“What inspires you that ESG investing can help us make progress on social justice and gender diversification?”

In exploring this question we reached out to leading experts in the ESG investing industry to find out their responses, and this is what we found…

QUESTIONWhat inspires you that ESG investing can help us make progress on social justice and gender diversification?

ANSWERYusuf George Managing Director, Corporate Engagement, JUST CAPITAL

ANSWERJUST Capital’s polling shows that Americans are calling on corporate leaders to create equitable companies, and our data shows that companies that prioritize their workforces outperform industry peers. The companies that prioritize diversity, equity, and inclusion tend to have stronger and more engaged workers, which in turn leads to better performance for shareholders. 

QUESTIONWhat inspires you that ESG investing can help us make progress on social justice and gender diversification?

ANSWERPeter Krull. CEO & Director of Investments. Earth Equity Advisors

ANSWERSocial justice is intimately connected to environmental justice. Every time we make a conscious choice to invest sustainably and with our progressive values, we’re helping to make the world a better place for everyone.

QUESTIONWhat inspires you that ESG investing can help us make progress on social justice and gender diversification?

ANSWEREsther Pan Sloane, Head Partnerships, Policy & Communications, UNCDF

ANSWERInvesting in businesses owned by minorities and women can help previously excluded groups create jobs, build wealth, lift their families out of poverty and build their communities.  There are many currently overlooked opportunities that can deliver both social impact and financial returns that we encourage investors to consider as part of a diversified impact investment portfolio.

QUESTIONWhat inspires you that ESG investing can help us make progress on social justice and gender diversification?

ANSWERMartina Macpherson, SVP ESG Engagement, Moody’s & President, Network for Sustainable Financial Markets

ANSWERSocial justice and equality is an ongoing process. It entails respect, care, and equity; with a consciousness on the impact of race and ethnicity, class, gender, age, sexual orientation, family responsibility or family status, religious or political conviction, pregnancy, and disability. Social justice and equality recognize inclusive behaviours in the construction of institutional, corporate and governance policies and practices, and seeks ownership, accountability and responsibility for these behaviours. By recognizing human rights, and the dignity of each individual as a categorical imperative, investors, corporations and public institutions should seek to establish a global community of respect, resilience and purpose. This approach in turn is a fundamental part of the social agenda in ESG, and its philosophy for long-term value creation.

QUESTIONWhat inspires you that ESG investing can help us make progress on social justice and gender diversification?

ANSWERJed Emerson, Independent Strategic Advisor to Impact Investors, Blended Value Group

ANSWERWhat inspires me regarding ESG’s potential as a vehicle for the advancement of social and gender justice is that ESG is all about the illusion of separation—the idea that it is wrong to think that one can consider economics in the absence of considering social and environmental factors—and social/gender justice is, at its core, a question of our understanding the links between Self and Other, between who we are as individuals and who we are as communities and society. Just as diversity makes for strong eco-systems and viewing the firm as part of the stakeholder whole and commons makes for stronger companies, for each of us to fulfill our own individual potentials all of us must be supported in attaining our individuals possibilities, which at its core is what social and gender justice offers.

QUESTIONWhat inspires you that ESG investing can help us make progress on social justice and gender diversification?

ANSWERChristina Shim, Managing Director, Commercial Innovation Palladium

ANSWERIn this world rife with ramifications – both positive and negative – from COVID and the BLM movement, now is the time for real change – if not simply because it’s the right thing to do, then because people are demanding it. The business world has made statements and committed funds, but their efforts ring hollow in the ears of stakeholders who have become disillusioned by posturing without progress. Same with ESG investing, with many investors considering socially responsible investing tied to the SDGs or ESGs as public relations issues. Investors and the trillions of dollars of available capital can touch every facet of our lives – that amount of deployed capital is too immense not to play a meaningful role. Focusing on investing through an ESG lens – by focusing on impact to communities (as partners rather than beneficiaries) and moving beyond the box-ticking – can have serious catalytic consequences on social justice and gender diversification. It’s inspiring to think that we’ve started to see different worlds coming together to create these catalytic changes, which require a focused assessment of the current state, a targeted outcome of what the investments want to achieve, and a roadmap for realization. Social justice and gender diversification is for all of us to solve – and in particular, those groups, organizations, and investors that have historically enjoyed a position of relative power in society.  

