When it comes to making an impact with our money, our first instinct may be to shift our shopping dollars to support the change we seek in the world. Fromto to boycotting retailers that are unkind to their workers, how and where we collectively spend certainly matters and deserves attention.
But are these financial transactions the most powerful way to spark change? In her new book, Wallet Activism, author and activist Tanja Hester encourages us to think bigger about aligning our financial moves with the broader movements that are important to us. "If we look at the biggest opportunities we have to use our financial power, a lot of that is in the work we do. It's not just the shopping part. It's in how we invest and where we save," Hester explained on a recent episode of my podcast So Money.
Here are a few money moves that Hester believes can help tip the scale towards a brighter future.
Find out if your bank is part of the problem
If you have a checking or savings account with a major US bank, your deposits may be used to finance large-scale "climate-unfriendly" projects. A Rainforest Action Network study finds that the world's biggest financial institutions have been key financiers of fossil fuel projects -- to the tune of $3.8 trillion since 2016.
"I think you have a much bigger impact if you can move your money out of a big bank and into a credit union, a community bank, a Black-owned bank. There are so many great options that aren't funneling money to the fossil fuel industry. So I would honestly tell people to start there," says Hester.
Total cash deposits at all commercial banks in the US currently exceed $17 trillion -- but some of those dollars are shifting into mission-driven, digital-only banks.
Ando, a neobank, launched in January as an alternative to so-called "dirty banking." Since then, in partnership with community banks and credit unions, the company has invested its customers' money to support more than $12 million in carbon-reducing projects. "Ando empowers and enables the average person to engage with climate change on a healthy, meaningful and frequent basis," says co-founder JP McNeill. Ando says it has more than 30,000 customers and has raised $6 million in funding.
In September, female-led neobank Rallius vowed to use its customers' deposits to invest exclusively in environmental, social and corporate governance-friendly issues -- sometimes referred to as ESG -- such as decarbonization, affordable housing and empowering women and minorities. The company told CNET that it hopes to draw $500 million in deposits during its first year of business.
Align your investments with your values
Are the companies in your portfolio aligned with your beliefs? ESG investing is fast becoming a multitrillion dollar market, as individual investors increasingly throw support behind mission-aligned companies. You can often invest in ESG-focused funds through your broker. Some workplace retirement accounts may also offer ESG or "impact" focused exchange-traded funds.
But while the market for ESG investing is growing, Hester insists we still need to do our own homework -- because, with no standard metric for evaluating ESG funds, the market remains murky.
Direct indexing is another way to pick and choose investments tailored to your values. How it works: You buy individual stocks in an index fund you want to track, omitting the companies you find problematic. "You could take the S&P 500 index and pull out the fossil fuel companies, the gun-makers, the people who make fast food," says Hester. "You can match it with your values."
Make a difference at work
Refusing to work for a "bad actor" company is another way to leverage your power, says Hester. "I do think that industries will be forced to change if the most talented and sought-after people say, 'You know what? I don't want to work for this industry.'"
Quitting your job, however, may not always be practical or a strategic financial move. You can, as an alternative, try to make an impact from within -- by organizing a union, for example. There is strength in numbers, says Hester. And if your company faces issues related to equity, you can serve as a mentor and push for more diversity and inclusion in the workplace.
Theis an example of this. Trans advocates and employees urged the streaming service to take down Dave Chapelle's new comedy special, which mocks transgender people. But when the company refused, employees staged a walkout and the news went viral. In time, it may lead Netflix to think twice about the content it supports and streams. It will also serve as an example for other businesses.
"Work is a financial transaction," says Hester. "So it's important to think of that as financial power."