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Advancing Racial Justice and Equity in Our Investments: Making Leadership from Canada’s Philanthropic Sector Count

By August 5, 2020News

By Shannon Rohan, Chief Strategy Officer, SHARE

The Black Lives Matter movement, which has spoken out against police brutality, anti-Black racism and the disproportionate violence against Indigenous peoples has sparked a national debate about systemic racism in Canada. Although systemic racism is often viewed by Canadians as something that happens elsewhere or at another time in history, the lived experiences of Black, Indigenous and People of Colour (BIPOC) show that systemic, deeply rooted racism runs rampant in Canadian society.

For their part, philanthropic organizations are grappling with how to shift entrenched structures to address racial equity and justice within their own organizations and in the communities they serve. At the Racial Equity and Justice in Philanthropy Funders’ Summit held in June 2020, 12 calls to action for the philanthropic sector to address anti-Black racism were put forward. The calls to action range from making clear public commitments on anti-racism, to conducting equity audits and collecting race-based data that help inform decision-making.

Another critical space where philanthropic organizations can embed principles of racial justice and equity is in their investment portfolios.

Canada’s capital markets sorely need leadership on addressing systemic racism, and philanthropic organizations are well placed to provide that leadership.

“We can no longer follow the established norms of donor primacy, over emphasis on endowment growth or comforting our Board of Directors as an excuse for the status quo. We must step into the space of understanding who we are and how we are perpetuating racism in Canada through our own actions and behaviours.”

Andrew Chunilall, CEO of Community Foundations of Canada

So, what can foundations do to advance racial justice and equity in their investments? Here are three initial steps that we have identified:

  1. Embed racial equity and justice into investment governance

A valuable starting point for foundations is to strongly and intentionally commit to racial equity and justice across the organization, including in its investments. Considering how to embed this commitment into your foundation’s overall investment governance is critical.

Increasingly, asset owners, including foundations, are articulating beliefs, values, principles and expectations in their investment policies that go beyond typical statements about financial risk and return. Foundation investment policies can establish objectives and provide direction and parameters to investment managers that include explicit expectations and aspirations related to racial justice.

For example, you may articulate a belief that:

The success of our investments over the long-term depend on an inclusive economy, an economy that creates opportunities for everyone to thrive, particularly those who have been historically and persistently excluded including Black, Indigenous and People of Colour.

The Winthrop Rockefeller Foundation, a leader in aligning its investments with racial equity, has emphasized the business case for racial equity investing. They observe that “inclusive growth and investments capitalize on some of the fastest-growing demographic trends and may also reduce long-term public costs in sectors such as health care and education, where outcomes are deeply tied to community wealth and other socially determined factors.”

Foundations may also consider adapting the terms of reference, term limits, recruitment approaches and composition of their investment committees to ensure alignment with the organization’s commitment to anti-racism, inclusion and diversity. Investment committees are a key pillar in the governance of foundation endowments. While stability and continuity are important to foundation investment committees, so too are the new ideas and perspectives that come from giving a seat at the table to people with diverse ideas and backgrounds.

  1. Talk to your investment advisors and managers about racial justice and equity

It is no secret that the investment management industry is dominated by white men. And while we have seen efforts by US foundations to give mandates to firms led by women and people of colour, we have not seen similar efforts in the Canadian context.

As a starting point, Canadian foundations can integrate racial equity and justice considerations into manager hiring and monitoring processes. For example, during the hiring process foundations can ask their investment consultants to research firms led by Black, Indigenous and people of colour. Foundations can also expand the set of questions used in interviews to include inquiries about the firm’s perspectives, policies and commitments related to racial justice and equity.

Here are three examples of questions foundations can raise at their next investment management meeting:

  1. What steps has the firm taken to advance awareness of systemic racism within its own organization?
  2. What efforts has the firm made to improve its diversity, equity and inclusion policies and to hire and promote Black, Indigenous and people of colour across the organization? What about more broadly in the investment industry?
  3. What efforts has your firm made to promote strong diversity and inclusion processes by Canadian corporations at both the board level and in senior management?
  1. Help elevate investor action beyond diversity

Much of the investment industry’s attention to date has focused on calls to incorporate racial equity into advocacy for gender diversity on boards and in the C-suite of Canadian corporations. We know that corporate boards are predominantly white and male. Research conducted in 2020 found only four of the 676 board members at S&P/TSX 60 companies were Black.[1] Similarly, in 2017 SHARE research found that only two companies of 173 surveyed had Indigenous board members.

While pushing for greater diversity and inclusion of BIPOC in key leadership and decision-making roles is a critical step, addressing the central underlying issues of systemic racism requires much more.

Systemic racism is fundamentally a question of social and economic justice, and foundations have the opportunity to ensure that efforts to address racial justice and equity do not focus exclusively on diversity. They must also address the underlying structures that entrench systemic racism. These structures include racialized economic inequality, precarious employment, housing financialization, colonization, privatization of basic services, access to quality healthcare and education, and unequal access to financial services and investment capital.

If we are to be successful in advancing racial justice and equity in Canada’s capital markets, we must not restrict our work to the safe spaces but lean into the discomfort and complexities of oppressive economic and social structures and be willing to recognize how our investments may be perpetuating, and even benefitting from those structures.

If you are interested in participating in further conversations about advancing racial justice and equity in your investments, please get in touch with us.

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