If you’re thinking about retiring comfortably, you’re probably investing in your employer’s retirement plan, known as a 401(k) — or a 403(b) if you work for a nonprofit.
Typically, you’re making investments into mutual funds — an investment product that allows small investors to buy a basket of stocks rather than trying to self-manage a portfolio of individual stocks. Mutual funds make it much easier for the average person to invest in the stock market, but it also comes with less transparency about which companies you actually have an ownership stake in.
For example, how would you feel if you learned that your hard-earned dollars are invested in companies that:
- Produce fossil fuels, weapons or tobacco products
- Contribute to mass incarceration, deforestation or climate change
- Have a history of gender or racial discrimination or human rights violations
As we navigate a multitude of social and environmental issues that include climate change, COVID-19 and Black Lives Matter, among other things, it’s important that we better understand where our money sleeps at night and how it’s being used by those publicly traded companies in which we’ve invested.
In addition to your vote, your money is the most valuable tool you have to create the change you seek in the world. Are you using it effectively? If you protest to support Black Lives Matter, why would you invest in for-profit prisons? If you donate money to find a cure for lung cancer, do you feel comfortable owning cigarette stocks? And if you want big multinational companies to make climate change a priority, do you want to own stock in companies that aren’t making that effort?
I believe the vast majority of us want to do good and that if our money was aligned with our values, we’d have a lot fewer problems to fix in the world. We just need the knowledge and ability to take action. Fortunately, a nonprofit based in Berkeley, California called As You Sow has created a web-based tool that makes it easy to understand how mutual funds score on social and environmental issues. And it’s completely free to use!
Last week, my organization, Philadelphia-based ImpactPHL, co-hosted a webinar with As You Sow entitled “Is Your Company’s 401(k) Plan Aligned with Your Values?” to showcase the Invest Your Values tool. You can watch the full video here, and below are a few key takeaways and action steps to help you get started.
1. Know what you own.
In order to align your investments with your values, you must first know what stocks you currently own and how they act across social and environmental issues. This can be difficult if you invest in mutual funds, but As You Sow’s tool makes it easy by assigning report card-like letter grades (A through F).
2. Find out if your investments align with your values — and make changes as necessary.
Now that you know what you own, do you feel comfortable with it? Is it enough to ensure your investments cause no harm, or would you like to be more proactive in addressing issues you care about?
If there is a mismatch between your values and your investments, it’s time to think about what changes you want to make. Use the Invest Your Values tool to evaluate the other mutual funds offered in your employer’s retirement plan and reallocate your investments as necessary.
3. Ask for better options.
If your employer doesn’t provide options you’re comfortable with, talk to your HR department about it. Only 3% of employers provide any such offering, so this may not even be on their radar yet. Show them the Invest Your Values tool. Suggest they contact me (email@example.com) if they need help — that’s what ImpactPHL is here for, even if you’re not local.
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