IMPACT: the Socially Conscious Investment App Putting a Price on Values
By Lauren Louie
Socially conscious shopping has taken hold of Gen Z and Millenials and it’s not letting go anytime soon. It’s been a slow and steady transition, but the movement among shoppers to buy with a mission in mind is staying and brands are listening and responding. There are greener, cleaner options for about every household item there is to buy; from razors to dish soap, companies are providing eco-friendly options, sometimes several, and the convenience is only further convincing more people to reach for the packaging that promotes a cause.It doesn’t end with spending. There are other ways to enact change with your dollars. ESG investing, sometimes referred to as socially responsible investing, evaluates companies against environmental, social, and governance criteria, essentially broadening the scope of what kind of value and contribution a company holds.
Environmental criteria refers to factors like the treatment of animals, waste management, and carbon emissions. Social criteria includes matters such as diversity, data security, and fair labor treatment. Governance criteria looks at components like transparency, as well as conflicts of interest, lobbying, and executive pay. No company will score across the board, but investors can research and reflect on what values they hold closest. Similarly, impact investing is an investment strategy that reframes the phrase “money talks.” Impact investing communicates the investors' support by channeling their funds into companies that generate measurable social or environmental change. Neither ESG nor Impact investing is an act of charity; both function as a practice and a philosophy that aims to make a difference while making financial gain.
There are those who doubt its efficacy, however, ESG and Impact investing are recognized practices that are directly aligned with the social conscious shopping frame of mind that’s prevalent today.Unlike a one-time purchase which isn’t a risk or a commitment, investing can require a lot of research. Those who are new to investing, and even those who aren’t, may have difficulty filtering through the endless list of companies that are available to them. Which one’s align with my values? Which don’t? How well are they doing, and is this a sound investment? IMPACT is a new mobile trading platform meant to fulfill that need. Launching November 1, 2021, it’s a tool for the population of investors that are seeking out companies they feel reflect their values. Users are presented with 13 values and principles across a variety of categories, including environmental sustainability, racial and gender equality, LGBTQ+ inclusion, and ethical and transparent business practices. From the 13 values, users can rank them as “important” or “very important.”
The app also allows users to exclude investments based on 10 categories, including animal testing, corporate political spending and lobbying, and environmental pollution. Based on their preferences, IMPACT identifies companies that correspond with the categories and provides impact scores on existing portfolios and holdings. The user may then choose to customize their portfolios to align with their values. The end result is a streamlined sustainable investing process that condenses their research and trading experience to a primary place. IMPACT is backed by Interactive Brokers and is an extension of the Impact Dashboard that was named a 2021 Fast Company World Changing Idea software finalist. The app offers several key features, like Swap, an option that gives users the ability to swap positions for the same dollar amount from one equity security to another. IMPACT also offers a Charitable Giving option for U.S. clients, which allows users to make cash donations to nonprofits directly from the app. Charities can be found by category, by people served, or by location, so users can benefit their local community.
There’s also the Guided Investing Experience, which provides access to Socially Responsible Investment portfolios from Interactive Advisors, an affiliate of Interactive Brokers Group. IMPACT offers cryptocurrency that allows investors to have access to trade cryptocurrency alongside other asset classes available on the platform. Other crypto exchanges and brokers charge a fee of 2.00% of the trade value or more. They also add spreads or markups to the price. On IMPACT, cryptocurrency is traded through Paxos Trust Company (“Paxos”) and has low commissions of just 0.12% - 0.18% of trade value, depending on the monthly volume, with a USD 1.75 minimum per order. With IMPACT, there are no added spreads, markups, or custody fees. All execution custody services are provided by Paxos and available to U.S. clients only. IMPACT also claims zero commissions on U.S. stock trading for U.S. clients. Lastly, Interactive Brokers has partnered with One Tree Planted and will plant 25 trees for every $1,000 dollars an investor deposits in their account. This is available to the first 30,000 customers who sign up for the app. Post-college, my friends and I are collectively dabbling in investing.
We trade vague bits of knowledge and I have a suspicion that no one knows what they’re talking about—we’re still learning. I do know, without needing much discussion, that our values have a seat at the table. The changes I’ve made to the ways in which I shop have been a slow and growing process. Little by little, my habitual purchases have been replaced with alternatives that are sometimes readily available, sometimes not, but always, at least, a bit more congruent with my values.
My toothbrush is made of recycled plastic and comes in cardboard and paper packaging, my sunscreen is coral-reef safe, and I try to find cosmetics without microplastics and polymers. Some things I haven’t switched and sometimes I’m lazy and won’t make the considerate purchase. The ever-growing effort, however, is lifelong and I see it among my peers, my friends, and my family at varying levels. This gives me great faith in socially conscious shopping, ESG, and Impact investing as ideologies that will only rise in popularity. It’s become the way a generation is spending, both big and small, and the impact it’s making, well, it goes both ways.