Gender-Smart Investing Journeys: Rachel J. Robasciotti
We talk about scarcity mentality versus the regenerative economy with Rachel J. Robasciotti, Founder & CEO of Adasina Social Capital, and why investing in alignment with social justice movements just makes financial sense.
We’re here to get a better understanding of the intersection between gender and social justice. As someone who's doing the work, can you describe Adasina Social Capital and what you do?
Adasina is an investment and financial activism firm. We see ourselves as serving as a bridge between financial markets and social justice movements. We are a pretty diverse team of people, all from non-traditional backgrounds in finance, and we're committed to making large-scale systemic change through investments in public markets. What's different about our particular approach is that we work very closely with the communities that we intend to impact, in order to do two things: One is building our investment selection criteria, so those communities we intend to impact are actually part of us understanding how we're selecting our investments. And secondly, expanding our impact well beyond our own portfolio with those communities. We’re having impact via industry campaigns, data, and education, so that we're impacting public companies all across the board. By being a bridge between social justice movements and investors in public markets, we allow them to come together and become very powerful agents of truly meaningful change for people and the planet.
“When you’re operating on a model of scarcity, it leads somewhat automatically to extracting from vulnerable populations”
The way that we see it, gender justice is a part of a broader social justice, that includes racial, economic, and climate justice as well as gender justice. We're living the effects of scarcity mentality, the idea is that there is not enough, and that in order for any of us to do well, you have to take from someone else. When you're operating on a model of scarcity, it leads somewhat automatically to extracting from vulnerable populations. It's no wonder, therefore, that the issues we’re working on end up intersecting the groups that have historically had power extracted from them for the benefit of others. When we're looking at issues like ending the subminimum wage in the United States, that's an issue that not only impacts women enormously, but also disproportionately impacts Black and Brown workers, in addition to being a pure economic justice issue. When we look at climate justice, it's no wonder that environmentally compromised areas are heavily populated by Black and Brown communities. These issues are inseparable.
Many investors feel torn choosing which issues to focus on when investing for social impact. Why is taking an intersectional approach to social justice investing a more achievable strategy?
It seems very obvious to me that these are intersectional issues. Working for gender justice is working for racial justice and is working for economic justice and is working for having an inhabitable planet. The way we demonstrate that is to shine a light on how this harm happened to begin with to show that it's from an extractive, scarcity-based economy. The truth is that there's actually more than enough for all of us if we choose to allocate resources equitably. We're moving towards a regenerative economy that values wholeness for people and the planet. You can stop chasing your tail, feeling like you’re playing social justice whack-a-mole with gender, racial, economic, and climate justice, when you start to recognize those issues all stem from the same scarcity-based economy.
Our investment management team believes that investing in alignment with social justice movements makes financial sense as well, because we believe social justice movements are providing early indicators of material risks in public markets. If you look at three years of backtested performance, our social justice index meets and even exceeds the returns of an unscreened index. That’s why it's a smart financial decision to move toward the regenerative economy, because people are starting to wake up and realise that this winner-take-all scarcity extractive model isn't working.
Can you give us some examples of thematic areas you’re working in where race and gender issues intersect?
Our response to the #MeToo Movement was to go directly to the organisations that were supporting survivors of sexual harassment in the workplace, and directly to those survivors themselves, and to ask them, “What can investors do to support you?” Lots of other investors were focusing only on gender representation in the boardroom, because that seemed related to gender justice and could be easily counted, and they were building gender lens portfolios in response to the #MeToo Movement on that basis. But, when we went to the most impacted communities, they said that change in gender representation is good, but what we really need is to end the policies that enable serial sexual harassment in the workplace to begin with because, at its root, the #MeToo Movement is about serial sexual harassment at work, not board seats. That’s why we took up the work of understanding which public companies have a policy of forcing employees into private arbitration proceedings for sexual harassment claims, policies that are known to advantage the employer (and perpetrator), silence the victims, and unsurprisingly they disproportionately negatively impact not only the employee, but particularly women, Black and low-wage workers.
“the most impacted communities said that change in gender representation is good, but what we really need is to end the policies that enable serial sexual harassment in the workplace”
That was not an easily trackable data point, because no one was collecting this data. So, we launched Force The Issue, a campaign to end the practice and offers a complete public database of where every one of the 3,500 most commonly traded companies stands on this issue, so that investors across the board can use this to screen for policies that enable serial sexual harassment in the workplace, and to give information and leverage to those who own shares in companies where this is the case.