QUESTIONWhat inspires you that ESG investing can help us make progress on social justice and gender diversification?

ANSWERMegan Fielding, Senior Director, Responsible Investing at Nuveen & Head of Strategic Partnerships

ANSWERThere is a clear connection between the integration of ESG issues and financial performance. This includes strong evidence supporting the benefits of gender and racial diversity, and conversely, penalties when these issues are not prioritized. We are now experiencing a cultural and economic alignment that is rapidly driving progress–financial materiality, performance results and investor demand—and this convergence will likely lead to positive change for both investors and society at large.

QUESTIONWhat inspires you that ESG investing can help us make progress on social justice and gender diversification?

ANSWERKesi Gibson CEO/Founder – Club Debut

It is terrific that considerations of environmental, social and governance issues are now being incorporated into institutional investors’ decision calculus. This will go a long way, particularly on the environmental front, where there are tangible metrics to report on. Gender diversification will also continue to be a priority for companies, as investors respond to the demands of the feminist movement and other diversity related campaigns, making women in leadership a prerequisite for investing.  When it comes to social justice, I am honestly in no way inspired that the widespread approach to ESG investing will do much to engender lasting change. I would go as far as to say that it is disingenuous to tie the two together. Definitionally, social justice relates to the  distribution of wealth, opportunities, and privileges within a society. For social justice to be relevant in any discourse on ESG investing, the accepted metrics around ESGs would have to, at a minimum, address access to capital for underserved entrepreneurs, and businesses owned and operated by people of color. That said, I am inspired by the conversations around race, class and privilege that are now happening among the people (particularly the investor class) who truly have the power to make progress on social justice, beyond words. 

Investing for Social Advocacy and Gender Diversification

Every generation leaves behind a legacy. What that legacy will be is determined by the people of that generation. What legacy do you want to leave behind?

― John Lewis, Across That Bridge: A Vision for Change and the Future of America

For this issue we set out to explore the performance of investments that have been filtered for social advocacy and gender diversity, both predictably complex issues. Many in this country are struggling to find ways to advance reforms in these areas and the Socially Inspired Investor supports efforts to level opportunities for everyone. 

When it comes to diversity, we are seeing more and more evidence moving from anecdotal to scientific that companies that embrace diversity in leadership are beginning to differentiate themselves.

Harvard Business Review cites at least two studies that show women score higher than men in most leadership skills 1. So why then does this continue to be a challenge?  These days don’t we need more competent leadership more than ever.

In the SII podcast for this issue you will hear from Eric Glass of AlianceBernstein and Patrick Drum of Saturna Capital, on the topic of Investing for Social Advocacy and Gender Diversification, with some pretty convincing stats for us to consider.

“What inspires you that ESG investing can help us make progress on social justice and gender diversification?”

We posed this question to leaders in the ESG investing community. Their responses were fascinating and enlightening. Check out the responses in our Spotlight On article. Clearly reforms are needed across virtually every segment of our society, including the investing community. 

We learn that businesses are more willing these days to use their capital and governance to contribute to real change. All efforts need be applauded. And in real definable ways, we can see this commitment will pay dividends worthy the efforts. But buyer beware.

The fervor may also cause average investors to let their guard down.  In the zest to support the critically important Black Lives Matter and other diversity goals, we also see instances that perhaps investors may be too willing to overlook the fundamentals of sound investing. Remember all investments must adhere to basic investing principles. So, we have added some more reference material to keep you sharp in our Investing Basics section. Unfortunately, some emerging trends do indicate investors may be allowing their passions to overshadow these rules. Rules are rules regardless of the passion.

Our contributors this month speak to all these questions and begin to frame for us how complex the landscape has become.  Perhaps the timing is finally right for significant change. 

Thank you for being part of the Socially Inspired InvestorSM Digest/Podcast family.  Please share this digest with others who are interested in becoming a more informed Socially Inspired Investor.

1 HBR June 23, 2019, Jack Zenger and Joseph Folkman article