Floodlight Politics: Using Data to Power Values-Aligned Investment
Floodlight is a new technology that collects and presents transparent data on political contributions from S&P 500 companies and many exchange-traded funds (ETFs). Our data allows investors to screen businesses and funds to align with their political interests.
Political data is just the start. We’re adding new values (Environmental Sustainability, Supply Chain Management, and Diversity are soon to launch) with a mission to present a holistic view of each company’s impact through a wide variety of “lenses”. We began with political activity and are rapidly adding others. Floodlight enables an advisor to increase their client’s wealth and power positive change in the world.
Overview
Investors are fundamentally changing the way they invest, seeking investments that generate a financial return aligned with their values and life’s purpose. Floodlight provides this extra level of insight to an advisor’s portfolio recommendations.
According to USSIF/Deloitte, this approach will account for 50% of all professionally managed assets in the US by 2025 (over $34 trillion). Forward thinking investment managers that offer values-aligned investments today will likely capture the greater percentage of this emerging market.
With our software, advisors can offer investment strategies that are in harmony with their client’s politics.
Contribution Trends
Because a business’s political leanings change over time, the data is viewable from the last 4, 8, or 12 years — as well as by election cycle — which allows users to see recent and long-term contributions.
Amazon.com Inc contributions from 2015 to 2019 (inner to outer circle)
We chart contributions by year so advisors can view how much a company has donated as the political environment changes. As you can see below, many companies increase their donations in election years.
Las Vegas Sands Corp contributions from 2007–2019
Corporate Alliances
Each company profile includes a list of the top donation recipients, revealing the specific political causes and candidates each company’s employees support. Advisors can build a balanced portfolio and see which lawmakers the employees (most often the C-suite and Board of Directors) support to reduce the risks of its business model. Our technology reveals where other corporations donate along similar lines, revealing common interested and alliances that should weigh on an advisor’s mind in order to achieve balance.
Employee Contributions
A business’s top political donors are almost always the C-suite or Board of Directors. By revealing who they support, our data provides a good proxy for the true politics of a company.
How to Use Floodlight’s Data:
Using Floodlight, an advisor can make recommendations on where to invest based on political leanings as well as financial outcomes.
Case Study #1 Sylvia — Registered Investment Advisor
Sylvia has a client, Benjamin, with $3MM of investable assets. Benjamin is an ardent supporter of the Democratic party and is strongly focused on environmental factors for his wealth. As a Floodlight member, Sylvia reviews the data for iShares MSCI ACWI Low Carbon Target ETF. The top holding companies have mostly donated to the democratic party, which is a good fit for Sylvia’s client.
After reviewing financial performance and fees on her standard systems and making the allocation, Sylvia creates a tear sheet to provide extra validation for her review with Benjamin. Benjamin wants to ensure his political opinions will not reduce his alpha. Sylvia confirms that her recommended solution provides similar performance/fees to his previous allocation and Benjamin is pleased that he is able to reinforce his political values with his investments.
iShares MSCI ACWI Low Carbon Target ETF political contribution ratios for the current election cycle
Case Study #2 John — Family Office Director
John manages the Doe Family Trust. His client has a long history of supporting conservative political causes and would like their $150MM in investable assets to be profitable and match their values. John has identified several key investment vehicles by fee level and performance. Aided by Floodlight’s data, he reviews Goldman Sachs’ profile to ensure a values match. Although Goldman Sachs are contributing more to Democrats this election cycle, they have historically made more contributions to The Republican Party. Using this data, Goldman Sachs is a highlighted as an investment opportunity for John.
Displaying the contributions employees at the selected equities have made, and how they jive with the Doe Family’s investing objectives, John is able to deepen his relationship with the current key decision makers, as well as begin the process of understanding the values and priorities of the succeeding generations involved.
Case Study #3 Michael — Endowment Manager
Michael manages the Hudson University endowment fund. The university relies on generous donations to facilitate its operations and growth. With ESG Investing on the rise, Hudson has opted to remain politically neutral to avoid alienating potential donors. While reviewing iShares Russell Mid-Cap Growth ETF (IWP) on Floodlight, Michael sees that although the ETF has leaned more to the left this election cycle, it’s historically been well balanced between the two parties. Michael’s research leads him to believe that IWP is a good investment for the endowment fund and his projections around financial performance ensure alignment of all key objectives the client has communicated.
By recommending politically neutral companies with performance metrics in line with client expectations, Michael’s role as fiduciary and understanding of his client are increased. Using Floodlight’s easily transferable data, Michael is able to effectively recommend strategies that leave the client with a better understanding of what their money is doing and greater confidence in Michael’s understanding of their interests.
The Future of Investing
More investors are becoming aware of environmental, social, and governance (ESG) investing. At Floodlight, we believe ESG is just the start of people aligning their money with their values. We’re developing value sets that provide unbiased data beyond ESG. Advisors will be able to find investments that match a client’s core values right down to individual policies.
Create a full or free account at www.floodlightinvest.com and add our services to your business strategy. We’re continually adding new features, if you’ve got a suggesting or feedback, please contact us.
