Have Sustainable Brands delivered right to your inbox.

Finance & Investment
Achieving Racial Equity in the US Demands We Rethink Capitalism

Fixing centuries of racism and unequal access will require big changes in how we do business if we are to truly move towards a more equitable, fair, and just economy and society.

As protests continue across the United States, calling for action to address pervasive violence and human rights abuses against Blacks, often at the hands of police — driven by the senseless murders of George Floyd and Breonna Taylor, among many others — businesses and brands have started to speak out. Many have made noteworthy pledges and made sizeable donations.

While donations matter, changing the system requires more than recycled philanthropy. Police violence is the focus of the protests, but the role of extractive capitalism in perpetuating racial inequality for generations has been central, too. Low-income communities of color across the country suffer from chronic underinvestment — not just in businesses, but also education, infrastructure and healthcare — often unscaleable barriers.

“In America, capitalism was founded on land theft and free labor,” said Renee Morgan, Social Justice Strategist and Financial Advisor at Robasciotti & Philipson — an impact-focused and community-driven investment manager and advisory firm — during a digital event this week organized by ESGX and HIP Investor. “That legacy still remains today; it just keeps repackaging itself.”

Actions matter more than words; and if companies really want to help address racial inequity in the US they need to first look internally, said Erin McClarty — a social change architect and attorney who works with businesses and other organizations to design programs that have real social impact.

“Today’s systems of capital and investment are built around a purpose of generating wealth for a few at the expense of the many,” McClarty said. Companies should ask themselves, “am I merely trying to tweak a system for communities that were previously excluded from this system for a specific reason?”

When considering this, the aforementioned pledges no longer seem as impressive. William Michael Cunningham, founder of Creative Investment Research, is working to create a tool to track corporate commitments to Black Lives Matter. While the dollar figures seem impressive, the devil in the details.

“In a lot of these cases, all these corporations are doing is adding additional dollar amounts to grants and programs they already have in place, an easy thing to do,” Cunningham said. “These commitments are going to be all over the place — equity, debt, charitable contributions. It’s not as good as it looks.”

What Cunningham and others would like to see is a shift from a focus on diversity in hiring, donations and community assistance under the guise of Corporate Social Responsibility towards companies and foundations looking at equity — namely, giving power and ownership to communities of color. As McClarty asserted:

“The focus on diversity doesn’t really do anything if you have a bunch of people in the room that have no power. Until you have ownership and equity in the company, trying to catch up is really difficult. Prioritizing inclusion is crucial.”

Robasciotti & Philipson has created a model for a different type of approach. Investment decisions are made not by an advisory board or managers, but by social justice groups themselves and people of color directly.

“We center around Black, brown and indigenous-led organizations,” Morgan said. “We’re not going to solve systemic issues with the same eyes and same points of view that created them.”

Robasciotti & Philipson focus their investments in what they call transitional capital, focusing on systemic problems. Ultimately, they want to invest in regenerative communities, allowing investments to have an even bigger impact.

That is not possible now, because the mechanisms to invest regeneratively isn’t there. To reach that point, there need to be broader shifts in how capital and investment decisions are made; and a rethinking of our dominant economic model, including how we define growth and profits.

“Half of the issues that we’re facing come from a faulty way of looking at economics,” Cunningham said. Take, for example, the stock market — which keeps rising and enriching the ultra-wealthy, even as unemployment grows and protests continue.

In the end, addressing racial inequality in the US will require more than nice-sounding press releases and commitments to donate more money. Companies need to begin investing in regenerative, local, grassroots-led businesses — and be willing to share equity and decision-making with communities of color, especially Black Americans.

Fixing centuries of racism and unequal access will require big changes in how we do business if we are to truly move towards a more equitable, fair, and just economy and society.

Advertisement

More Stories

Have Sustainable Brands delivered right to your inbox.
We offer free, twice weekly newsletters designed to help you create and maintain your company's competitive edge by adopting smarter, more sustainable business strategies and practices.
Copyright ©2007-2020 Sustainable Life Media, Inc. All Rights Reserved.
Sustainable Brands® is a registered trademark of Sustainable Life Media, Inc.