This is the third in a three-part series of guest blog posts by The Consortium’s strategic partner Net Impact, which mobilizes new generations to use their skills and careers to drive transformational social and environmental change. In this segment, we include a look at Consortium alumna Zeina Fayyaz Kim (Berkeley ’16).
Now, more than ever, conversations about racial and gender equity in the workplace have forced their way into the national consciousness. We have previously discussed how impact investing is a rising field among millennials, but now we must address what may be lacking in this field…diversity.
Earlier posts in our series
- The Who, What, When, Where, and Why of Impact Investing
- How to get involved in the impact investing sector
To begin, let’s examine diversity in the fields that most closely relate to impact investing: corporate social responsibility/environmental science and finance. Theoretically, diversity and CSR should be closely linked within an organization. Both of these lead to a stronger company and connecting the two allows an organization to have a collective conversation as they build their strategic business imperatives.
However CSR and environmental science careers remain predominantly white. According to a 2015 STEM Index, while the number of jobs, types of degrees, and level of student interest in the science, technology, engineering and mathematics fields continues to increase since 2000, the public and the private sectors have failed to close gender and racial gaps in STEM.
In a nation where the population of African Americans, Hispanics, Asians, and other people of color is growing, the financial industry also remains overwhelmingly white. In 2015, The Wall Street Journal found that 80 percent of executives at Goldman Sachs, Wells Fargo, JPMorgan, Bank of America, Citigroup, and Morgan Stanley were white.
During the same year, more than 79 percent of the 434,000 financial advisers in the nation were white. Research indicates that financial literacy is strongly linked to socioeconomic background and because more African American and Hispanic households are poor in the United States, financial literacy takes a racial turn.
Impact investing is a marriage of the CSR/environmental world and the financial world and the lack of diversity in these pillars transfers to a lack of diversity in the field of impact investing. How do we get more diverse students to enter the space and motivate companies to move the needle on diversity?
In research conducted by Net Impact, we found that people of color often do not believe that corporations are doing enough to prioritize diversity in their workforce and are concerned that they are being hired as a “token,” rather than as a member of the team, valued for their unique perspective.
Ian Monroe, the president and CEO of Etho Capital, a mission-driven investment management company committed to helping solve climate change by bringing sustainable investing to the forefront, says to dispel this perception, students must use their diverse perspective as an asset. He suggests not to marginalize what you bring to the table as a diverse candidate, but to emphasize it as a reason the organization needs you.
With the potential to have a more diverse workforce entering the field of impact investing, how can we also encourage the companies they invest in to further their commitment to diversity? Monroe suggests proving financial materiality. Management needs to really believe in the financial benefits of diversity within the organization, and not just as a PR stunt.
Results are also key to proving this point. While it’s difficult to convince a company to strive for diversity because it’s the “right thing” to do, it is possible to show that companies that make better investments make more money — and that a company can make less money due to a lack of diversity.
Many impact investing firms are focused on increasing diversity in a number of fields. Zeina Fayyaz Kim is an associate partner at NewSchools Venture Fund working on the diverse leaders team. She invests in diversity initiatives in education specifically working to increase the number of black and Latino leaders in education. They aim to have 30 percent black and Latino senior leaders in education by 2020.
Learn more about her journey to impact investing here.
If you are interested to learn more about the field of impact investing, hear from more practicing experts, and chart your own career path, please visit Net Impact’s Impact Investing Portal.
Crowe, Portia and Kiersz, Andy. “These charts show just how white and male Wall Street really is.” Business Insider, 25 August 2015. Assessed 09 May 2017.
MacBride, Elizabeth. “A Diversity Problem.” Investment News, 14 December, 2015. Assessed 09 May 2017.
Neuhauser, Alan. “2015 STEM Index Shows Gender, Racial Gaps Widen.” U.S. News, 29 June 2015. Assessed 09 May 2017.