Changing the Investment Algorithm to Advance Racial Justice

By Dennis Price and David Bank | Impact Alpha

Last month’s Agents of Impact Call joined two conversations that are too often separate: systemic risk and systemic racism. Today’s Call continues the effort to call out the ways racism shows up across the economic landscape and highlight strategies and designs that “center Blackness and the Black experience as a necessary strategy to ensure economic liberation for all Americans,” as the Insight Center’s Anne Price, Jhumpa Bhattacharya and Dorian Warren put it this summer.

Identifying the ways finance drives racial injustice is essential for investors looking to do the opposite: Use their portfolio to root out racism.

  • Municipal finance. Cities that treat their residents fairly have longer, stronger fiscal outcomes, says Activest’s Ryan Bowers. Cities that do the opposite risk stranding assets of such injustice, including jail infrastructure and extractive revenues, leaving taxpayers and investors with liabilities and expenses. “Too many local governments have predicated their financial fortunes on the control and oppression of Black people,” writes Bowers, along with Activest’s Napoleon Wallace and Chelsea McDaniel. Until recently, Bowers struggled to get meetings with city budget directors to make that case. Now, Bloomberg Philanthropies has tapped Activest to help officials in 30 urban centers put equity at the center of their COVID recoveries. Activest has teamed with investment firm Adasina to offer a fixed-income portfolio that invests directly in Black communities, primarily through municipal bonds.

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