Giving Compass' Take:
- E. Napoletano and John Schmidt explain the complex-but-critical roles of SRI and ESG in effectively investing in the LGBTQ community.
- What is SRI investing, and how does it differ from ESG? How can you work to expose other investors to the opportunities to support LGBTQ communities through ESG and SRI?
- Read about how COVID-19 and the BLM movement have impacted the LGBTQ community.
What is Giving Compass?
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Historically, the LGBTQ community has relied on its own peer-to-peer financial support structure to help its members to survive and thrive. Today, community members, allies and activists are seeking investment returns that support the broader LGBTQ community through socially responsible investing (SRI) and environmental, social and governance standards (ESG) investing.
ESG investing attempts to identify investments with both strong returns and positive social impacts from companies’ environmental, social and governance policies. Generally, the higher a company’s ESG score, the more likely its business practices will lead to higher, socially conscious returns.
SRI investing goes a bit beyond ESG. While ESG rates how a company performs certain key criteria, SRI actively eliminates investments from consideration if they clash with an investor’s moral or ethical values.
Right now there are few corners of the ESG/SRI world that attempt to exclusively address LGBTQ factors. But there’s one aspect of ESG where LGBTQ concerns feature most prominently: human capital.
“The companies generating the largest cash flows and cash flow growth in the modern era tend to be in industries where innovation and intellectual property are important. In that type of environment, companies need the best people they can get and certainly can’t afford to discriminate for arbitrary reasons,” says Lloyd Kurtz, head of social impact investing for Wells Fargo Private Bank.
Investing research experts like Kurtz are always on the lookout for companies that are able to attract the most diverse and inclusive talent across all identities, and companies like this tend to score highest on ESG measures regarding human capital. That includes a demonstrated commitment to salary and benefits equality for all workers, including LGBTQ employees.
Read the full article about investing in the LGBTQ community by E. Napoletano and John Schmidt at Forbes.