Financial advisor Rachel Robasciotti grew up in a poor African-American community in the shadow of the Oroville Dam in California, a structure that three years ago was in peril of collapsing and reportedly forced tens of thousands of people to evacuate. It was a highly segregated, rural community, she says, and there was likelihood of a Hurricane Katrina-type calamity.

“Those most exposed to the extreme flooding were in the low-lying areas there on the south side of town, which is where I grew up," she says. "And you could see that those who were being evacuated were those least likely to have cars, the wealth is so low.”

If that crisis didn’t show the world the disparities of race where it intersects with environmental and health issues, the coronavirus certainly has. “Any natural disasters really put pressure on the system and show where the system has cracks,” Robasciotti says.

The world’s focus on police brutality after George Floyd’s death at the hands of police has also resonanated with Robasciotti, who says that her family has personally dealt with police brutality (she says her mentally ill father was tased by police and that he died shortly after. She also recalls an incident in which police grabbed one of her older sisters—who was holding her baby sister).

Robasciotti, who was on Financial Advisor magazine’s list of “Young Advisors to Watch” in 2017, says environmental justice and social justice are intertwined. Not only are Black and Latinx communities more at risk from environmental catastrophes and pandemics. They are also more exposed to predatory lending and discriminatory mortgages practices (on homes less likely to appreciate) and are incarcerated at disproportionate levels. And Robasciotti says these intersections are poorly addressed by typical socially responsible investing and its mature counterpart, ESG.

She didn’t see a suitable investment strategy to address these problems, so she decided to build her own. She and her partner Maya Philipson at San Francisco’s Robasciotti & Philipson are spinning off their strategy in a new investment firm that tries to bridge the gap between investments and social justice, making target investment companies decide which side of the line they stand on, as she puts it.

The new firm is called Adasina Social Capital, and it’s rooted in a strategy the firm has already been pursuing since 2018. Dubbed the RISE strategy (for “return on investment and social equity”) Robasciotti says she and Philipson wanted to house it in a freestanding sister firm, which launches Wednesday.

The two have already been using the approach in separately managed client accounts comprising stocks that passed the firm’s rigorous screens. Robasciotti says that about 35% of her RIA firm’s revenue is already coming from this social justice strategy. (The firm has some $144 million in assets under management.)

“We really wanted to expand the availability of the RISE offering specifically.”

The firm is also launching an Adasina Social Justice Index, which reflects the same methodology. And according to the SEC, the firm has filed a prospectus for an exchange-traded fund, called the Adasina Social Justice All Cap Global ETF, which will be based on the index.

The approach means looking outside traditional power structures for data. It means actually looking at neighborhoods like the one she grew up in and asking people about the issues that affect them—and working with groups like the Movement for Black Lives and the Poor People’s Campaign.

It also means looking at the data in different ways than traditional ESG investors do—going beyond, say, counting the number of females on corporate boards.

“What we do is fairly different. We actually work with the social justice movements that are by and for those that are most impacted by the particular issues and ask them what they would have investors do. Sometimes that means working with brand new data sources. For example, on gender equity, one of the things that we use is whether a company has forced arbitration for sexual harassment claims, which we know disproportionately impact women.” Robasciotti & Philipson helped create a database of offenders along with consumer activism group Grab Your Wallet Alliance and the workplace equity data group LedBetter. The effort was called Force the Issue.

The criteria for the new index include racial, gender, economic and climate justice lenses. Such screens weed out obvious targets like fossil fuel companies, industrialized agricultural concerns and businesses that engage in predatory lending. But the racial justice exclusion list (which Robasciotti & Philipson released June 5) goes beyond that, also targeting companies involved in surveillance, facial recognition technology, private prisons, for-profit colleges and companies working in occupied Palestinian territories. That leaves out a hefty chunk of companies often appearing in other indexes: Amazon, Boeing, State Street, Raytheon, BlackRock, Charles Schwab, Prudential and Northern Trust.

“These are the systems that need to change in order for us to experience justice. These are the companies with activities that are supporting those systems. Let’s name who those are and exclude them from a portfolio that we would call focused on social justice.” (The Adasina index constituents themselves won’t be live until the end of September. Robasciotti says the firm is still in the process of building it.)

Robasciotti says that when socially responsible investing started to get big some years ago, she started to notice after the Great Recession that many of these strategies were not only charging more, but at the end of the day they held most of the same securities as the traditional indexes. That made her grow wary of them.

Part of that is due to the way activist and proxy investors try to engage. One major incident in 2010 spotlighted the flaws in classic SRI-ESG investing strategies. Many of these activist investors were embarrassed in the wake of the Deepwater Horizon rig explosion that many SRI portfolios held British Petroleum, mostly because of its green efforts.

Robasciotti says that the problem with current screens is that the wrong people are being asked what should be in them.

Her goal is still to have a broad-based exposure to asset classes in a global, all-cap strategy. This requires care for optimization, because she says many impact portfolios that use hard and fast screens just end up overweight in technology and growth stocks.

The argument is the same for this impact investment as all others: If you invest in the wrong companies, you don’t have sustainable investments. Oil companies, it has long been said, will be dealing with externalities like the costs of carbon, for example. For the same reason, Robasciotti says long-term investors want sustainable long-term returns in a world that bends toward justice.

“In civil society, many of the things that are unethical or exploitative often end up becoming illegal anyway. If you’re ahead of that, or if you’re ahead of, for example, not investing in fossil fuels … and how much climate change is being associated with them, that can only be a benefit to the long-term sustainability of your portfolio.”