Rachel J. Robasciotti

Rachel J. Robasciotti is founder and CEO of Adasina Social Capital, an investing and financial activism firm acting as a vital link between the financial markets and social justice movements.

Her contributions include mainly commitments to increase the flow of Black, indigenous and people of color within the investment industry. She is also involved in many other projects, namely as Treasurer of the Board of Directors for Resource Generation Board Member for One Fair Wage, and Advisor of the Indigenous Women’s Investment Fund for Native Women Lead, as well as a previous Director of queer people and gender violence-related foundations.

For example, in social justice movements, when you talk about equity, they're often talking about fairness, racial equity, and gender equity. Inside the investment world, when you're talking about equity, you're often talking about percentage ownership in a company. In the social justice world, when you talk about voting rights, they're usually talking about your civil voting rights and ability to elect representatives and weigh in on laws. To investors, when you're talking about voting rights, you're talking about shareholder voting rights. The need for translation comes down to the terminology and words used, disambiguating there

— Rachel J. Robasciotti

Interview transcript

Great, thank you for your time today. Could you please introduce yourself and tell us a bit about what you do? Also, share with us your personal journey into the impact space.

Rachel My name is Rachel Robasciotti, and I am the CEO and founder of Adasina Social Capital. Adasina is my second company in the investment industry. The first company was a wealth management firm that we started almost 20 years ago. At that firm, we created a social justice investing strategy in 2018, which grew to become an entity in and of itself, known as Adasina Social Capital. It focuses on wealth management, particularly with women, gender expansive folks, and people of color. I started there because I grew up in a very segregated and poor black community, primarily led by women, as the men had been removed from the community by mass incarceration or their lives were taken by law enforcement. The issues of racial, gender, economic, and climate justice have always been very personal to me. I also lived in an environmentally compromised and vulnerable community. I realized that I wanted to help people like me make better financial decisions. In the wealth management firm, I helped people who were in groups most impacted by racial, gender, economic, or climate injustice. I was really trying to work with people from those groups to help them make better decisions. Late in that career, I realized that the systemic issues we were facing were bigger than our ability to make individual financial decisions that would get us out of the situations we were in. As the industry was transforming from socially responsible investing into ESG, we were busy building our social justice investing strategy. Instead of looking within finance for the answer to how we could make an impact, we started connecting with social justice movements that represented the communities most impacted by issues of social injustice. We started asking them how investors could align with, support, and advance their goals. That's how we built our social justice investing strategy. We were the first to invest in certain social justice metrics, and we also mobilize investors to expand the impact beyond what we can accomplish in our own portfolio. Our impact thesis is that we're mobilizing investors, while our investment thesis is different in that we believe social justice movements are giving us early indicators of risk, which drives our portfolio construction. We use their definitions of impact and partner with them to develop novel datasets that inform our strategy.

To give a bit of background about myself, I used to work for an investment bank, specifically in institutional sales, for eight years before switching to design a few years ago. The idea was that I wanted to do something more socially driven, which led me to design.

It's interesting that you mentioned mobilizing investors through social justice. How has that been going for you? When I was in institutional sales, the conversation around ESG was that investors felt they needed to compromise financially to invest in companies with good ESG ratings. I would love to hear your perspective and observations on this topic.

Yeah, I do think that in the short term, if you are not invested in certain industries, like for example, we are not invested in fossil fuels, fossil fuels may perform better in the short term, which is something that you may not be able to take advantage of. But generally speaking, what most institutional investors and regular everyday investors are looking for are sustainable long-term returns for their future. And the way to achieve those is by investing in companies that are sustainable and engage in sustainable practices for the long term. Any company that is, over time, a net drain on society and extractive from people and the planet is ultimately not going to achieve those goals. So while you may have momentary blips of missing out on certain industries having an uptick, ultimately what investors really want out of investing is what social justice investing delivers. We deliver market-like returns, and it's not concessionary capital to invest in our portfolios. Not only do we deliver market-like returns, but we actually frequently perform even better than an unscreened index, which focuses on similar geography and similar market capitalization. Great, so yeah, not concessionary at all. Okay, I can show you a data point for that if it's useful.

Yeah, that'd be great.

