Creating Change With Your Wallet: Harnessing the Power of Personal Economics for Good
Money is a Powerful Tool
Money has long been a driving force behind human history. Wars have been fought over trade routes. Businesses have crushed their rivals. Friendships have been lost to debts.
But at the end of the day, money is a tool, and like all tools it can be used for good or for bad. So, how can you consciously and intentionally use the power in your pocketbook to make the world a better place?
You can start by evaluating your own personal finances in these three areas:
How you spend money
How you invest money
How you earn money
How You Spend Money
Have you ever thought about how every single piece of plastic you’ve ever purchased still exists somewhere in the world? With today’s global economy and supply chains, the products you purchase can have far reaching effects.
The good news is, there are companies out there that are working to do good in the world! Unfortunately, there are also many that employ unethical business practices to shave dollars and pennies off the final purchase price to make their products more attractive to consumers, with these unpaid corporate costs usually getting passed on to society in many forms, such as greater pollution and illegal labor practices.
Through conscious consumption, thoughtfully spending your money on ethical products, you can help the good companies succeed and limit the success of the bad actors. By switching your purchasing decisions towards good companies and products, you can have a huge positive impact, including:
Bringing success to businesses and companies that strengthen their local communities.
Supporting ethical business practices, such as paying fair, living wages to employees; while reducing the use of practices such as prison and child labor.
Sponsoring the use of better materials and ingredients that simultaneously help renew Earth’s resources, while limiting deforestation, illegal dumping and other types of destruction to nature.
Reducing carbon emissions and other pollutants that disproportionately affect minority and disadvantaged communities.
Limiting plastic consumption, which can bog down waterways and kill vulnerable wildlife (according to the EPA, only 8.5% of plastic was actually recycled in 2018).
The point of conscious consumption, at least in my mind, is not to spend endless hours researching every product to understand the full implications of purchasing it. Very few, realistically, have the time for this. Rather, the point is to bring a sense of intentionality to the products you ultimately buy, instead of simply deciding upon the lowest cost or the flashiest marketing. This will help nudge the market in the right direction.
Here are some actions you can take:
Purchase organic and other natural products whenever possible.
Learn about sustainable and ethical product certifications to make an easier, more informed decision.
Limit your personal plastic consumption by switching from products wrapped in or stored in plastic, purchasing refill sizes instead of single use, and refill grains, cereals, and many other goods from the bulk section of your grocery store.
Reduce your consumption of meat, especially higher environmental impact meats, like beef. Personally, I have not given up meat consumption, though I am steering my diet towards flexitarian (My personal rule is to primarily cook vegetarian at home and enjoy meat when I eat out).
Purchase renewable energy to power your home, either by installing panels on your home or by choosing a renewable energy option for your electricity supply, which many utilities now offer.
By taking these actions and using your best judgement, you can help nudge the world in the right direction.
How You Invest Money
The point of investing is to earn a rate of return on your money. By its very nature, this means that the companies you are investing in are also aiming to financially benefit. Are they using this money responsibly?
Your investment allows companies and other beneficiaries of these funds to turn around and make their own investments in the future success of their business. Companies and financial professionals traditionally target projects with the highest Net Present Value (NPV), to maximize their returns. However, finance majors and MBAs (my educational background), are typically taught to limit a project’s Return on Investment (ROI) time horizon to pay back within the next 5 years to reduce long-term risk and uncertainty.
What this means is that your personal investment has an impact on what sort of projects, technology and infrastructure will be built with it over the next several years. By choosing more sustainable and socially responsible investment options, you can help empower communities, reduce pollution, and make the world a more equitable place.
As the climate crisis continues to worsen, sustainable investments may also prove to be lower risk investments, with less exposure to natural disasters, volatile energy markets, and supply shocks.
Here are some actions you can take:
Choose a responsible bank, which ensures that the loans they make and the business they support consider things like sustainability and diversity. This article from NerdWallet can help think about factors to consider.
Match your stock market investments with your values. This is easier today than ever with the rise of socially responsible Exchange Traded Funds (ETFs), allowing you to invest in a fund that allocates your investment across the publicly traded companies that match the fund’s filter criteria, which may consider factors like a company’s impact on climate change, natural resources, pollution and waste, human capital, and corporate governance, as this resource from Schwab helps define. With any investment, do your due diligence. And to maximize your personal return on ETFs, it can be wise to choose a fund with a low expense ratio.