When we started Force The Issue, there were only 5 companies that publicly disavowed using forced arbitration for sexual harassment claims. Today there are over 371. That represents more than 10 million workers who are unsilenced and now know they can take their sexual harasser or abuser to court.
What is the Due Diligence 2.0 framework you recently co-authored?
We looked at the reason why 98.7% of the nearly $70 trillion in assets in our industry are allocated to white men, and only 1.3% is allocated to women and people of colour combined. We realised that, while there's a lot of interest in our investment strategies, we were falling out of due diligence processes because we don’t have the institutional advantages that firms primarily run by white men have. We wouldn't have the requisite assets under management, or lengthy track record or other requirements that are intended, on their face, to help an advisor or allocator make good investment decisions. But what these standards really end up doing is ensuring that those who already manage assets continue to be the ones awarded assets. Even though we have the right people, at the right time, with the right strategy, we're not getting allocated significant assets.
We went to the root of this systemic issue, the antiquated due diligence standards in the financial industry that have delivered us the industry we have now. The Due Diligence. 2.0 Commitment came out of realising that unless we get allocators and asset owners to commit to using equally rigorous but less biased ways to fulfill their fiduciary duty, we're going to continue to be systematically left out of professionally managed investment portfolios.
“what these standards really end up doing is ensuring that those who already manage assets continue to be the ones awarded assets.”
We want as many asset owners and allocators to sign it as possible. The Due Diligence 2.0 Commitment has already been through a rigorous, multi-billion dollar investment committee to ensure the recommended practices are able to be realistically implemented by allocators with fiduciary duties to clientsIt requires some additional work on the part of the due diligence team and the investment committee members, but given that they're the ones who hold the assets and institutional power, it's time for them to step forward and use that power in service of justice.
What might a gender-smart social justice portfolio look like in 2021?
Our exchange-traded fund, the Adasina Social Justice All Cap Global ETF (ticker symbol: JSTC) is a really good example of a strategy that does just that. We’re the first fund to use the Force The Issue sexual harassment data. . Similarly, Adasina worked with social justice partners to identify and our JSTC became the first fund to exclude companies that pay a subminimum wage. We've extended our impact by making this company data public and organizing other investors who want to use this data for portfolio analysis and shareholder engagement.
JSTC represents nearly 900 different companies. It's global and covers all market capitalizations of publicly traded companies. It's designed to be a public equities replacement for investors with social justice values. And you can rest assured that leaders in gender, racial, economic, and climate justice are informing the portfolio creation, as well as the campaigns that we’re working on to spread that impact well beyond our own portfolio throughout the industry. It's not just that these are great issues to focus on right now; we'll continue to be at the forefront of whatever the next issue is, because we have social justice movement leaders partnering with us on our work.
You use the phrase “social justice.” Language is obviously fraught in this area, so can you talk us through the thought process behind using this term?
The word “justice” sometimes catches people, they prefer to use terms like “social equity” instead. I've noticed that some of the biggest critiques of using the term “justice” come from inside of the United States. I believe that's a result of the punitive legal system here. When people in the United States think about justice, they're thinking about punishment, but that's not the origin of justice as a concept. Justice doesn't have to be a divisive word. It's about making whole those who were harmed - repairing the damage and restoring wholeness.
Using the word “justice” means looking at the good you’re trying to do in the world through the lens of restoration and understanding how the harm was done as you are repairing that harm. If we want to be gender-smart investors, of course we need to see women in the boardroom, but we also need to be sure that we’re working on where the injustice that led to serial sexual harassment in the workplace originates in order to restore a sense of wholeness--for example, to employees who've been victims of serial sexual harassment because of unjust policies, or workers who've been paid a subminimum wage and are impoverished as a result. It’s not about punishment, it’s about repair that starts at the source of the problem.
Thank you so much for talking with us about these important issues. One last question: What can the GenderSmart community do to join you in this campaign?
The GenderSmart community of asset owners and allocators should sign the Due Diligence 2.0 Commitment, because when more allocators and advisors use that framework it will actually allow us, women and historically underrepresented groups, to become the ones directing assets inside of more investment portfolios. We're the ones who have the new strategies that the world needs to address our biggest problems. Investing in JSTC and using it to replace all or a portion of the public equities in your portfolio is a tremendous step in the direction of intersectional justice, not just for women, but for Black and Brown people, the economically vulnerable, and our planet. Every time someone invests, it's a vote, saying that we want more of something - so tell the world you want more intersectional gender, racial, economic and climate justice.