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Combining Racial Justice and Investments

Combining Racial Justice and Investments

June 22, 2020

Black Lives Matter.

Before I begin, let me be clear- I AM NOT taking a political stance nor am I addressing the police force in any way. This is simply recognizing that there are systemic issues that are baked into our world, of which we all deal with and have picked up during our lifetimes (regardless of the color of our skin) and a message showing there is a way to align your investments with a focus on equity and diversity.

It is hard to know where to start when addressing the topic of racism. It’s a heavy topic that sparks big emotions, and rightfully so. Many of us are looking introspectively to uncover ways we can make the world better for our black and brown brethren.

In an attempt to “be the change [I] wish to see in the world” (one of my most favorite quotes by Ghandi), I have been researching ways that I can promote diversity, equity, and antiracism. In my personal life I started reading a fascinating book by Ibram X. Kendi called “How To Be an Antiracist” (which I HIGHLY recommend). This is a way for me to better acknowledge systemic racism and learn to see the myriad of ways discrimination appears both subtly and unconsciously. Once I have that knowledge I can put it into practice and appropriately address it. In my professional world, I knew right away how I could help. It’s widely known that for the last 16 years I have been focusing on investing with a moral compass. These investments are often referred to as Environmental, Social, Governance (ESG) screened investments.  Many times these screens are investing in environmentally conscious companies, or those that promote healthy and safe products for consumers. But there are more ways to invest with your conscience, including investing in companies that are focused on racial equity and diversity.  

You might be thinking, “how does owning stock in a company that promotes equity and diversity actually help?” I know it might seem inconsequential at first glance, but the impact is real. First, together with other investor’s voices you can speak through a proxy vote. A proxy vote is basically an investor’s way to cast an absentee vote for issues being voted on at a company’s shareholder meeting. Jackie Cook of Morningstar reported that just this year so far issues regarding employee welfare and political influence have been voted on at company annual general meetings.1

Another way shareholders can influence corporate decision-making is through direct engagement. For example, Calvert Research and Management, a well-known ESG money manager, is committed to the cause by asking companies they have ownership in to provide details on their racial diversity. They are also verifying the companies’ pay equity across race and gender as well as ask companies to publicly state what they are doing to combat racism. They even go as far as reviewing action taken to address failures in our education system.1 Another well-known ESG money manager focused on racial justice is Impax and Pax World Funds. Together they believe it is important to engage with companies to address inequality through pay equity and environmental justice but also by eliminating enablers of unconscious bias.4

Calvert and Pax World are not the only money managers focused on racial equity and diversity, several other ESG screened mutual funds have been committed to racial justice for decades now.  An example is Domini, who has built their commitment into their stock selection process. Domini’s investment policy contains several layers of screens that are applied to each company based on racial, ethnic and gender diversity. In terms of racial and ethnic diversity specifically, they have found only a handful of countries report good data (specifically, the United States, Australia, the United Kingdom, and Canada) so within these countries they are looking for at least 40% or three (whichever is greater) non-Caucasians as company board nominees”.2 They also believe that, among other things, diverse leadership helps deter discriminatory practices and fosters a culture of tolerance and inclusiveness throughout the organization. They have found these organizations are better positioned to recruit and retain talent because of their diverse culture.2 Another example is how Impax and Pax World Funds walk the walk, so to speak, as they have been including diversity and inclusion factors in their screens for years. Not only have they proudly voted against boards that did not include racial diversity but they consciously hire and recruit diverse candidates for every open position they have within their company.4 Similarly, another ESG money manager, Ariel, walks the walk with both their co-CEOs and many members of their Board of Directors being people of color.3

If you are looking for ways to promote racial equity and antiracism in your workplace/business, here are some first-steps for examining where there are deficiencies:

  • Review the general demographics of your workforce.
  • Audit the diversity of your company’s Board of Directors.
  • Review your company’s general labor relations and where the corporate lobbying and political expenditures are going.1
  • Review your company’s volunteerism, presence within the community, and charitable donations.
  • Conduct a pay and benefits audit amongst the entire workforce. Analyze it by demographic and job level focusing on gender, race and ethnicity.
  • Review the diversity of your company’s professional service providers (law firms, accounting firms, etc.).
  • If pay gaps are identified, make sure to set goals for eliminating them, and then establish the programs needed to close those gaps. Real progress must be measurable.
  • Establish targets in recruitment, retention, career development, pay equity and employee satisfaction.
  • Once targets are set hold people accountable for meeting them. Design incentives for meeting (or exceeding) the targets as well as consequences if not met.
  • Step up your company’s protocol for addressing discrimination for both commonly addressed issues (like harassment, communication and language) as well as higher level biases like algorithms used for hiring that may be dependent on credit ratings and facial recognition.

So now is my time to ask you- How many of your investments are promoting racial equity? Can you say whether or not you’re invested in companies that are aligned with your racial justice initiatives?


1 Hale, Jon. Investing Has a Role to Play in Ending Systemic Racism. 8 June 2020.

2 Investing in Diversity. Domini. 17 June 2020.

3 Ariel Investments. 18 June 2020.

4 Keefe, Joseph. A Call to Action for the Investment Community. 18 June 2020.


Carrie Waters Schmidt is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Equanimity Wealth Planning and Investing is not an affiliate of Lincoln Financial Advisors.  CRN-3133290-061920