Let’s say you’re a broad-minded investor. You don’t care so much about a single issue, like women’s empowerment or alternative energies, but you do want your investment dollars going toward companies you can respect.
What does that mean? How can you make sure that any company takes the kind of ethical, long-term approach to building value that mindful investors prefer?
Here’s your Aha Moment for this week: a lot of fund providers don’t have a great answer. But some of them know where they can go to find one.
“You want to make sure your money is going toward companies you can respect. What does that mean?”
Partnering up on sustainability
To be clear, there are numerous fund companies that specialize in defining what mindful, sustainable companies are. There are several of them listed in the Equities.com Impact Fund Finder tool. But for firms that don’t specialize in sustainability, evaluating companies based on factors outside of their balance sheet is a tricky proposition.
One solution, especially among larger firms with roots in traditional investing, is to find partners who can help them gather nonfinancial data – that is, data around the impact corporate decisions have on customers, employees and communities. Fund firms can incorporate that data into their own analysis efforts. Or, they can let the data provider do the research and simply buy the rankings or indexes that result.
The JUST example
JUST Capital is a non-profit whose goals align closely with the mindful investor. Founded by business and finance leaders, JUST does research to determine what consumers expect from companies, then looks for companies who meet those expectations.
For example – at the end of 2024, JUST released their annual People’s Priorities Report, which is a survey of what Americans want from big business. JUST gathers corporate reports related to these key issues and then builds indexes that include the companies that align best with consumer priorities.
What Do Consumers Want from Business Leaders? – per JUST Capital
Interestingly, JUST’s survey data consistently shows that people care most about corporate employment practices, so employment-related data is at the core of their analysis. Alvin Carlos, financial advisor with District Capital Management, is familiar with how JUST Capital’s index is built.
“JUST’s criteria focuses on worker pay and well-being,” he says. “Stocks in JUST are twice as likely to pay nearly every worker a living wage. Companies in JUST also paid significantly less in fines from the Equal Employment Opportunity Commission and consumer violations.”
Pamela J. Sams, an author and financial advisor who caters primarily to professional women, finds that the fund is appealing to her clients. “JUST offers a people-centered way to evaluate a company,” she says. “JUST’s focus is on how companies treat their employees and communities.”
Investing in JUSTice
JUST Capital’s thoughtful, data-oriented approach made them an attractive partner for the traditional financial titan Goldman Sachs. The two firms came together to create the Goldman Sachs JUST U.S. Large-Cap Equity ETF in 2018 – an ETF whose ticker, aptly, is JUST. JUST
Through the JUST ETF, investors have been able to access results on par with the broad Russell 1000 index (gross of expenses), while actively prioritizing the companies that rank highest using JUST’s criteria.
I asked Sams and Carlos what their views of the JUST ETF are and what advice they might give to mindful investors.
“Depending on what you value,” says Sams, “JUST can be a better investment option than other ESG-focused funds. That’s particularly true if you are concerned more about how workers are treated in the workplace and the social impact of a company. I view JUST as best suited for investors who are comfortable with a more hands-on approach to investing.”
Carlos agrees. “I think the JUST ETF is an excellent addition to the lineup of ESG funds,” says Carlos. “In return for a small fee of 0.20%, investors can align their investment portfolio with their values” – specifically when those values are focused on how companies treat their employees.
Finding the source
It’s fairly common for traditional fund and ETF providers to build their sustainable offerings using data, research or rankings from sustainability specialists. But that highlights another important AhaMoment for mindful investors — it’s useful to know where a fund’s nonfinancial data is coming from and who’s doing the evaluating.
A quick way to figure out where a fund or ETF is getting their nonfinancial data from is to look at the fund’s benchmarks – information that is available in fund listings on this site, as well as on the fund’s own web site.
A fund like Amplify ETHO Climate Leadership US ETF ETHO uses a benchmark called the ETHO Climate Leadership Index. That means that the data gathering and research is done in house. Meanwhile, an ETF like SPDR MSCI Emerging Markets Fossil Fuel Free ETF EEMX is using the MSCI Emerging Markets ex Fossil Fuels Index – in other words, they are relying on MSCI to do that analysis.
Funds that use a broad market index, like the S&P 500 or Russell 1000, may be pulling data from many different sources, but the gathering and analysis of that data is primarily done internally.
The variety of data providers, and approaches to using that data, can make things seem complicated. But there’s good news too: By asking a few more questions, you can find an investment strategy that is tightly linked to the values you care about most.
JUST provides a window into where those questions can lead – and to an option that might be just right for the right kind of mindful investor.
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