Before the turn of the century, sustainable and socially responsible investing (SRI) was a small portion of the overall financial system. Of the thousands of mutual funds in the market, a couple dozen carried the “green” or “socially responsible” description. Committed SRI fund companies had a general mission and vision to encourage greater corporate responsibility towards a triple bottom-line approach: People, planet, and profit. They launched the initial standards in SRI, including negative “avoidance” screens, filing shareholder resolutions at annual meetings, and supporting community development finance.
In the last decade, the public’s appetite for sustainable and ethical investments has grown significantly. Seeing the demand and capital flowing into the SRI space, traditional finance responded by either creating their own products or purchasing their competition.
With the influx of new players on the field, Natural Investments has seen a watering down of standards. Instead of committing to avoid a particular issue, such as fossil fuels, tobacco, or private prison operators, newer funds began to reference “ESG (Environmental, Social, and Governance) integration.” This methodology allows portfolio managers to “consider” ESG issues into their decision-making without any practical restrictions on a company’s potential inclusion in the fund.
This opaque approach leaves room for greenwashing, which led the Securities and Exchange Commission (SEC) to investigate and fine several major firms in the last several years for misrepresenting their products. ESG integration funds receive a lower score in our Heart Rating’s ESG Screening category because it forces our firm to monitor the fund’s holdings rather than trust the criteria being used to compile it.
ADASINA SOCIAL CAPITAL
Adasina Social Capital, a Black woman-owned and diverse asset management firm, maintains an unwavering position on social justice values, even at a time when a large part of the SRI industry is softening language due to the right-wing backlash to ESG principles and the stigmatization of diversity, equity, and inclusion (DEI) policies.
The Adasina Social Justice All Cap Global ETF (JSTC) is a highly diversified, global, all-cap portfolio designed to be a core strategy that allows investors to align their portfolios with social justice values. The fund is based on Adasina’s philosophy that issues raised by social justice movements today may be early indicators of future material and reputational risk factors for publicly traded companies that continue unjust practices. Adasina’s approach focuses on the following aspects:
Screening, transparency, and accountability. Adasina selected criteria that best addresses the causes of injustice across and at the intersection of four pillars—race, gender, economic, and climate— and are publicly disclosed in fund materials, often sourced from social justice organizations’ research. Their use of datasets on race and gender inequality, climate change concerns, and wealth inequity offer transparency in the JSTC portfolio makeup for conscientious investors. As an example, the Racial Justice pillar excludes private prison operators, funders, and beneficiaries of prison labor with information sourced from Poor Peoples Campaign, American Friends Services Committee, and Worth Rise.
Shareholder advocacy campaigns. Beyond its investment criteria, Adasina Social Capital collaborates with social justice organizations to directly engage with companies. Each pillar targets one key campaign to maximize effectiveness. For example, poverty wages affect the health and wellbeing of individuals, families, and the stability of entire communities affected by the practice. On the Economic Justice pillar, Adasina therefore created the campaign Livable Wages in partnership with the nonprofit One Fair Wage, with the aim to push publicly traded companies to end the subminimum wage for tipped workers. Seventy-five percent of states permit subminimum wages that pay less than $5 per hour.
Through shareholder advocacy, Adasina leverages its influence to propose and support initiatives that align with justice objectives, thereby amplifying the impact of JSTC’s investment strategy. This includes voting proxies on ESG resolutions submitted by peers in alignment with its stated values.
Community collaboration. An immeasurable portion of Adasina’s impact comes from leveraging “people power.” Adasina has an advisory board called the Stewardship Circle, which consists of Black, Indigenous, and People of Color (BIPOC) specialists who are compensated for their expertise. The Stewardship Circle engages with nonprofit and for-profit organizational partners to assist in social justice movements, industry transformation, and building and running successful investor mobilization campaigns.
The Climate Justice pillar focuses on extractive agriculture. Adasina partner ETC Group released a report, Plate Tech-tonics: Mapping Corporate Power in Big Food, that provides a guiding framework for where the food industry negatively affects minority communities while also exhausting natural resources in the pursuit of profit. Renee Morgan, Director of Impact, noted in a recent interview, “Although Adasina talks about issues in categories, we don’t think about them that way as we build campaigns or address them in our portfolio. We believe it is vital to look at all issues in an intersectional way. You cannot think about racial justice without thinking about gender justice or economic justice or climate justice. Who and what is most impacted by harm in capital markets are deeply intertwined.”
A PATHWAY TO FINANCIAL GROWTH AND SOCIAL EQUITY
In an era when the lines between profit and purpose are more blurred than ever, the Adasina Social Justice All Cap Global ETF stands as a beacon for investors seeking to make meaningful change. Adasina Social Capital doesn’t just offer a pathway to financial growth—it pioneers a movement toward lasting social equity. Through meticulous screening, active engagement, and collaboration with the social justice movement, Adasina redefines investing responsibly.
