How Ellevest Is Making Sure Your Investments Benefit All Women
“Our core mission is [to] get more money in the hands of women,” says Sallie Krawcheck, CEO and cofounder of Ellevest. That’s the thought behind the company’s intentional impact portfolios, which are public equity portfolios built to weed out companies that harm women and make it easier to invest in the companies that are working to make the world a better place for all women. These portfolios were originally launched last fall, but as of last week, the company has expanded them to screen out companies that don’t meet Ellevest’s standards for pursuing gender equality and racial justice.
“If all of us aren’t revisiting and rethinking what we’re doing in the pandemic and in this renewed move toward racial justice, I don’t know what’s going to make us think deeply,” Krawcheck says. “It’s clear you can’t be for women’s equality without also being anti-racist. Given that today women have 32 cents of wealth to a man’s dollar, Black women a penny. If you’re not specifically addressing the issues that affect Black women and Black people, then you’re not getting fully there. That’s when we said, ‘let’s take a step back and see how we can expand out our flagship intentional impact portfolios to also add an anti-racist lens.’”
These portfolios work to screen out companies based on 13 focus areas that can have a negative impact on women and women of color in America.
“What was interesting as we began this anti-racism work is, perhaps not so surprisingly, so many of the issues that affect women disproportionately also affect Black people and people of color disproportionally,” Krawcheck says. “For example, gun violence hurts everyone…hurts women more, hurts Black people more. Women, because of domestic violence, Black people because of the police brutality and gun violence against them. When you look at race, environment, hurts women more. There’s also environmental racism where, it’s fascinating and disturbing that Black people for so long have not been able to buy homes in many areas, many desirable areas.”
And while many of the focus areas the company initially had in place impact women of color and the Black community, too, they have made some additions in the expansion.
“We found there was an interesting amount of overlap, but there were additions that were made,” Krawcheck says. “For example, the private prison system and the private prison ecosystem, and looking at that and making sure that we are firstly, not investing in private prison companies, but also those who supply them in a meaningful way, whether it’s the food service, the telephone, et cetera.”
The intentional impact portfolios certainly are making strides in changing impact investing, but there is an interesting challenge presented here, too: How can you be certain that the companies that are being screened out are truly harmful and the ones kept on truly beneficial for all women?
“Unfortunately, we can’t, we’re not there yet, because of the systemic nature of these issues,” Krawcheck says. “What we’ve done is we’ve put in place quantitative measures, so that we’re looking at it in a systematic and analytical way, as opposed to opinion. In fact, I was talking to one person who said, ‘Well, how about women being CEOs? Does that count for a lot?’ The answer is, it might not because we’re also looking at the percent of women managers, as others do, percent of women employees in the bottom fifth percentile. Do those companies provide daycare services? Do those companies have strong diversity and inclusion practices? Do they have gender pay equality? All that could be, yeah, check, check, check. Wait a second. Greater than X percent of their revenue is from the production of tobacco and firearms, whoops.”
“Then it’s constantly updated, because the data from a company has updated. Oh, they reported new results, let’s look at that. Or we found a new data source that we’re beginning to use now. It’s a living, breathing dynamic thing,” Krawcheck says.
One thing Krawcheck stresses is the importance of being good over being perfect when it comes to impact investing because we all can only do the best with what we know right now. And what Krawcheck knows right now is that money matters—and making sure that money benefits all women is a top priority at Ellevest.
“It’s all about getting more money in the hands of women in different ways,” Krawcheck says. “If through this we can be driving capital to companies that are doing ‘the right thing’ and away from companies that are not and draw attention to it and spark conversations about this…that helps us drive to our ultimate goal. The reason this is our goal is because we have yet to figure out anything bad that happens when women have more money—that the economy grows, society is fairer and healthier, the markets improve. All of it, for us, drives towards that singular goal.”