The economic value of racial equity investing — the practice of redirecting capital to support communities of color with an explicit objective of increasing financial and economic inclusion and dismantling systemic and institutional racism in measurable ways — is clear and well-documented
. Foundations and philanthropic investors can engage in racial equity investing by thinking holistically about racial equity across their investment portfolios; using investments to advance opportunities for Black, Indigenous, and other people of color (BIPOC); and by supporting frameworks and approaches that support wealth-building in historically marginalized communities. They can also take a public stance against systemic injustices in a number of ways — for example, by endorsing this statement
, developed by Adasina Social Capital and others, that outlines actionable steps investors can take toward policies that seek to reform and eliminate systemic inequities.
Below are frameworks that foundations and other investors can use to evaluate current and potential investments from a racial equity lens. Have a resource to share? Contact Laila Hussain
This framework can be applied to new and existing investments. Intended to help investors determine where an investment is on the continuum of supporting racial justice, the framework consists of 20 questions that delve into an investment’s processes, practices, and external reporting, and evaluates investment opportunities on their potential for advancing racial justice. The framework segments investment opportunities into three categories: Diversity and Inclusion, Racial Equity, and Racial Justice
This paper, developed by Croatan Institute, offers a synopsis of the evolution from community development and ESG investing to the emergence of investing explicitly with a racial equity lens, proposes a definition for racial equity investing, and presents emerging opportunities across asset classes for investors.
The Adasina Social Justice Investment Criteria is a data-driven set of standards that guides the firm's investment strategies to reflect social justice values and advance progressive movements for change. These criteria aim to uproot systems that reinforce, perpetuate, and exacerbate racial inequities. Adasina evaluates companies to determine whether they participate in, or benefit from, those unjust systems.
This report by Glenmede serves as a report-out on the state of the racial equity investing market in the U.S. with a specific focus on investments that aim to provide competitive, market-rate returns. The report provides a framework to guide portfolio construction with case study examples diving into each investment approach, a roadmap for investors interested in racial equity investing, and challenges facing the racial equity investing market today.
The IRIS+ Racial Equity theme (currently in prototype form in the Navigating Impact Project) helps investors find evidence-backed strategies and key indicators to move toward racial equity in their portfolios. Developed through a partnership between the Global Impact Investing Network (GIIN), CapEQ, PolicyLink, JUST Capital, FSG and with the support of 180+ experts, the resource includes three interrelated “strategic goals” that guide investors on how to shift power, redefine risk and advance justice. Investors and others can use these resources to learn about key practices and shifts needed, identify performance indicators for themselves and their investee companies, and access tools, resources, data sources, and guides by thought leaders within the space.