Diversity & Inclusion
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A guide to investing for racial equity

"It’s time to 'own what we own' and align all of our actions and our assets with the world that we want to see — a world that is just and inclusive," writes Nia Global Solutions' Kristin Hull.

Investors can take actions to increase racial equity. (Photo by Burak K from Pexels)

This essay was originally published via ImpactPHL Perspectives, a multi-part series which explores the many facets of the impact economy in Greater Philadelphia from the perspectives of its doers, movers, shakers and agents of change. This version has been edited for style and length.

This is a guest post by Kristin Hull, Ph.D., the founder and CEO of Nia Impact Advisors, a women-led Registered Investment Advisor that trains women and people of color in investing, and founder of Nia Global Solutions, a gender-lens portfolio of solutions-focused companies.

From taking a knee to blacking out our social media to raising our fists in protest, many of us are experiencing outrage, frustration, anguish and empathy for all that is unfolding in our country.

And from committing to learn about white privilege to taking steps to dismantle systemic racism and white supremacy to donating to organizations supporting racial justice and shopping at Black-owned businesses near our homes and online, many of us are stepping up to support in all of the ways we know how.

2020 has seen an unraveling of our social contracts, and as we look to rebuild our economy and reweave our society, it’s time to center the Black community and those previously marginalized from planning and decision-making tables.

Most people who identify as investors in the United States and around the world are white and male. Yes, we have a long way to go to shift just who sees themselves as an investor, and who has access to investment accounts. For those with assets to invest, a starting question might be, “How much is enough?” For those that have more than enough for their own families or organizations, donations in the form of support for Black organizations working on racial justice may be an appropriate first action.

Due to a history of systemic racism and slavery in the U.S., the net worth of a typical white family is 10 times that of a Black family, and thus for many — engaging in wealth redistribution may be a meaningful objective.

To have the current crisis become a turning point and a move toward true transformation, investors can — and must — play a significant role, by adopting a racial equity lens when making investment allocations. Below I have outlined steps to incorporate a racial justice lens when making investment decisions, as well as ways to consider a commitment to racial equity within the investor policy statement.

What I didn’t get into here is banking. Moving your money from a large extracting institution to a local bank, credit union, or CDFI is one of the most important steps each one of us — those who see themselves as investors or not — can take to solve for some big aspects of racial inequality. For past articles on the importance of switching to a local bank, see my Money Doula blog. Check out CNote for a quick way to get cash to CDFIs loaning money during this crisis. And Marilyn Waite has published a list of banks that are climate justice friendly.

Here are eight examples of racial justice criteria and actions for investors:

1. Count and add to people of color in leadership.

Look to ensure that every company in your portfolio includes people of color in leadership. There is a need for greater diversity at the board level and in executive leadership regardless of company size. Until recently, the onus has been on nonwhite men and women to prove that inclusive workplaces represent a solid business proposition. With accumulating research illustrating the benefits of inclusive practices to both companies and their shareholders, the tide is turning toward viewing diversity and a culture of inclusion as competitive advantages. The right thing to do may also be a smart thing for investors.

In public equities, and many asset classes, the overwhelming majority of board members and corporate executives are older white males. The good news is that the financial industry changes by client request and demand. With enough of us aware of this issue, and raising this issue, we can make significant progress.

Possible actions: Select companies that include people of color in executive management, and on the board of directors.

Look to add people of color to your own investment team and in all areas of hiring. As an example of a possible action, at Nia Impact Capital, we provide a “Changing the Face of Finance” internship program specifically to train young women and people of color in sustainable finance.

Need help finding diverse talent? Incluzion and LaborX help employers connect with underrepresented, people of color candidates and job seekers.

2. Divest from companies causing injustice.

Many public equities portfolios, and even private equities may include companies causing harm. From private prisons, weapons and firearms to tobacco and alcohol to large corporations like Walmart or MacDonalds that are not actively paying a living wage, make sure you don’t inadvertently hold companies that are actively part of the problem. Check out Robasciotti and Philipson’s racial justice exclusion list.

Possible actions: Check with your financial advisor to make a plan to sell any harmful companies. Reinvest that money in solutions focused companies. The Nia Global Solutions portfolio, Robasciotti and Philipson’s RISE and CNote’s loans targeted to women of color led businesses are some to check out.