See, this is the index. Pure. This is our Adasina Social Justice Index. There is a fund that seeks to track this, which we also manage. But as you can see, we're a global all-cap. Our indexes, represented by this light blue line, are widely known and available commercial global all-cap indexes that are not screened in any way and do not pursue impact. So our investment thesis has a lot of support.

Wow, it's fascinating to see that it tracks better than FTSE. That's great, thank you. I'm also interested in learning more about the composition of the screens. How do you partner with the community to determine what's important and what's just superficial data? In other words, how do you come up with these criteria?

So, we have social justice partners, and we select the partners with whom we work based on a few criteria. One criterion is that social justice organizations are actually mobilizing the community in service of a particular goal. They represent the community moving towards something that it wants. We are looking for organizations that are led by the community of intended impact and do work on behalf of that community. This means that while it would be lovely for a white-led organization to work on behalf of the black community, they might not necessarily be the organization that we would prioritize over a black-led organization doing work on behalf of the black community. It's about the leadership, who they're working for, and their ability to engage with us about the way that investors can advance their movement. It's very important that we choose the right partners to begin with. Those partners then work with us to both identify what would be impactful for their communities. They either identify the data that already exists, but often what they're doing is identifying a data point that does not exist. When that happens, we develop a data set for public equities that would have a significant impact for those communities if investors were to use that data as a leverage point for their engagement and investment. That's generally how we measure impact. It's really what's most impactful to the community of intended impact. What's different about that is that in finance, we financial professionals tend to spend a lot of time talking to each other about the outside world, and usually, we're only working with data that already exists. Those are two things that we've done differently at Adasina. We talk to people outside of finance, and when there is no data, we help develop it.

Great! Could you provide an example of a nonexistent dataset and explain how you mobilized the community to develop metrics for it?

Or on the issue of listening to the Wharton Dollars and Change podcast, where we talked about forced arbitration for sexual harassment during the #MeToo movement. It was the issue of forced arbitration for sexual harassment in all public and private companies, but particularly in public companies. The fact that this was in place resulted in serial sexual harassers continuing to exhibit that behavior for years, as those victimized by them were put into a private, unfair process that silenced them and allowed the perpetrator to continue. There was no dataset of where all companies in the United States stood on this issue, so we developed one to force the issue. Similarly, as a measure of economic justice, our industry tends to look at the problem of the #MeToo movement and develop gender lens portfolios, but on a metric that is not related or impactful. It is a metric about women's representation on boards. While representation is important, it is not the root cause of the issue. Very similarly, on economic justice, we should be looking at CEO and executive compensation at public companies to see whether or not it is fair. However, if you talk to the communities most impacted, such as the Poor People's Campaign, One Fair Wage, and the Fight for 15 United for Respect, they are all focusing on the wages of those who are paid the least inside of these publicly traded companies. What we found is that you can actually pay a wage that is less than the minimum wage to tip workers, incarcerated workers, children, and the disabled. By working with social justice organizations, we realized that wages were a really important piece that we needed to focus on, and that within that community most impacted, those who are paid the sub-minimum wage. So we partnered with One Fair Wage and developed a dataset of the publicly traded companies that are paying the sub-minimum wage. We have also developed a campaign that now has over $1 trillion of investors calling for an end to the sub-minimum wage.

Is it super difficult to obtain those datasets or build them from scratch? And if you want to create a database for a specific issue, how much time would be required to build it?

It can happen as quickly as six months if it's a very targeted issue, like the sub-minimum wage, and there are relatively few companies engaging in that practice. It can take one to two years, as is the case with forced arbitration. We started that work in 2017, before we had officially launched our social justice investing strategy. We had just started doing the research, and it took over a year to get the initial data set out there because we were looking at 3,600 publicly traded companies and where they stood on this particular issue. So it really depends on the issue, but it can be a large undertaking. It takes an investment professional who knows what investors need and also knows what would be meaningful to the social justice organization. There's a lot of translating work that happens. For example, in social justice movements, when you talk about equity, they're often talking about fairness, racial equity, and gender equity. Inside the investment world, when you're talking about equity, you're often talking about percentage ownership in a company. In the social justice world, when you talk about voting rights, they're usually talking about your civil voting rights and ability to elect representatives and weigh in on laws. To investors, when you're talking about voting rights, you're talking about shareholder voting rights. The need for translation comes down to the terminology and words used, disambiguating there. But it also comes down to saying, "Great, this is your issue. How do we translate that into a meaningful metric for investors? And how do we work with you to ensure that we're gathering the information that we need about the public companies that are involved?" So, it's a lot of work. That's kind of the secret sauce of what we do: translating.

