Make a Positive Impact Through Anti-Racist Investing and Banking Practices

August 25, 2020

How to ‘Move Your Money Toward Justice’ and Create a More Inclusive Economy

As the rising racial justice movement and societal divides revealed by the COVID-19 pandemic have made clear, the current system isn’t working for everyone. Investors at all levels — from heavily funded VC firms to individuals with a bank account — can make a positive impact by shifting the flow of capital to companies with leaders and workers who are Black, Indigenous, or People of Color and aligning their money with companies that incorporate diversity goals and anti-racism measures in their policies and practices.

Investing for social justice and environmental sustainability is one main reason Kristin Hull founded Nia Impact Capital, a Certified B Corporation in Oakland, California. Hull says she has long seen the value of business for good and profiting from purpose — finding effective business solutions for the environment as well as people — and first saw these benefits while growing up in a family business with worker-friendly practices.

“People who feel they are working with purpose are more productive,” she says. “They’re more aligned with the goals of the company and more likely to be loyal.”

The same is increasingly true for investors, who are looking to align their money with companies and funds that reflect their values. As calls for racial justice rose across the United States and around the world, Hull addressed the connections between investing and race and how investors can shift their dollars to businesses that are taking action against racism. B The Change recently contacted Hull to learn more about how individuals, businesses and investors can “move their money toward justice” and support businesses that are creating an economy that works for all people.

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Compiled by the Team at B Lab U.S. & Canada.

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Where can investors and individuals start to make a positive impact by applying a racial equity lens to their money?

This is not a linear path. There are many opportunities to evaluate what you own and where you bank with a racial equity lens. In terms of where you bank and which banks you work with at your business, is this bank making loans to local people and do they have specific programs focusing on financial literacy or loans to black entrepreneurs? Be sure to ask. Most of us think of banking as checking, business transactions, retirement funds, yet all of those deposits are being loaned out for other purposes. Make sure those loans are aligned with your values.

Kristin Hull of Nia Impact Capital
Kristin Hull of Nia Impact Capital

How can investors encourage companies to move from anti-racism statements to anti-racism actions?

It depends on how you want to play. Everybody that owns a stock has both a right and a responsibility as a shareholder. At Nia Community Investments, we take it very seriously and engage with all of our companies. One easy way for investors to encourage change is with a proxy ballot, the papers that get mailed to you or delivered online so you can vote on any of the issues that are up at the company.

Investors also can encourage change at the very top through votes for the board of directors. Look to ensure that every company in your portfolio includes People of Color in leadership. At Nia, we vote “no” for any board of directors that’s not diverse. Businesses that are trying to move toward anti-racism need to go from statements to action, too — with clear, measurable goals and people in positions of leadership empowered and bought in to make measurable change.

With such a large focus on racial justice worldwide, do you see true momentum now among investors to align their money with their values?

We absolutely do. In corporate America culture, we’re typically separated from our investments. It’s not like we learn much in high school or college about investing, and a lot of the language can be mysterious as well.

Once we connect the dots and let people know their investments are having an effect on the world, people light up and want their money to be in alignment with their values. We’re creating the economy we want with our investments. We can create the future that we want by investing in companies that are sustainable and inclusive. And, in reverse, business leaders can decide which investment plans, banks, and other financial institutions they work with to create a full-circle relationship of positive impact.

How can an Investment Policy Statement (IPS) serve as a structure for racial equity investing?

Everybody — from a personal investor to a company to an endowment — could and should have an IPS that really talks about goals and objectives. This can be communicated to a financial adviser and manager, and you can incorporate whether you want to invest with advisers or managers of color.

Women and People of Color combined now make up 1.3% of financial managers. To the extent that you can choose to invest with women or People of Color, you will help move our society and economy forward. We need to see that percentage climb above 50% to reflect reality.

How can individuals “move their money toward justice?”

On the banking side, CNote provides a fabulous product. The B Corp has a wonderful technological ability where they can direct money to entrepreneurs who are women or People of Color. At Nia, we are developing a mutual fund so that people can start investing at $1,000 to make impact investing more accessible.

It’s also important to focus on policies and procedures and, over time, hold businesses accountable so that their actions match their words. By choosing to invest in companies that embrace diversity goals, as well as inclusive policies and practices, investors can align their dollars with their values while supporting companies that are likely to outperform their competition.

The most important thing is raising your voice, whether it’s to your bank or your financial adviser. That is how our industry changes — through investor demand.

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