From “The Social Justice Investor: Advance Your Values While Building Wealth, Whether a Few Dollars or Millions” by Andrea Longton, CFA
For the sake of simplicity, this chapter presents the two most common approaches for a social justice asset allocation budget: micro asset allocation, which enables the investor to create a highly tailored division of social justice priorities, and macro asset allocation, which widens out the lens to more generic social justice opportunities.
Micro asset allocation
Social justice investors seeking highly tailored social justice returns may prefer a micro asset allocation approach, where delineation across asset classes is very precise.
This micro asset allocation strategy is like a custom order pizza: half of the pizza is green peppers, sausage, and pepperoni and the other half is ham and pineapple. In a nonmetaphorical example, you may wish to invest 25% of investments to Black-owned businesses, another 25% to affordable housing in Indigenous communities, 25% to Latino-owned businesses, and the final 25% to rural health initiatives.
A micro asset allocation approach is generally better for people who prefer going “all in” with their investment decisions or sculpting precise advances in social justice based on their personal values. A tailored approach enables an investor to create a complex asset allocation configuration designed to address a robust set of goals. A micro asset allocation approach is ideal for social justice investors with the capacity and willingness to research how individual investments may meet their precise roadmap objstices.
Macro asset allocation
Alternatively, other social justice investors may widen out their lens to a more generalist view on social justice returns. Many investors prefer to split their investment portfolio into two macro buckets: one bucket for investments that seek traditional, profit-maximizing return goals and another bucket for social justice investments (i.e., sustainable financial earnings coupled with social justice returns).
In this case, you may allocate one portion of your portfolio to deliver social justice investor returns and another portion of your portfolio to deliver traditional returns. It’s like when you can’t decide on pizza toppings and order a half-pepperoni, half-cheese pie. This is a great approach for people who want to practice with a smaller portion of their portfolio before applying a social justice lens to their entire pool of financial assets.
Applying a macro asset allocation approach is generally better for people who prefer adopting a gradual introduction to social justice investing and want to take one step at a time. Or perhaps you wish to execute a generalist approach to social justice investing and do not want to be overly prescriptive in their asset allocation strategy.