If there’s one hot topic that Americans may remember about 2017, it’s the wave of sexual harassment cases that took the corporate world by storm. From famous actors, producers and entertainers to newscasters, big corporate figures and politicians, the Harvey Weinstein epidemic has cost many their jobs, reputations and marriages.
But as the stories continue to unfold, investors must undoubtedly wonder whether the financial industry is going to follow suit when considering certain company stocks or bonds for inclusion or exclusion in their funds and portfolios.
Environmental, social and governance, or ESG, investment assets grew to $8.7 trillion at the start of 2016, a 33% increase since the outset of 2014, according to the US SIF Foundation Report on US Sustainable, Responsible and Impact Investing Trends.
But while 43 ETFs totaling $4.7 billion are labeled as socially conscious, 55% of those are focused on environmental issues and only five ETFs with less than $1 billion in assets combined are considered thematic socially conscious, according to data from Impact Shares and Morningstar Direct.
“Everyone agrees on what a good portfolio looks like on the E side and what good corporate governance looks like on the G side, but the S is often called the messy middle, because everybody has different social priorities,” said Ethan Powell, founder and president of Impact Shares, a not-for-profit startup that partners with leading charitable organizations to launch ETFs that carry a specific social impact theme.
Understanding and communicating these social priorities to a financial intermediary and then constructing a portfolio around it is “next to impossible,” he noted.
His company, Impact Shares, is launching the first ETF focused on women empowerment that will screen for sexual harassment. The fund will contain around 200 to 300 stocks and will track the Equileap North American Women’s Empowerment Index. The index applies 19 screening criteria, which cover gender balance in leadership and workforce, equal pay, flexible work options, safety at work and freedom from violence, abuse and sexual harassment.