash is profitable right now, who knew?!), and organic foods. I also decided to listen to Steve a little, and invested in a few environmentally conscious index funds, to take some of the daily pressure off my shoulders. I also invested some of my money into CNotes’ fund that supports small women-owned businesses, which I think my aunt would have appreciated. The return may be small, but I like the thought behind it. I did the research, I diversified and now the goal is to pay attention—to use my wallet and my voice to point toward a future that looks good to me. It still feels a little scary, but I know I can keep tweaking, if those avenues don’t feel good after a while. After all, as Berman says, “Your savings account is a vehicle for change.” And that change doesn’t happen if we don’t make it happen, and keep making it happen, one dollar at a time.
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