Fairness: galvanizing our greatest natural resource (people). Systemic barriers to opportunity like (conscious or unconscious) racism and other "-isms" are chokeholds to the economy, suffocating its vitality at the exact moment it needs energetic action. This phenomenon is not new. A 1961 cartoon by Herbert Block illustrates the economic and political hindrance that racism poses to our country. More than 60 years later, our economy and moral stature are still being pulled down by the dead weight of racism and it is more urgent than ever to drop it.
Research from the World Economic Forum has shown that excluding Black people from fair access to economic opportunity has cost America a devastating $51 trillion in lost output since 1990.
The good news is that tearing down the walls of anti-Blackness could generate as much as $5 trillion to the economy over the next five years alone, according to a report by Citi. Diversifying the economy by increasing opportunities for access to capital, whether it helps historically oppressed people of color or overlooked and underserved communities like those in Appalachia where the Ford Foundation has made investments, is the type of patriotic impact investing that lifts all boats. It also offers the potential to generate risk-adjusted, market-rate financial returns.
Big private equity firms like KKR & Co. and TPG Inc., insurance companies like MetLife and New York Life Insurance Co., and banks like J.P. Morgan Chase & Co. and Bank of America have already discovered attractive commercial opportunities in underrepresented founders. But the American economy is a team sport. We need everyone on the field. We all win when we all win.
JSG: creating jobs and improving national security. The COVID-19 pandemic made it overwhelmingly clear that offshoring jobs and relinquishing control over our supply chain to lower labor costs for the benefit of higher corporate net income has painful long-term consequences. Shareholders may have won in the short term, but the damage resulting from a hollowed-out manufacturing base and the loss of millions of good jobs is staggering.
It is now apparent that depending on another country's supply chains creates a threat to national security and economic stability.
Prudently implemented jobs, security, and growth (or JSG) investing strategies — codified by emerging asset manager Amberwave Partners in 2022 — can help regenerate our economy and place the country on more independent footing by creating opportunities in the job market, reinforcing supply chains, contributing to sustainable American economic growth and improving national security. Hopefully, the JSG concept will inspire more patriotic impact investment activity designed to improve the lives and livelihoods of workers in America.
Substance over sloganeering: moving beyond polarizing rhetoric to powerful action. Everyone loves transparency until they have something to hide, which might be why some have cunningly weaponized the term "ESG" in hostile anti-woke sloganeering.
Despite its critics, standardized ESG disclosure can help organize the collection and presentation of data to help refine risk management, shine a light on business activities and inspire solutions to help drive toward a more sustainable form of capitalism.
Some think all things ESG are about sanctimonious virtue signaling. Others believe it is a sneaky way to attack the fossil fuel industry. Both could be true.
However, it is also possible to see value in standardized ESG disclosure while recognizing value in both the fossil fuel industry and a managed transition to cleaner renewables. Sort of like walking while chewing gum.
Supply chain dependencies, unfair barriers to opportunity and divisive sloganeering are brutal beasts that have chased us to a dead end. With collective action, we can slay the cruel monsters with the patriotic power of fairness, innovative impact investing initiatives and standardized ESG transparency.
This content represents the views of the author. It was submitted and edited under Pensions & Investments guidelines but is not a product of P&I's editorial team.
