In the midst of the economic turmoil that followed the Covid 19 lockdowns, one commentator on National Public Radio remarked that “we are all in the same storm but we’re not all in the same boat.” In other words, the severity of the impact on families and individuals was inversely proportional to the economic resources that could be marshaled to address the challenges. The results, as we know, were anything but equitable.
At Adasina, we are committed to advancing the cause of economic justice. It is one of the four key pillars built into the selection criteria used in the construction of the Adasina Social Justice Index, which in turn provides the basis for the Adasina Social Justice All Cap Global ETF (NYSE Arca: JSTC).
The index includes both traditional Environmental, Social & Governance (ESG) metrics and our proprietary data-driven screens and is built from a global universe of public equities across all major asset classes. In addition to economic justice, other screens include gender, racial, and climate justice. The economic justice criteria are intended to move our economic system towards a more fair and equitable financial future for all people and communities. They include factors like the payment of subminimum wages, forced labor and child labor, worker protection and rights, excessive executive pay, predatory lending, and overall working conditions.
After decades of advantaging capital over labor, we are seeing an increasing recognition of the value of human capital in the corporate enterprise. In our view, those companies that understand and act on this will be better positioned for long-term success. Conversely, abusive labor and compensation practices may lead to a long-term erosion of value. As such, the practice of economic justice is not just checking an ESG “box;” it can have a material impact on company performance.
As with the other social justice movements we support, we strive to go beyond the basic company screening employed by many ESG funds, drawing on ideas and inspiration from those most directly impacted by an issue, and collaborating with grassroots organizations that support them. In the case of economic justice, we worked closely with the nonprofit One Fair Wage to establish the “Investors for Livable Wages” campaign to pressure public companies to pay a fair and livable wage to their employees. Employers of tipped workers are only required to pay $2.13 per hour in direct wages as long as that amount combined with tips equals the federal minimum wage. This backstop measure often falls short, leaving workers with even less than the already too low minimum wage of $7.25/hour.1 Paying employees a livable wage is not only good for the employees, but is also good for companies, and good for investors, resulting in higher worker morale and lower turnover rates.
Competing for Workers
The Job Openings and Labor Turnover Survey (JOLTS), published by the U.S. Bureau of Labor Statistics, is a closely watched measure of labor trends. In January of this year, there were 11.3 million job openings – near the record high. The so-called “quits rate” – a measure of the willingness of workers to leave their jobs – stood at 2.8%. As recently as November 2021, a record 4.5 million Americans were quitting their jobs.
This appears to reflect a long-term shift in labor market dynamics – there are currently more jobs than workers available or willing to fill them. In this environment, fair labor practices can become a competitive advantage for companies. Research on the practice of paying a full minimum wage has found that there are multiple financial benefits for both businesses and employees, including higher average profits and faster average organizational growth.2 Paying higher wages can also lead to increased worker morale, improved worker health, and lower turnover rates, all contributing to better business outcomes for employers.
Companies that recognize this may not only create a more productive workforce but also a more loyal customer base, as more consumers take note of corporate behavior.
Similarly, the last few years have seen an explosion of interest in ESG-focused investment assets as Millennials and Generation Z have come of investing age.3 A Harris Poll conducted on behalf of CNBC found that about one-third of millennials (who are not kids- some are as old as 41) often or exclusively used investments that take ESG factors into account. Nineteen percent of Gen Z expressed similar preferences. Companies with good employee and community relations, thoughtful governance, and climate-aware environmental policies may be more successful in attracting the loyalty of workers, consumers, and investors.
The economic reality is that if the tumultuous waters rise high enough, we all risk getting swamped, regardless of what boat we’re in. For clients who want to invest in positive social change, Adasina makes it possible to align with an investment company that is fully committed to fostering that change. For more information on Adasina and the Adasina Social Justice All Cap Global ETF, click here.
At Adasina Social Capital, we’re committed to making large-scale, systemic change through investments in financial markets. Our diverse team of people from non-traditional backgrounds works closely with the communities we intend to impact – aligning investors with social justice movements. Beyond creating our own investment criteria and portfolios, Adasina mobilizes investors to drive long-term impact through industry campaigns and education. Join us in becoming unstoppable agents of meaningful change for people and our planet!
Before investing you should carefully consider the Fund's investment objectives, risks, charges and expenses. This and other information is in the prospectus. A prospectus may be obtained by clicking here. Please read the prospectus carefully before you invest.
Investing involves risk, including the potential loss of principal. There is no guarantee that the Funds investment strategy will be successful. Shares may trade at a premium or discount to their NAV in the secondary market, and the fund's holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions. The Fund is new and has a limited operating history. The Fund has a limited number of financial institutions that are authorized to purchase and redeem shares directly from the Fund; and there may be a limited number of market makers or other liquidity providers in the marketplace.
Foreign and emerging market investing involves currency, political and economic risk. Applying climate, economic, gender, racial, and movement aligned justice domain criteria to the Fund's investment selection process may exclude securities of certain issuers for non-financial reasons and therefore, the Fund may underperform the broader equity market or other funds that do not utilize similar criteria when selecting investments. Adasina is a newly registered investment advisor and has no long-term track record that an investor may judge. Investments made in small and mid-capitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. The securities of large-capitalization companies may be relatively mature compared to smaller companies and therefore subject to slower growth during times of economic expansion.
It is not possible to invest directly in an index.
Shares of the Fund are distributed by Foreside Fund Services, LLC.