Divestment – Which Industry Exclusions are right for you?

Following our article rounding up FLIT Invest’s Investment Themes, it’s time to look at the flipside – exclusions. Aligning your investments with your values can look like putting your money into places you agree with and taking your money out of industries you don’t. Industry exclusions are one of our two impact investing strategies, and you learn more about divestment versus active ownership on our website. You can use our divestment option to exclude industries that don’t align with your values and ensure you vote with every dollar. The exclusion engine is powered by As You Know, the impact data arm of the leading shareholder advocacy group, As You Sow. Thanks to them, you can invest fossil-free funds, weapon-free funds, and more! Remember, everyday impact begins with putting your money in the right place! How you vote with your dollars today has an impact on our future. Read on to discover our 6 industry exclusions.

Civilian Firearms

Why it matters? In 2021, nearly 700 mass shooting incidents occurred in the United States and over 45,000 people died by firearms. Half of them died as a result of murder or homicide, while the other half committed suicide. Recently, deaths from firearms surpassed those from motor vehicle accidents and other injuries as the leading cause of death for children in the United States. While gun sales and lobbying from gun rights groups have increased in recent years, the majority voice support for expanding background checks to all gun sales, and the majority supports increased safety regulation.  

 

How can I make a difference? By selecting this exclusion, you can remove companies involved in the gun business from your portfolio and invest in gun-free funds. These are firms manufacturing civilian firearms, including handguns, rifles, and ammunition, as well as retailers selling handguns, shotguns, rifles, and ammunition — including semiautomatic weapons known commonly as “assault rifles.”   

Deforestation

Why it matters? The Earth has lost 100 million hectares of forest over the last two decades (2000-2020). To limit the catastrophic impacts of climate change, reduce our destruction of the world’s biodiversity, and respect the rights of indigenous peoples, protecting the world’s remaining forests is critical. Deforestation isn’t just bad for the planet. Increasingly, it’s risky business. Companies engaged in deforestation, land grabbing, and human rights violations expose themselves and their shareholders to significant financial risks from stalled business operations, reputational damage, and legal liabilities.  

 

How can I make a difference? By selecting this exclusion, you can remove companies involved in the deforestation business that are harmful to our environment from your portfolio. This is powered by As You Sow’s deforestation-free funds. 

These companies include:   

  • Agricultural commodity producers and traders that produce and trade palm oil, paper/pulp, rubber, timber, cattle, and soy that have a record or a significant risk of contributing to deforestation, land grabbing, and human rights abuses. 
  • Financial institutions, directly and indirectly, involved in underwriting and lending to deforestation-risk producers and traders. 
  • Consumer goods retailers that source palm oil, paper/pulp, rubber, timber, cattle, and soy from deforestation-risk producers and traders and sell it to consumers worldwide.  

Fossil Fuels

Why it matters?  Fossil fuels are non-renewable energy sources, including coal, oil, and natural gas. Fossil fuels are utilized in numerous ways, including industrial processes, transportation, and energy production. Burning fossil fuels releases carbon dioxide and other greenhouse gases. These gases trap heat in the atmosphere and therefore cause increasing temperatures over time, leading to global warming and climate change. The combustion of fossil fuels also releases air pollutants that harm the environment and human health. Fossil fuels and the companies and people who produce and use them are actively destroying the planet.  

 

How can I make a difference?  If you would like to avoid directly financing the production of fossil fuels, you can stop supporting fossil fuel companies in your investments through divestment. We utilize As You Sow’s fossil-free funds database.  

Unfortunately, we are all contributing one way or another, mainly through:  

  • Investments in the most prominent producers (directly financing fossil fuel production).  
  • Using banks that provide significant financing to these companies (indirectly financing fossil fuel production).  
  • Buying products that use fossil fuels for production either as ingredients or industrial processes.  

Military Weapons

Why it matters? In 2016, the U.S. spent $741.3 billion on foreign and domestic militarism. That’s 64% of the federal discretionary budget. $304 billion went directly to corporations. Military weapon companies derive profits from military interventions, the global arms trade, and the militarization of our streets. Companies engaged in the military weapons industry make profit from military interventions and consider defense over human rights.  

 

How can I make a difference? 

By selecting this exclusion, you can remove companies involved in military weapons industry from your portfolio and invest in weapon-free funds. These companies include: 

  • Largest publicly traded military contractors fueling global warfare.
  • Current or recent manufacturers of cluster munitions.
  • Companies involved in constructing or maintaining nuclear arms.
  • Companies producing chemical and biological weapons.

Private Prisons

Why it matters? The prison industry in the United States continues to grow, with the U.S. prison population the largest in the world per capita and total numbers. The border industry similarly grows with the advent of private policing and the development of virtual border surveillance and monitoring technologies.  Private prisons do not perform traditional prison functions such as deterrent, punishment, and rehabilitation; instead, they want to keep their prisoners as long as possible in order to maximize profits. Corruption and human rights violations are more common in private prisons than in public prisons. 

 

How can I make a difference? By selecting this exclusion, you can invest in prison-free funds and remove companies involved in the prison industry, such as private for-profit prison operators, prison services providers, and companies involved in militarizing borders and policing immigration. These operators include:  

  • Incarceration and detention facilities (facility management, youth and family detention, international private institutions, private prison financing, transportation and deportations, facility surveillance and security, and prison labor).
  • Services in facilities (communication services, health services, banking and financial services, and food, commissary, and other goods).
  • Supervision and monitoring (e-carceration, community corrections, and bail bonds).

Tobacco

Why it matters? Smoking is the leading cause of preventable death in the U.S. and worldwide. Most smokers start before they’re 18, and every day, more than 2,000 young Americans become smokers. Kid-rated movies still depict smoking, even though the U.S. Surgeon General and the scientific community have concluded that smoking scenes in movies influence young people to smoke.  

