Morningstar's Out@Morningstar employee resource group hosted an "Investing for Equality" discussion featuring Morningstar's Director of Sustainability Research John Hale and Trillium Management CEO Matthew Patsky Oct. 26 at its Chicago Loop headquarters.
The discussion, moderated by Morningstar.com Editor Jeremy Glaser, focused on ways to invest that positively impact both the LGBTQ community and the world.
Out@Morninstar Co-presidents Mike Leung and Mike Wood explained the genesis of this event to the approximately 200 people in attendance.
Glaser showed an LGBT equality map to highlight the disparity between the states with only 14 states and Washington D.C. having ratings when it comes to LGBT legal protections while 28 states have low or negative ratings.
Patsky said the LGBT rights movement won equality largely due to corporate America moving the needle forward in terms of employee protections for, at first, LGB employees and later transgender employees. This happened well before some states enacted laws protecting LGBT people. Patsky noted how easy it was for companies to say yes to adding protections for transgender employees because of the earlier work to ensure that LGB employees were protected.
Glaser asked why LGBT concerns should be expanded into the investment realm.
Hale explained that it is normal to want to express ones values in terms of where they are investing their money including LGBTQ ( and other minority groups ) and environmental issues and investment firms are making it easier to do this. He said there are about 200 funds that fall under the socially responsible investing umbrella with 90 of them created in the past year and of those one is focused on LGBT issues ( the ticker is called EQLT ).
When looking at ones investment portfolio and tilting it toward companies that are doing good, Patsky said he has yet to meet an LGBT client who only cares about LGBT issues. He noted they also care about gender parity, racial equality and environmental issues. Patsky explained that Trillium asks companies what protections they have in place for LGBT employees as well as reproductive health benefits before they are deemed socially responsible companies for investment purposes.
Hale noted that if someone is interested in investing for equality they are also concerned with a whole range of issues they call sustainability issues or environmental, social and corporate governance ( ESG ) issues. He said early ESG adopters are generally good companies to make an investment in.
Glaser wondered if companies can/will do better on their own. Hale said shareholder resolutions are sometimes necessary to move the ball forward and used the recent ExxonMobil shareholders vote that called for the company to release their climate risk reports to the public.
In terms of what else people can do to financially support the LGBT community, Patsky said two ways are depositing one's money in local LGBT friendly banks and investing in community loan funds that are targeted toward the LGBT community.
Both Hale and Patsky emphasized doing research before investing, i.e. not picking the default on the 401k and 403b forms. Patsky said inertial and human laziness among investors keep investment firms and financial advisors from doing the right thing because most people need to be pushed in the right direction.
A Q&A session followed the discussion.