Justice Champion Spotlight: Sonia Kowal
What is Zevin Asset Management?
Since our founding in 1997, Zevin Asset Management has managed values and mission-aligned investment portfolios for individuals and institutions devoted to creating a just and caring society and a healthy planet, working with them to meet their financial goals. We are a 100% employee-owned, majority women-owned and -led firm, and the majority of our investment team identify as people of color. In addition to screening investments based on client criteria, Zevin Asset Management goes further to create positive social impact and enhance shareholder value through robust shareholder advocacy. We have decades of experience of holding publicly traded companies with large social and environmental footprints accountable for their impacts on employees, stakeholders, communities, and ecosystems. As a Certified B Corporation™, we hold ourselves to the same high standards.
How does Zevin utilize ESG in its approach to investment?
Socially responsible values are the founding principles of our firm and continue to be the driver of our work. We understand that financial markets don’t exist in isolation from social or environmental challenges.
Integral to our investment process, we analyze companies according to their many interdependent relationships, including those with investors, employees, customers, suppliers, communities, and the natural environment, preferring those that engage positively with their stakeholders. Our ESG (environmental, social and governance) analysis of stocks may uncover risks that have a low probability of occurrence but a potentially high negative impact. At other times, we may discover slow improvements or disintegration that can play out over a long period of time at the country, sector, or company level.
We do not believe that simply using insights from ESG analysis to help construct an investment portfolio creates social or environmental impact. However, our ESG analysis can strengthen our advocacy and drive tangible corporate changes and broader social impact. Rather than just passively screening out companies that are “bad” or investing in those that are a bit better, we also use shareholder advocacy – including, but not limited to, meetings, letters, and SEC filings – to improve corporate behavior. In the process of holding companies responsible for the social and environmental impacts, we enhance value for investors.
The three focus areas of our shareholder engagement are civil rights (including racial justice), wealth inequality, and the climate crisis.
What role do businesses and their leaders play in creating a fairer and more equal society? How has that role evolved in recent years?
Our country’s wealth inequality is unrivaled in the developed world and we strongly believe that this holds us back from further progress. Ample research demonstrates that long-term investments in the workforce result in reputational benefits for companies, improved worker morale, motivation, and productivity, and better recruitment and staff retention. Workers across the board contribute significantly to building tangible and intangible shareholder value, elevating the materiality of this issue. To address persistent gender, racial and ethnic gaps in pay, benefits, and living standards, we joined the Interfaith Center on Corporate Responsibility (ICCR) as a signatory of the Investor Statement in Support of a Living Wage.
In terms of tying racial equity to our investment approach, we begin with the understanding that our economy and capital markets are systemic in failing communities of color, and extract value and profit from further marginalization. We also believe that a more diverse, equitable, and inclusive workforce will help us better capitalize on market opportunities, bolster innovation, improve our resiliency, as well as enhance our commitment to social responsibility as an investment firm. This includes embedding racial and gender equity lenses in our organization, investment decision making, and corporate engagement strategies.
We are heartened that businesses are increasingly viewing diversity, equity, and inclusion as business imperatives.
Why is Clean Slate Massachusetts important to you as a business leader?
The Clean Slate campaign is a no brainer! The proposed legislation to automatically seal records at the appropriate time would expand Massachusetts’ workforce, diversify the labor pool, help employers, and provide meaningful second chances to thousands of people.
The sad truth is that employers continue to discriminate against people with criminal records, no matter how old or irrelevant. The lack of stable employment of individuals with criminal records is a sizable structural flaw in our labor market. Denying qualified and skillful individuals employment opportunities weakens our economy by overlooking a significant segment of society.
One focus in our analysis of potential investments includes worker recruitment and retention. Companies who automatically disqualify individuals with a criminal record from employment opportunities dilute their applicant pool, limiting their access to talented workers.
It is important to remove barriers to employment for qualified applicants who do not pose a threat to employees, clients, or the public. High unemployment among people with criminal records leads to higher state and federal government assistance and a loss of income-tax revenue. Given the disparate racial impact of the criminal justice system, company reluctance to hire individuals with criminal records disproportionately affects communities of color.
We know that inclusion of individuals with criminal records into the larger community is a vital deterrent to criminal conduct and recidivism. Employing low-risk, qualified individuals presents an opportunity to address economic and labor challenges and will help close the inequality gap.
Why did you choose to get involved in legislative advocacy?
I believe we are all obligated to use the tools and advantages we have to work towards a better world.
Apart from engaging with corporations to improve their business practices, our firm has long engaged with public policymakers to support legislation or rule-making that advances corporate transparency, and environmental and social sustainability. Understanding that public policy engagement can be influential in driving systemic change, we write letters to legislators, comment on potential legislation, and provide testimony for committee briefings.
We have found that our unique voice as investors is valued by legislators, as we often have a differentiated viewpoint that they might not have previously considered. For example, we have used our investor voice to write and support numerous letters to federal and state legislators on issues such as the right to vote, access to a national paid family leave benefit for workers, banning non-competes, and divestment from nuclear weapons. We have also provided testimony to the EPA on the pollution of heavy trucks and to the SEC on human capital management disclosures.
Can you tell us more about Zevin Asset Management's research on background checks in employment practices?
Over a decade ago, we conducted research on the use of background checks in employment practices at large public companies. In doing so, we uncovered the widespread and detrimental consequences to employment posed by criminal records. We found a wide dispersion in how companies approach criminal background checks, although most hadn’t considered this issue thoroughly. We were concerned that Ban the Box campaigns would only have a marginal impact on improving the employment prospects of individuals with criminal records, unless companies themselves initiated a more thoughtful review of their hiring processes.
We brought together a coalition of investors to urge companies to instigate a more thoughtful review of their hiring practices. We worked with local and national non-profits to identify best-practice criminal background check policies that companies could use to improve their hiring procedures while protecting their employees, their customers, and the public. At that time, these included considering changes such as omitting questions about criminal history on an initial application form, only considering convictions and pending cases, considering the nature and age of an offense, and giving the applicant the ability to contest the accuracy and relevance of the offense. We also asked companies for their policies and offered recommendations for improvement.
How does employment impact the lives of people with criminal records?
Individuals with criminal records face unnecessary structural barriers to employment that can persist long after someone has paid their debt to society, contributing to multi-generational cycles of poverty and recidivism. We believe that access to quality, stable jobs that pay a living wage is a basic right that contributes to a person’s sense of dignity and self-worth. Having a criminal record often carries an unwarranted stigma that limits a person’s inclusion with a community, as well as their ability to obtain employment, get housing, volunteer at their child’s school, and so on.
By denying individuals who have paid their debt to society the opportunity of employment, inequality is heightened. It is an inequality that is cumulative, in that it often affects already poor communities, deepening the disadvantages of the most marginal members of our society and fueling a multi-generational cycle of poverty.
When you are not working, what else do you enjoy doing?
Eating junk food and reading, preferably at the same time! I also really enjoy getting my hands dirty in the garden.
What is a fact about you that would surprise people?
I’ve travelled extensively throughout eastern Europe, Siberia, Kyrgyzstan, and Mongolia – a heavy feat as a vegetarian but still thoroughly fantastic!