Bridging Social Justice and the Financial Markets

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Wharton’s Katherine Klein speaks with Adasina Social Capital's Rachel Robasciotti about her firm’s mission to create change through ethical investing.

Publicly traded companies that want to get in good with Adasina Social Capital should know upfront that San Francisco-based advisory firm does its homework on social justice — and it doesn’t grade on a curve.

Having a female chief executive officer or women on the board of directors isn’t enough to get included in a prospectus. Adasina investigates each company’s specific policy on sexual harassment and workplace safety. If the company practices forced arbitration for sexual harassment, which is outside a courtroom and usually requires a nondisclosure agreement, it isn’t making the list.

“The core issue here is serial sexual harassment in the workplace and the policies that allow that to continue,” Adasina Founder and CEO Rachel Robasciotti said. “Forced arbitration has been shown to favor employers over harassment survivors, and it silences the victims, which creates this culture of acceptance of sexual harassment in the workplace.”

Robasciotti spoke about Adasina’s mission with Katherine Klein, vice dean for the Wharton Social Impact Initiative, during a recent episode of the Dollars and Change podcast. (Listen to the segment at the top of this page; find more episodes here.) Adasina focuses on racial, gender, economic and climate justice, but it goes beyond the typical umbrella of ESG — or environmental, social and corporate governance.

“We’re doing something that’s pretty different. We’re serving as a bridge between social justice movements and the financial markets,” Robasciotti explained. “If you’re going to make systemic change, you’re going to be required to have impact that extends well beyond your own portfolio. The only real way to do that is by organizing other investors.”

“We’re serving as a bridge between social justice movements and the financial markets.” –Rachel Robasciotti

The extra work is evident in Adasina’s approach to gender lens investing. It can be hard to ferret out the companies that refuse to engage in forced arbitration for sexual harrasment because internal policies aren’t always transparent. Just a few years ago, Adasina could find only five that had disavowed the practice. Now, there are more than 300 companies that meet that criteria. They’re included in the Adasina Social Justice Index, a database that Robasciotti and her team built from scratch.

“It’s such an important issue and one that’s not easily missed when you are in conversation with those who are closest to the problem [of sexual harassment],” she said. “They are very happy that people are paying attention to women on corporate boards, but that’s not actually addressing the core issue. In all of the areas that we’re doing work and we’re investing, we are talking directly to the impacted communities so that we know what the right metric is. Sometimes, that means we have to build the dataset in order to measure it.”

Does Social Justice Investing Work?

Klein noted that some critics argue that negative investment screens and divestment strategies are not very effective in driving change within corporations. For every company like Adasina that screens out bad actors, there are plenty of others willing to include them in an investment prospectus.

Robasciotti said change is happening though, albeit slowly. It comes from a collective effort and continuous pressure to change the norm.

“It is not that divestment doesn’t work. It’s that divestment that is localized in one portfolio, almost no matter the size, will never have the impact that you need. What’s really required is that we build solidarity within the investment world, so that our collective actions are actually having an impact on share prices,” she said. “It’s important to remember this, too: For most of those in the C-suite, their primary compensation is coming inside of stock in that company. When you’re impacting the share prices, you’re impacting their take-home pay.”

Robasciotti also believes that going deep on social justice issues makes a big difference. Her firm partners with organizations including the Movement for Black Lives and One Fair Wage to better understand and drive change. As part of its focus on racial justice, Adasina won’t invest in companies that are involved in the prison industry.

“Of course, diversity and equity are important. But what’s really harming us is an unjust criminal system,” she said. “What we really need to do is end profiting from the mass incarceration primarily of Black and Brown people in this country.”

The soon-to-be-launched Adasina Social Justice All Cap Global ETF is even broader in its criteria. For example, it examines whether companies are involved in immigrant detention or other forms of racial discrimination around the world. For Robasciotti, injustice doesn’t end at the border.

“What’s really required is that we build solidarity within the investment world, so that our collective actions are actually having an impact on share prices.” –Rachel Robasciotti

“What we know is that long-term sustainable returns come from sustainable companies that actually take care of their stakeholders, their supply chains,” she said. “Instead of taking large returns upfront and not thinking about the future, what we’re really doing is looking at what is the long-term return that we’re wanting to achieve inside of the financial markets. And is there a way to do that regeneratively?”

Woman on a Mission

Adasina is a reflection of its founder’s expertise and identity. Robasciotti is a queer, Black woman, and the company is majority-owned and operated by women, people of color and members of the LGBTQ+ community.

Even the name “Adasina” is significant. It is similar to a Yoruba word that means “she opens the way.” Robasciotti learned of it when researching her ancestry and felt the name was a fitting description for the firm’s mission.

Finance is a sector dominated by white males, with the percentage of women in leadership below 8%. Klein asked what can be done to boost the numbers. Robasciotti suggested looking outside the traditional pipeline and bringing in people from other industries who have transferrable skills. She’s done that as a manager and thinks it’s a good way to widen the pool and find different perspectives.

“It’s not simply about deciding that we just want diversity, equity and inclusion. It’s about noticing that new perspectives are something that we all need if we are going to change the conditions that we are living under,” she said. “And the folks who are most likely to have those are the people who sit outside of the traditional power structures.”

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