I have another question: when you find social justice partners, it involves a lot of due diligence. Do you have a team of people who take care of background checks and understand the effects of partnering with them?

I don't know if we're running background checks. But yes, we have a Social Justice Department, and we are probably the only asset manager on Wall Street that has a social justice department. Wow. So what they do is really bridge and campaign work to mobilize investors.

Do you partner with other institutions, such as asset managers, for collaboration?

Well, it depends on what mobilizes them. They join our coalition and sign our collective investor statements. They are the people whose impact we can have in our own portfolio by either divesting or engaging with a company. This impact is very admirable, but it's quite limited. The impact we can have by strategically sharing data and facilitating coalition building is much greater. That's where we tend to focus our time. We have fewer competitors than other investors we're working alongside to focus on the same issues. We're bringing investors together to collectively act in solidarity with social justice movements. That's the piece that hasn't been there before Adasina.

Wow, that's really interesting! We also spoke to Fidelity, who are focused on the ESG side of things. We were curious to learn how they source all of this data and think about sustainable investment. They focus less on the G and S and more on the E, so it's fascinating to see the different approaches.

Yeah. Yes, G is about getting additional information to inform investment decisions. Values-aligned investing is about aligning your investments with your values, which can overlap with ESG. Impact investing is really about what impact the company you're investing in is having on the world. So you can think of it this way: ESG is saying, "What impact does the world have on this company?" That's mostly what ESG is trying to figure out. But impact investing and social justice, specifically justice investing, is saying, "What impact is this company having on the world?" Those may seem like they're different, but in a highly connected world, they get closer and closer. The impact the company has on the world has something to do with how that company performs as well.

Yeah, this might be a very naive question, because I don't live in the US. Does it get political sometimes? And how do investors react?

It does get pulled. It has recently become political around ESG. It's less so in other parts of the world, but I believe that ESG investing, generally with any ESG impact investing values, has made such inroads toward uncertain issues that there's a fair amount of backlash and it has gotten quite politicized recently. People are referring to it in disparaging ways, but I think that's really a backlash to the fact that we're having a real impact with what we're doing as investors.

Great. Drawing from your experiences, is there a particularly memorable project that you've worked on where you feel like you shifted power dynamics from one group to another? I'm interested in hearing about an impactful example beyond the ones you've shared before.

So, the end of the story regarding forced arbitration is that it no longer exists in the United States. This was partly due to our work on the issue, as we came out as investors and said, "This is bad for business." We also advised at the highest levels of policymaking when the legislation was in Washington, which had a huge impact. When we started our campaign, there were fewer than 20 companies that had ended forced arbitration for sexual harassment. By the time we ended it, because it had shifted to a policymaking advisory role as investors, we had just under 400 companies and over 10 million workers who were no longer subjected to forced arbitration. So, we had an impact on 10 million workers. Additionally, we supported the policy and legislation that resulted in over 130 million workers no longer having forced arbitration for sexual harassment. This core issue that was driving the #MeToo movement, this corporate practice, is now gone. This feels like an example of when those who are most impacted were actually able to ask investors to do something about it, and the situation changed. I think that the way that Adasina works is a shift in traditional power structures. Finance talking to itself about the problems of the non-financial world is a luxury that's reserved for those who have power. What we do is go to those who are most impacted and put our power in service of their goals. The reason we didn't end up with a gender lens portfolio that focused on board representation after the #MeToo movement was because we went and asked, listened, and said, "What can we do to help? What can investors actually do to help?" When they told us what we could do, we realized there was no data, so we had to go build out the data set. I think that's a shift in traditional power, when you're actually listening to those who are most impacted rather than opining about what impact you might be able to have with data that already exists.

So, let's talk about the projects. They were obviously very successful, but what do you think was the special sauce that made them stand out? What was done differently? This was a new venture, so can you share your thoughts on why it was such a huge success? From my perspective, I'm curious to know more.

