Why Rachel Robasciotti Works to 'Mobilize Investors'

In mass incarceration, we put out the racial justice impact data set, which basically doesn’t just say “Hey, finance, stop investing in private prisons.” It identifies which companies are actually involved in perpetuating the system of mass incarceration. So we’re talking about everything from the money bail system to private prisons directly as well as their major financiers and suppliers.

If you go to our website, you can look up the racial impact dataset and see where publicly traded companies stand. The reason we focus so much on data is because we believe that if we’re going to have an impact, it’s not just about having impact on our portfolio; it’s actually sharing information so that other investors, particularly institutional investors, can be looking at the same data that we’re looking at as much as possible… And we know that institutional investors don’t do anything without data.

We’ve gone to the impacted communities and asked “What can we do to help?” and … we partner with a social justice organization to publish that data.

What would be an example of that?

Forcetheissue.org is one example. … We do something similar on economic justice … for tipped workers. Go to Investors for Livable Wages. You can see  that, again, there’s data.

How are you applying this data in your own investments? 

We have an ETF, the Adasina Social Justice All-Cap Global ETF (JSTC). In that public equities portfolio, we are the first to apply the data that we produced. We are the first publicly traded portfolio that specifically identifies and excludes publicly traded companies that pay subminimum wage to their workers. It’s not just an economic justice issue. Most of the people who are paid those wages are Black people and women.

We also have a fiscal justice municipal strategy. That’s all about buying up the bonds of majority-Black cities or cities with a large Black population … buying what you would call Black muni bonds. We are leveraging our weight as investors in those communities to try to improve the outcomes for the residents there. 

What would be an example of that?

That is not in a fund, so we don’t put out all the details of what communities we’re in, but if you go to our website to invest in fixed income, to FAQs at the end, it says where the strategy invests and why. 

We also invest in historically Black college and universities bonds like in Hampton, Virginia, a Black-affirming community… Like a lot of similar places, they don’t have the required capital needed and the bond market doesn’t give them favorable prices for their bonds. And when you eliminate all the factors, all that’s left is the issue of racial discrimination that appears in the bond market. 

We also take an active stance in communities where maybe it’s not all good but maybe some things are doing well. … For example, if there were a city like Ferguson, Missouri, or Kenosha, Wisconsin, where a really high percentage of their budgets [was] coming from fines and fees on residents, which happened … and they had a lot of police brutality, we would be able to go to them and say:

“Did you know that setting your portfolio up this way ends up resulting in civil unrest and an eventual bond rating reduction? We’re bond buyers. We own the bonds and we may be interested in future bond issues. and we want you to know that we care about how you build your budget.”

What about your stock market strategies?

That market is so big, so we screen our own portfolios, but we don’t limit our impact. We vote our proxies and screen our portfolios very rigorously. … We do that work by ourselves, but if we just do that in our own portfolios, that doesn’t actually have the kind of large-scale impact that’s needed for making changes to the whole system.

So we don’t focus on doing what we do with the Black muni bond strategy in our own portfolio. What we do there is, we actually … educate other investors and give them data so that they can do something similar in their own portfolios.  … 

We go into our portfolio to make changes on the bond side. We actually go outside the portfolio for public equities, and we mobilize investors. We make investors understand why it’s a problem that there are sub-minimum wages and why they should be checking this out in their own portfolios. … What we actually do is mobilize other investors that we can collectively have influence on corporations.

In your work with Robasciotti & Philipson, an RIA firm that has now merged with Abacus, how are you investing clients’ moneys in that capacity that deals with all these social issues?

I’m part of supporting the Abacus investment committee — they are centralized managed portfolios. They are one of the folks that actually use our data. Also, we worked with Abacus to create the Due Diligence 2.0 Commitment. That’s about investment industry transformation.

Everyone keeps complaining about how there’s no diversity in the investment management industry. Then when you get right down to it, it’s not because there aren’t other asset managers like us out there. We exist.

What happens is that institutional due diligence processes are systematically biased against new entrants. And that ends up excluding women and people of color. The industry is 98-plus percent white male.

What we did with the Due Diligence 2.0 commitment was make a road map on how to reform due diligence processes such that allocators are still meeting their fiduciary obligations but they’re not creating systemic barriers for Black Indigenous and people of color. We put out a set of standards … and we’ve had just overwhelming positive feedback.