 

How can I make a difference? By selecting this exclusion, you can remove companies involved in the tobacco business from your portfolio and invest in tobacco-free funds. Begin today to save the lives of the 500,000 Americans who are killed by tobacco smoking each year.  These companies include: 

  • Largest tobacco manufacturers (multi-national companies producing tobacco, illicit trade in tobacco products).
  • Entertainment companies promoting tobacco use (tobacco promotion through the entertainment media, smoking scenes in films, raising public health risks).

Thanks to As You Sow’s incredible research, we are proud to offer 6 poignant industry exclusions for 21st-century challenges. Knowing where to put your money and where to move it out of can assist you in developing a portfolio that truly aligns with your values and votes for a future you want to see! To get started on making a difference with your dollars, check out our early access offer to the FLIT Invest app.  

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Prior to founding FLIT Invest, Alejandro worked at J.P. Morgan’s Private Bank in New York, where he oversaw and managed investments for ultra-high net worth families. Before J.P. Morgan, he was an investment analyst at Northwestern Mutual, responsible for developing comprehensive financial plans and asset allocation models. Alejandro is a CFA charterholder and former professional soccer player.

Steven is a UX/UI Designer based in Los Angeles, CA. He received his BA from CSULB focusing on graphic design. Steven approaches his projects with a keen eye for design while prioritizing user-friendly solutions. He is passionate about animal welfare, and environmental causes.

Prior to FLIT, Kinga worked at Ericsson as a software developer specializing in data analysis where she developed machine learning models to evaluate the quality of the encrypted media traffic over mobile networks. She is an advocate for promoting a transparent and effective work environment. Kinga values diversity and feels strongly about providing access to education. She has a sweet tooth, loves reading and HIIT training.

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Prior to founding FLIT Invest, Richard was an investment banker at ING in London. He advised banks, asset & wealth managers, FinTechs and other financial institutions on mergers & acquisitions, financing and other strategic projects. He is an impact investing enthusiast having advised BlueOrchard – leading global impact investing asset manager – on their sale to Schroders. Richard is a former professional triathlete, vegetarian and nature enthusiast.

Serena is a sales and growth professional. She has experience in rapidly scaling revenues for consumer products through the deployment of marketing campaigns and team strategy development. Serena has a keen eye for identifying and implementing emerging consumer trends that result in better user experiences. She is passionate about criminal justice reform and is a loud voice in the fight for gender and racial equality.

Martin is a Software Architect and Developer whose goal is to make FLIT Invest an application that puts usability and security first. Martin started his career in finance, where he developed an integrated treasury solution for banks and corporations. Then he deep-dived into medical imaging at Siemens Healthcare, where he spent years developing a next-generation radiography system. Martin is an avid traveler and loves cycling, hiking, and skiing.

Zsolt has worked as a Software Engineer in Germany, Scotland, and Hong Kong. His work experience lies predominantly in the FinTech industry, both in startups and well-established companies. Before FLIT Invest, Zsolt was a developer at Asia’s leading wealth management platform in Hong Kong. Alongside FLIT, Zsolt is completing his Master’s Degree in applied mathematics in London. In his free time, he enjoys swimming and reading fiction.

Tina is a UX/UI Designer based in Los Angeles, CA. Her expertise in both Economics and Interactive Design allows her to approach topics from a variety of perspectives in order to create products, assist people, and solve problems. She characterized challenges in a larger scope as an explorer, and she continued to look for solutions that would better human life. In addition to design, Tina is enthusiastic about women’s issues in society and animal welfare in various countries.

Peter is a Mobile Engineer with extensive experience in native iOS and Android app development. He has worked with various Fortune 500 companies across industries including fintech, transportation, human resources, energy, accounting, and pharmaceuticals. Being a lifelong learner he’s always eager to acquire new skills in various topics. He’s enthusiastic about different aspects of finance, and in his free time he enjoys working out.

Nick is a User Researcher based in Los Angeles, CA. After receiving his BA in Psychology, he moved on to receive a certificate in UX/UI from UCLA which set him on the path to understanding users. Nick approaches User Research with an empathetic lens, ensuring that every user’s needs are considered in each step of the process. Nick is passionate about providing sustainable change, and in his free time, he’s looking for another national park to check off the list.

Brian is a self-taught iOS developer based in Los Angeles, CA. Driven by a strong interest in finance and renewable energy, he takes pride in being part of a team that takes huge steps towards a greener future. Prior to joining FLIT, Brian played multiple competitive games such as League of Legends at a top-tier level- applying the same mindset of growth and improvement from gaming to his iOS development. Brian is often playing the piano in his free time and is extremely fascinated by artificial intelligence.

Rob is an impact investing analyst passionate about sustainability and its role in finance. Currently, he is a student at the University at Buffalo (UB), where he is the President of the UB Sustainable Business Association and a Board Member of the UB Equity Research Group. In his free time, you can catch Rob exercising or golfing.

Holly is a BSc Psychology with International Placement graduate from the University of Manchester, UK. She has worked and volunteered in the social care sector for 7 years and whilst at university, established an award-winning student zero-waste shop. She is passionate about social justice and environmental sustainability, and in her spare time volunteers as a Scout Leader and enjoys going for tea and cake with friends.

Jake is an entrepreneur, designer, and biologist passionate about sustainability. Previously, Jake founded VOSTIC, a company that manufactured and distributed a kelp-based replacement for plastic. Jake holds a master’s degree in Design Systems from Pacific Northwest College of Art and a bachelor’s degree in Biology from Lewis & Clark College. On weekends you might find him making music or snowboarding at Mt. Hood.