Well, I think we, as investors, were joining a movement that was already in progress. That's important because it already had a certain amount of public support that was happening as a result of the social justice movement, raising awareness around the issue and asking for that change to be made. So I think that sometimes investors, when they're trying to make an impact, are coming up with ideas themselves. And that means you have to start from scratch. It's much better to listen to the communities of intended impact, to listen to them and see what they're already doing, that investors can put their power behind. So I think that is a very particular element of success. Other factors are important, like necessity. There's a reason we follow social justice movements, not only because we want to advance their goals, but also because it's a more efficient way of making an impact. They're already working on the issue, raising awareness, right? It's the same thing with private prisons and the issue of racial justice in the United States. We were able to lead a coalition of investors that stopped a prison bond from coming to market for the first time in history. That security has been brought to market and failed as a result of shareholder activism. That was able to happen ultimately because people in the coalition were actually in touch with the racial justice groups that were saying, "No, don't fund the creation of more prisons." And there was already a public sentiment that mass incarceration is not something we want to continue profiting from. So when the bond became available, we were already working with organizations that had managed to drive a fair amount of public sentiment behind what we wanted to do there. I think that's important for success.

Yeah, that's really interesting. Having momentum and an established partnership within the community can help avoid the challenge of one person pushing something impactful alone. I don't know much about prison bonds, but I find it fascinating that finance professionals are actively choosing not to engage in them.

There were not enough people to purchase the bonds, causing the bond market to fail.

I find it amusing that I often wonder whether I'm the token Asian. Maybe? My last questions is: What do you think technology can do to enable or enhance its role in creating impacts?

I believe that technology is creating a more interconnected world than we've ever had before. In an interconnected world, the impact of a corporation's behavior, whether it's a public, big public company, or private company, does not go unnoticed. So, I think technology is making us more interconnected, and it's making impact investing more relevant because people care about how a company is impacting the world as much as the world's impact on the company. Right? Yeah. Technology is driving an increased interest in this because if you want to take advantage of certain communities or extract unsustainably from the planet, and no one knows you're doing it, you may be able to continue doing it longer than in a more connected world where the impact of your behavior is well-known. So, I think that makes it much harder to continue gathering capital, keeping customers, and keeping employees that are helping you do that. Therefore, I think that technology is making a more interconnected role, which is furthering our goals around impact and making it a tighter loop. We don't have to learn 20 years later that Exxon has been responsible for climate change, for example.

Great! Thank you so much for your time today. Is there anything else you would like to share?

Those were really good questions. Thank you.

Great! Thank you so much. We'll be in touch. Before we publish anything, we'll make sure that your team has reviewed it. If you have any questions, please feel free to reach out to me.

Do you think people choose not to do something because of public pressure? Like, if no one else is doing it, they feel like they shouldn't either due to societal norms? Or do they do it out of the goodness of their heart?

Are you referring to corporations changing their behavior, or investors investing?

Both?

It's a mixture of both. I think it actually takes all of it to set, including the people who don't want to suffer the backlash of having said they wouldn't invest in private prisons yet. So, you know, purchasing a private prison takes away the fear of public backlash. And it also takes the people who, from a value standpoint, would never invest and are making noise about it. I think it takes all. Yeah, I get asked a question often about what's more important: divestment or engagement. As we divest from companies that are engaged in extractive practices and it's in our own portfolios, the data and the coalitions that we build, the data that we share, and the coalitions of investors that are both divesting and engaging, it actually takes all of us. It takes the people who won't invest, and it takes the people who are engaging with the companies around their behavior. So, I think it really is all of the above. We have to have all of the reasons in place to move in the right direction. Yeah.

Is it difficult for you and your team to discourage investors from investing in a specific vehicle or industry?

Well, no, because we aren't. It hasn't been very difficult because we aren't kind of making it up on our own. It's not our idea. There's already public sentiment that's built behind the idea. So we're just putting investor power behind something that already has a movement building around it. And I actually think that's part of what's important. Yeah, so no, it's not as hard as we get to. For example, One Fair Wage, we work with them to end the sub-minimum wage. They are already putting out research showing how tipping is a legacy of slavery. They're working on policy at the state level to end the ability for companies to pay a sub-minimum wage. They're already doing the work to build support for the end of that practice. And we are coming in very critically as people with power over the public companies who are often part of this process, who are part of the problem. We're coming in and saying, "Hey, actually, as owners of these companies, we don't want you engaging in this practice anymore." So if we are not starting from scratch ever, and that is important.

