Defining racial equity is not easy to do, and it may make more sense to start with the more familiar topic of ESG. When I first transitioned from tribal finance to impact investing, I was amazed at how many different phrases and words refer to nearly the same concept: sustainable, responsible, socially impactful, mission aligned, values aligned, regenerative, ethical, and of course ESG. I initially took a stab at defining and differentiating each term, only to realize that the significance does not lie in Webster’s dictionary, but in the concept of philosophical fundamental application. In this regard, role models are essential; when best practices are established then policies and applications follow and lead to meaningful shifts.
Similarly, a technical definition of racial equity is less important than the changes we will implement and the significant outcomes that must be achieved. Racial equity is not accomplished through simple demographic headcounts, but results when true representative numbers of BIPOC and women are in control positions of decision-making power in all sectors, but especially in the financial markets. This includes (but is not limited to) boards, C-suites, asset allocators and fund managers.
I am fortunate to surround myself with amazing colleagues, so I will also amplify a few voices I respect. Nathalie Molina Niño is an investor, author, and activist. She addressed the meaning of racial equity in a recent segment of SOCAP’s Spectrum and I found her views to be provocative, challenging, and profound. Molina Niño submits that the term racial “equity” lacks ambition. For example, it could simply mean closing the gender and racial-living-wage gap in this country, but that falls noticeably short of true equality.
“Caucasian males have been allowed to garner multi-generational wealth, while our systems have denied and excluded the same opportunities to BIPOC,” Molina Niño states, “we must raise the bar to focus on asset ownership and center of power.”
Kristin Hull, founder and CEO of Nia Impact Capital, a global fund that aligns investments with values, gender lens, social/racial justice, and sustainability, states, “To achieve true racial equity, we will need to acknowledge and truly embrace the benefits of inclusivity, and to understand that there is plenty of pie.”
Hull further challenges, “In the financial world, we will also need to acknowledge the patriarchy. When firms owned by women and minorities combined, manage just 1.3% of assets in the $70 trillion asset management industry, we know that something else is at play.”
I recently listened to the Securities and Exchange Commission’s Asset Manager Advisory Committee webinar addressing racial equity. Special guest Robert Raben, executive director of the Diverse Asset Managers Initiative, said he has spearheaded numerous campaigns and research projects and yet has never seen anything like the racial bias he observes in the asset management sector. He cited that data demonstrates women and POC managers are at least at par and often outperform Caucasian males and yet their underutilization remains pervasive. “There is a complete conflation of ‘emerging managers’ with minority and women managers regardless of how seasoned they are,” Raben states, “we must end the condescension.”
Although we may each define racial equity differently, a consensus is materializing. Diane J. Johnson, vice chair of Conscious Capitalism Bay Area, sums it up succinctly: “Financial and economic systems must be oriented towards what is best for the largest number of people in the world, in contrast to how it is oriented currently — towards the selective few with access to gather and build significant resources. Authentic racial equality will not only allow for but will robustly facilitate the equitable distribution of wealth and resources to those who have historically been marginalized.”
For centuries, the Native community has suffered from the concept that others can offer us solutions to challenges. My own family suffered terribly from this phenomenon. My father was a product of the forced boarding school system (an attempt to “anglicize” Native American children to integrate them into dominant American society; contrariwise the result was psychological damage from abuse and abandonment including loss of culture and family.) I reject the idea that BIPOC communities need “saving” by others, instead when we achieve equal representation of BIPOC in leadership positions (in finance, politics, medicine, boards, C-suites, media and education) we will be able to identify solutions and communities that are logical and meaningful for our future, but also consider our culture and history.
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We have critical issues to address in the financial sector. We must collaborate with allies and BIPOC communities alike to identify solutions that are appropriate and significant, and they must result in momentous shifts in the market including leadership and policies that create systemic change. My community has an adage, “we are all related.” From Wall Street to Main Street, we must embrace this philosophy and achieve a balance of power that establishes a new standard for racial equity, one that may cause some discomfort initially, but is ambitious, challenging and ultimately allows all people to thrive.
Valerie Red-Horse Mohl is the CEO and founder of Red-Horse Financial Group and is the advisory board chair of Stanford University’s Center for the Comparative Studies in Race and Ethnicity. She can be reached at email@example.com.