The mutual fund—essentially a basket of stocks—is a common investment option in employees’ retirement funds. What many workers don’t realize, though, is that the basket they’ve picked, usually from a limited set of options offered by a financial institution, is often filled to the brim with shares representing the most contentious industries in America: weapons manufacturers, big tobacco, and fossil fuels.
But people increasingly want to know that the conglomeration of corporations that they part-own is clean. That’s where As You Sow’s “Invest Your Values” online tool comes into play. The tool, the winner in the impact investing category of Fast Company’s 2020 World Changing Ideas Awards, gives users a chance to view what’s in the funds they’re paying into and—if they don’t like what they find—to pick a mutual fund more aligned with their politics “Its essence is to help everyday investors to align their investing with their values,” says Andrew Behar, As You Sow’s CEO.
Most people are unaware of where their retirement fund money is going. Personal investors are able to be more scrupulous—1 in 4 dollars invested in 2018 were in sustainable and responsible companies, according to a report by the Forum for Sustainable and Responsible Investment—but that’s not true for people kept in the dark about the mutual funds that are part of their 401ks. Unknown to them, Behar says, they’re owning shares in assault rifles, weapons of war, and “the Exxons and Chevrons of the world.”
The roughly 1 million users of the free tool simply input the name of a fund to find where their money is going. On that fund’s page, they’ll find a letter grade, A to F, according to its inclusion of “vice stocks” such as gun or tobacco manufacturers, companies that encourage deforestation, or businesses that have bad records on gender equality, for instance, questionable histories on maternity leave, sexual harassment, and gender balance in the workplace.
If someone especially cares about rain forest destruction, say, they can view metrics for a fund’s commodities that contribute to deforestation, land grabbing, and human rights abuses, “companies that are literally burning down the Indonesian rain forest for palm oil, or burning down the Amazon rain forest for paper, pulp, timber, rubber, and soy,” Behar says. They can also see a list of the banks that are underwriting and lending to those producers and the consumer brands that source those products and sell them worldwide.
The broader objectives of As You Sow, which was founded in 1992, are to advocate for the values of shareholders more generally. It’s in direct contact with corporations to encourage responsibility in the same areas that are covered by the online tool, and it has pushed for changes in fields from fracking to wage justice. Its efforts have helped persuade YUM Brands to phase out styrofoam cups, McDonald’s to reduce its use of antibiotic-injected meat, and Unilever to diminish its plastic packaging by 100,000 tons.
As You Sow will also advise its users how to go about changing their portfolio based on their search results, which can be tricky. It offers a toolkit on how employees should approach talking to a 401k administrator, an HR rep, or a financial adviser, depending on their company’s setup. There are tips on how to involve colleagues and organize together, and resources such as sample letters to address to administrators.
While it’s not always easy, companies can change what funds they offer their employees. As You Sow is proof of that: The transformation of its own retirement plan, for its small, Berkeley-based team of 15, led to the idea for Invest Your Values. The organization’s communications director turned coder, Andrew Montes, built a tool for internal use that expanded into a wider tool, which has been expanded further using hundreds of small grants—the first of which was a $20,000 lump sum from a small group of nuns in Missouri, the Franciscan Sisters of Mary.
The organization is currently working on adding a mass incarceration section to the tool, so workers can divest from prison shares, and on generating report cards for each individual company’s 401k. In the long run, Behar says, employees may find that their money is better placed in cleaner funds anyway; the energy sector, for instance, has been underperforming in the last decade.
In the end, employees holding shares in a retirement fund don’t have enough power to vote in company shareholder meetings, but they can certainly exercise some control by moving their money. And the tool is the first step toward empowering that action. “It’s really giving you the information you need to make really important decisions about whether you want to invest in our current destructive economic paradigm,” Behar says. “Or do you want your capital to be used to build a safe, just, and sustainable world?”