That's really good to know. When I was still in banking, I used to work for Goldman Sachs, and as a research salesperson, I would have to beg people to take a meeting with our sustainable investment research analysts. We would get so much pushback, especially around 2013-2014. So I'm just glad to hear that this sentiment has shifted. Obviously, ESG sustainable investment is a little bit different from social justice investment, but I'm just glad to hear that investors are more receptive to actually doing things the right way.

Yeah, I think there's more receptivity than lotto backlash recently. So if you blur a little bit, the corporations are a little bit lagging and a little worried about seeming too responsive. That's also why we're in that moment, but I really believe that investors, the next generation of investors, and both women and young people, care very much about values alignment. People are less interested than they used to be in investing in a way that may give them a financial return but a really bad social return. I believe that the pressure will continue irrespective of the current backlash, just because of what investors care about now.

Yes, it's good to hear that. I'm mindful of the time, so I'll ask a few final questions. Regarding these projects, do you believe that smaller scale projects can create systemic change? This question is based on conversations we've had over the past two months about creating impact. Many people talk about creating impact at scale, especially when taking a multi-stakeholder approach. However, some believe that it needs to be localized and contextual. You can't necessarily expect the same methodology or process to work in different contexts. What are your thoughts on this? Have you been able to replicate the process of addressing a problem and finding solutions, rather than the specific outcomes of your projects?

We've been able to replicate it, but that's because we listened to what investors and social justice movements needed. Social justice movements want the issues they're working on to advance, and having investor support will advance it. Investors care about understanding the issue, how it impacts returns, and what the business case is for a particular issue. They want something authentic and meaningful to present to their clients regarding the issues they're working on. If we're meeting those needs by running an investor coalition, providing the necessary data and thought leadership, and organizing the coalition, we're meeting the social justice movements' needs as well. This is a winning recipe that can be applied to different issues.

Regarding small-scale projects, if you mean private investing not in the public markets, small-scale projects can have an impact. However, unless they're connected with other small-scale projects and coordinating along certain principles, themes, or bigger goals, it's unlikely to achieve systemic-level change. One thing that can happen is putting money in the hands of people who have not traditionally had it. In the US, for example, as of the last census, 51% of the population are women, and 39% are people of color. Yet, when you combine those two groups, they make up only 1% of assets managed. This is a problem. The more money you put in the hands of the communities you want to impact, the more benefit will come to those communities. It matters that Adasina was started by a queer black woman and that we're working on these issues. The more you put money in the hands of people from those communities, the more likely they'll end up working on those issues for their communities. So, if you're going to invest privately but want to make systemic change, at least make sure that the people directing the capital are from the community you intend to impact.

If you had a magic wand, how would you enable the empowerment of underrepresented groups beyond simply providing capital and power? What impacts would you create and how would you use the wand? Since this is a hypothetical scenario, feasibility is not a concern and there are no limits.

The number one thing that we need as an asset manager is more assets under management. However, racial and gender discrimination gets in the way. There is a 1% unfairness that hinders our progress. If I had a magic wand, I would remove the racial and gender bias from the asset manager selection process. This would result in demographic parity, with 51% of the assets managed by women and 39% by people of color. I believe this would create a different world than the one we're living in. Unfortunately, there are many obstacles in the way. Our Due Diligence 2.0 commitment, which can be found at commitment.com, is our roadmap for removing systemic bias from the process, with a focus on racial disparities. However, women are also facing similar issues.

Yeah, this really hits home because even as someone who's Chinese and has been working in Hong Kong for the last eight years in a bank, most of the clients are just white men. Very often, I'm in a meeting room as the only Asian in Hong Kong, which is insane. Also, I'm a woman and I don't think I've ever been in a meeting with another woman. In my previous role, I had to talk to CIOs and fund managers about helping them understand how to evaluate their brokers. Most of the time, I was the only woman and only Asian in the room full of white men in Hong Kong, which is frustrating.

No, yeah, that's just crazy. I can't tell you how many times I've seen a panel of mostly white people talking about racial justice. I don't think only people of color should be on the panel, but it's like, what? Yeah, yeah.