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 utilizes data from 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 learn more about how FLIT Invest utilizes As You Sow’s research check out our press release.
Footnote 1: Content is for informational and educational purposes only. Any views, strategies or products discussed may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. The information contained herein should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. Investors should carefully consider the investment objectives and risks as well as charges and expenses of a mutual fund or ETF before investing.