Invest with an impact investing company, which factor in social and environmental return on investment in addition to financial returns. While impacting investing options are still limited, this is a rapidly growing industry. A great resource I found on companies working with individual investors can be found here.
Sustainable investing strategies are not only helping to make the world a better place, they are also proving to be highly effective as consumer conscience grows; investors are demonstrating that they can even beat the market as a whole, a feat that less than 10% of investment funds can claim. Both the world and your nest egg will thank you.
How You Earn Money
The last factor to consider is the company you work for. Your talent is helping your company succeed at something; are they doing good in the world?
Before continuing, I would like to acknowledge that taking action here requires a high level of privilege. For many, finding a job and making ends meet is already a great enough challenge and time commitment. However, if you do have the capacity and privilege to act, then you may find this to be one of the most rewarding and impactful challenges you can take on.
By working for a good company or helping to steer your company in this direction, you can have a powerful and measurable positive impact on the world, including:
Demonstrating in the marketplace that doing good can be financially successful
Driving thought leadership to guide other companies in this direction
Inspiring people, organizations, and communities to amplify the impact
There are several questions you can think about when evaluating whether or not an employer may be a good fit:
Do they treat their employees well and pay living wages to everyone? Today, there are numerous online resources to help answer this question.
Do they give back to the communities they are a part of? Do they allocate their people, brand, and financial resources towards this goal?
Do they have a sustainability/ESG (Environmental, Social, and Governance) plan? Smaller businesses or startups may not have the resources yet to develop one; but for larger, well resourced companies, the lack of such a plan can be a warning sign that they aren’t thinking about or don’t understand the wide-reaching impacts of their business.
Does the very nature of their business do good or does it do harm? For example, renewable energy companies reduce emissions while fossil fuel companies directly cause them. There can obviously be shades of gray here, so use your best judgment.
I built my early career in renewable energy and am now fortunate to work for Slalom, a purpose driven consulting company. One thing I have found in working for companies that correctly answer most of these questions is how great all the people have been to work with. Good, thoughtful companies attract good, thoughtful people. This can provide you with the chance to both earn your money in a better way and enjoy the journey. That should be a win-win in anyone’s book!
If a company doesn’t check all of those boxes, or if they check many, but could be doing even better, then an important follow up question would be, “do they afford the space to, or would you feel comfortable engaging in the type of activities that can help guide the company in a better direction? Are you empowered to make it happen?”
For example, if it seems like your company doesn’t follow the best diversity practices, do they offer the ability to create an Employee Resource Group (ERG) to help educate and advocate throughout the company? Do you feel safe to raise your voice without getting in trouble?
Shortly after joining Slalom in 2020, I helped co-found Slalom’s Seattle Sustainability employee group along with several passionate teammates. Together we’ve helped grow our team and our impact, making our local office more sustainable, educating our colleagues on sustainability and ESG, and are now launching go-to-market consulting offerings.
It’s important to reiterate that I couldn’t have done this alone, and I’m grateful for all the collaboration with our team along the way.
You Have The Power
When you think about how big the problems in the world are, it’s easy to lose hope and think that you as an individual can’t possibly make a difference.
The ideas I've included here are certainly not the only options you can do, and there are more opportunities than ever today to make a positive difference. I chose these ideas to share, as I think they are both accessible and have the capability to positively nudge the system as a whole in the right direction using the power of personal economics.
It’s important to remember that each one of us represents a pixel making up the portrait of life. One by one, if we each make the conscious decision to earn our money, invest our money, and spend our money more wisely. If we factor good values into our decisions, then slowly the tapestry will start to change colors. It will become brighter. More vivid and meaningful. The edges will no longer fray. It will look like the world we could have. The world many of us are already working to build. A world filled with prosperity. Maybe you’ll even find the joy and happiness in yourself along the way, like I have.
As always, I'm always happy to have a conversation if you're interested in talking further. I've found most people passionate about or working in sustainability to be among the most welcoming, understanding, and intelligent people I've had the chance to interact with, and they would similarly be ready and willing to discuss.
I hope you’ll join me in this endeavor.
