Research & Insights

“The compensation structures in the impact and ESG investing industries, particularly at large funds, may be exacerbating the very problems that ethically minded financial professionals are trying to solve. Here are five guidelines for addressing the glaring income and wealth inequality in our own backyard.”

Populist discontent with the economy has become one of the defining features of contemporary politics. Its sources are familiar: widening wealth inequality, the concentration of power in financial institutions, the erosion of community voice, and the perception that existing economic models no longer deliver security or fairness. The question is how to respond. In July, Compass, the Predistribution Initiative, Social Enterprise UK and the Fairness Foundation organised a roundtable with business leaders, cooperative advocates, policy-makers, and investment professionals to discuss alternative economic models as a promising response to rising disaffection and widespread distrust in the status quo. Read the excellent blog post by Will Snell and detailed key takeaways by Jack Jeffrey of the Fairness Foundation

In our contribution to the NYU Abu Dhabi Transition Investment Lab's annual report, in particular on the theme "Understanding Inequality as a Systemic Risk to Financial Markets and Portfolios", our Executive Director, Delilah Rothenberg, makes the case that inequality has earned its place alongside climate and nature as a defining systemic risk of our time. Modern finance has not yet developed the analytical tools that enable diversified investors to adequately factor externalized social costs into their risk-return analysis. As a result, it's increasingly unclear whether markets can facilitate the price discovery needed to reflect the true value of human, social, and natural capital.