Key Things to Help Investors Take Steps towards Racial Equity
3 min read · July 19, 2022
Kristin Hull, Nia Impact Capital
Impact Investment Funds · Credit Unions · Foundations · Banks · Venture Capital · People of Colour
“People of colour and women are much more likely to get funded with crowd-sourced, community investments. As the founders of Investibule state, ‘If we want to change who gets funded, we also need to change who does the funding.’” (Amy Cortese, Founder at Investibule).
Summary
In 2019, just 1 percent of venture-backed founders were Black, despite the high level of innovation coming from the Black community. Most investors are still white males. If we want to build a system with an equitable flow of capital, we have a long way to go to expand perceptions and get more people to see themselves as investors, and increase access to investment accounts and services.
Key findings
The article mentions eight examples of Racial Justice Criteria and Actions for Investors and outlines actions we can take to use investing as a tool to further racial equity:
1. Count and Add to People of Color in Leadership: Select and invest in companies that include people of colour in executive management and on the board of directors.
2. Divest from Companies Causing Injustice: Many public equities portfolios and even private equities may include companies causing harm but invest in solution-focused companies.
3. Use Your Investor Voice - Activism and Engagement with a Racial Justice Lens: Use your platform and investor voice to inform companies of the benefits of diverse leadership, and encourage companies to increase their racial equity practices, including hiring and promotion practices. Be active in speaking up for living wages, access to healthcare benefits, and reducing inequalities.
4. Engage Formally and Proactively as an Asset Owner to Achieve Racial Equity: Vote proxy statements in alignment with fair and equitable corporate practices. Vote no for excessive CEO pay, and vote no to all-white boards of directors.
5. Invest in People of Color Entrepreneurs, Black-led Investments, and Black-led Funds Across All Asset Classes: Choose funds or investment products managed by Black portfolio managers. When selecting municipal bonds, choose projects that positively impact communities of colour or improve the lives of historically disadvantaged populations (for example, retrofitting public housing for single mothers).
6. Invest in Businesses that Produce Products and Services that Solve Everyday Problems for (and ideally with) Communities of Color: Choose companies that produce goods and/or services beneficial to Black communities; purposefully invest in people of colour-owned businesses, either by making loans or by investing in privately held companies.
7. Evaluate Company Employment Policies and Practices: Select companies based on their internal policies and practices to promote equity; this could include hiring practices, Board recruitment policies, sexual harassment policies, diversity and inclusion training, family leave policies, childcare, and more. Invest only in companies committed to paying a living wage.
8. Allocate to People of Color-Led Funds and Work with Diverse Financial Advisors: Choose to work with diverse-owned/led investment management firms.
Read the full article here.
References
Hull, K. (2020, June 3). An investors' guide to racial equity. Nia Impact Capital.
