Turning Ethical Investing into a Wall Street Disruptor

OpenInvest, a new investing platform that beta-launched at SOCAP16, aims to transform investing by putting the power of ethical investing into each investor's hand.

Sustainable investing is no buzzword – it has been over a decade since the first sustainability-focused investment firms and options emerged. Even as evidence has grown that sustainable investing is actually more profitable than investing in companies or industries with bad practices, it remained little more than a drop in the bucket compared to the vast sums flowing on Wall Street on a daily basis.

The flip side of sustainable investment – divesting from companies with bad practices, such as the movement to get universities to divest from fossil fuel companies, has also had limited financial impact. The leaders of this movement, in fact, acknowledge that its goals are more moral and social rather than financial.

Still, the immense social support for divestment shows that Americans are ready to put their money where they values are – if we can empower them to do so in an easy, effective way.

Enter OpenInvest. Its co-founder, Josh Levin, is not your typical startup founder. He previously worked for the World Wildlife Federation and has a deep understanding of the power of social movements to bring about substantial change.

“[At WWF], I saw how hearing from a customer base was powerful in getting companies to act,” Levin told TriplePundit. “[We're] never going to get things done without that groundswell.”

Though targeted corporate accountability campaigns have proved successful, they currently require massive investments in organizing and advocacy by civil society organizations. Ethical investing is, so far, only playing a tangential role. The problem, Levin told us, is that the current system is still controlled by large Wall Street banks and investment firms, which make it as difficult as possible for someone to invest their money ethically, trapping it in the existing ecosystems, under their control.

The other challenge is that existing ethical investment options are not tailored enough. That means someone who cares about, for example, renewable energy and healthcare access may find funds focused on one of these issues. But within each individual fund may be companies that don't align with your values, meaning your impact is being diluted.

OpenInvest's model is focused not only on creating a massive, one-size-fits-all fund, but also the exact opposite. The group hopes to take advantage of the massive growth in data-driven technology that is transforming how business is conducted around the world, for better and for worse.

We've all heard about Robo-Investing, funds that are now managed by super-computers using sophisticated algorithms. It is that same technology that OpenInvest plans to integrate and unleash to power ultra-customized, socially-conscious investing.

“Technology [now] allows deep customization in real-time,” Levin said. “By applying that to the financial space, we felt we could allow impact investing at the retail level.”

In practice, this means you can create your own personalized investment portfolio that aligns with your values. This involves integrating information from a half-dozen sources (with more to come) and allowing users to simply swipe and eliminate companies or even entire industries, from their portfolio.

The goal is not just better investing, but also engagement. Getting more people involved and empowering them through their investments will only make companies more responsive to their needs, Levin says.

“If we get to the point where the public is more engaged ... that is how we transform finance."

Image credit: Prawny via Pixabay