I haven’t been thinking much about my investments recently. To be frank, there is a lot going on that demands my attention and my portfolio isn’t at the forefront of what I care about right now. I check my Charles Schwab brokerage account very infrequently, to the point that I have seen some green where there used to be red. This behavioral technique of looking at my account less has given me an illusion (or delusion?) of hope.
However, it has been a minute since I checked in with the sustainable investing world. My sustainable investing strategy requires a review twice a year, so I will be analyzing my portfolio at the start of the new year. One of my rules is anything I choose to invest in should have an As You Sow gender equality grade of C or better, since many of the promising candidates that I found in the past are lagging in that area. Only two of the five index exchange-traded funds (ETFs) in my portfolio have A grades for gender equality. So, I went to As You Sow to find the top gender equality funds with grades of A to see how they compare and if they’re suitable investments.
The top four funds on the list as of November 12, 2023, were the Impax Ellevate Global Women’s Leadership Investor fund (PXWEX), the Boston Trust Walden Balanced fund (WSBFX), the Green Century Balanced fund (GCBLX) and the Amana Income Investor fund (AMANX). All four have grades of A for gender equality and civilian firearms, meaning stocks held within the funds do not support the production of civilian firearms with their investments. The gender equality score looks at gender balance in the leadership and workforce of a company and equal pay for employees.
Here’s a breakdown of the gender equality score for Impax Ellevate Global Women’s Leadership:
The further score criteria analyze the holdings of the fund based on how safe a company is for workers, whether there is sexual harassment in any form, how the rights of employees are protected, if business practices are both ethical and compliant and how diverse the company’s suppliers are, including women-owned businesses. Gender equality isn’t just about women, it encompasses the well-being of all genders.
When it comes to the other As You Sow grades, these funds vary widely. Many have high grades for tobacco but are inconsistent on the prison industrial complex. Deforestation and fossil fuels aren’t as big of a concern for some of these funds either. Amana Income Investor has a military weapons grade of F, while the rest of its grades are A and B.
Every time I look at these As You Sow grades, I am reminded of the meaning of intersectionality, something I mentioned in a previous blog post about why I care about sustainable investing. Intersectionality is the acknowledgement that everyone has their own unique experiences of discrimination and oppression, considering gender, race, class, sexual orientation, physical ability, etc.
Though these funds are focused on investing in companies that are promoting gender equality, some seem to be literally missing the forest for the trees, with deforestation and fossil fuel grades of C and D. Just because a company is doing its part to change in one area of environmental, social and governance (ESG) doesn’t mean it will do so across the board. The impact of deforestation and fossil fuels on the earth is one of the largest contributing factors to climate change. In turn, the people who bear the brunt of climate change are those who don’t have access to resources needed to survive due to gender and class inequality, racial oppression, lack of physical ability and homophobia. Everything is connected, and we are all individually impacted by the world in our own unique ways.
Now let’s look at these funds using AAII’s Fund Compare tool. Something interesting I noticed right off the bat is that most of these funds were incepted in the late 1980s or 1990s. Most of the funds that fit my investing strategy are much newer funds on the market, so they don’t have as much return history to look at. The two funds with better return grades are also less risky compared to their category: Amana Income Investor and Boston Trust Walden, with category risk indexes of 0.89 and 0.90, respectively. Green Century Balanced and Impax Ellevate Global Women’s Leadership have poor return grades and are riskier investments compared to their category. This usually isn’t the case with investing: If you take more risk, you are usually rewarded with higher returns.
Unfortunately, none of these funds fit my current investing strategy. All four have expense ratios of 0.77% or higher, while my cutoff is 0.60%. When it comes to As You Sow grades, the only fund that comes close is Green Century Balanced, with just a military weapons grade of C dragging it down. I have said previously that gender equality will be the hardest category for funds to grade well in. It is the longest-standing, most deeply ingrained issue in our society, and will therefore be the hardest to counteract and eventually dismantle through investing. The rest of the grades for fossil fuels, deforestation, civilian firearms, the prison industrial complex, military weapons and tobacco are all for man-made, more tangible things that are somewhat easier to pinpoint and avoid. The act of isolating gender equality as an issue on As You Sow instead showed just how connected every aspect of sustainability is and, to me, makes sustainable investing all the more important.
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