3. Use your investor voice: activism and engagement with a racial justice lens.

Moving forward in this age of inclusion, and at a time when innovation is paramount, all-white male boards will be questioned and the burden will shift toward these men to justify non-diverse leadership teams. In the meantime, investors can send a strong message by voting with their dollars. Nia Impact Capital invests only in companies that include diversity in leadership. Nia uses its platform and investor voice to share the accumulating research on the benefits of diversity in corporate leadership, encouraging many portfolio companies to increase their gender and racial diversity numbers.

Possible actions: Use your platform and investor voice to inform companies of the benefits of diverse leadership, and encourage companies to increase their racial equity practices, including hiring and promotion practices. Be active in speaking up for living wages, access to heath care benefits and reducing inequalities.

4. Engage formally and proactively as an asset owner to achieve racial equity.

Investors can incorporate a racial justice lens when voting proxies and by using their investor voice to advocate for social justice policies and practices in companies they own. Writing letters to companies and filing shareholder resolutions is an effective way to begin dialogue toward greater equality. Nia Impact Capital views the voting of proxy statements as both a shareholder’s right and a responsibility. From including women and people of color in board leadership to CEO pay and workplace equity, Nia uses its investor voice by voting proxy statements in alignment with fair and equitable corporate policies and procedures. If your portfolio managers or financial advisors do not already offer this service, As You Sow, a nonprofit shareholder advocacy group based in Berkeley, California, can assist investors with these goals.

Possible actions: Vote proxy statements in alignment with fair and equitable corporate practices. Vote no for excessive CEO pay, and vote no to all-white boards of directors.

5. Invest in entrepreneurs of color, Black-led investments and Black-led funds across all asset classes.

Financial inclusion is a significant part of how society can achieve racial equity. In 2019, just 1% of venture backed founders were Black, despite the high level of innovation coming from the Black community. Impact investors need to check for any biases — including implicit or unconscious bias — to ensure capital gets to people-of-color-led ventures, and not miss out on higher-alpha opportunities by (perhaps inadvertently) excluding many startup businesses. Investors that do not engage in private equity can check with their banks to ensure cash deposits are being used to provide loans to entrepreneurs of color. Additionally, investors can check with any banks and lending companies in which they own stock to ensure these institutions lend to people of color and Black-owned businesses.

And, interesting to note: People of color and women are much more likely to get funded with crowdsourced, community investments. As the founders of Investibule state, “If we want to change who gets funded, we also need to change who does the funding.”

Possible actions: Choose funds or investment products managed by Black portfolio managers; when selecting municipal bonds, choose projects that positively impact communities of color, or improve the lives of historically disadvantaged populations (for example, retrofitting of public housing for single mothers).

To seek Black and women-owned startup companies ,look to Investibule and Crowdfund Main Street.

6. Invest in businesses that produce products and services that solve everyday problems for (and ideally with) communities of color.

While providing leadership opportunities to diverse candidates is essential for both a company’s financial bottom line as well as broader societal inclusion goals, as investors and advisors, it is important to select companies that have communities of color in mind. In order to transition to a just, sustainable and inclusive economy, those companies that are actively innovating on behalf of nonwhite people need our investment. From avoiding harmful companies (such as oil, gas and extraction, to companies that do not include minorities in leadership) to investing in solutions-focused companies such as those focused on renewable energy, affordable housing and healthcare solutions, impact investors can allocate their investment portfolios to invest in a world that works for everyone.

Possible action: Choose companies that produce goods and/or services beneficial to Black communities; purposefully invest in people of color-owned businesses, either by making loans, or by investing in privately held companies.

7. Evaluate company employment policies and practices.

Hiring and board recruitment policies, as well as sexual harassment protocols, can have a large impact on company culture. By choosing to invest in companies that embrace diversity goals, as well as inclusive policies and practices, investors can align their dollars with their values while supporting companies that are likely to outperform their competition.

Possible action: Select companies based on their internal policies and practices; this could include hiring practices, board recruitment policies, sexual harassment policies, diversity and inclusion trainings, family leave policies, childcare and more. Invest only in companies committed to paying a living wage.

8. Allocate to people-of-color-led funds and work with diverse financial advisors.

When selecting wealth management services and investment funds, choose diverse investment advisors and portfolio managers. To change the face of finance moving forward, many of us will need to bring a racial and gender lens to all levels of investment decisions. The good news: Diverse managers have been shown to outperform their white male counterparts, so diversifying a portfolio along racial, ethnic and gender lines may serve all parties.

Possible action: Choose to work with diverse owned investment management firms.

And speaking of asset managers: Knight Foundation commissioned Harvard University to study diversity in asset management. What they found was a severe lack thereof.

Of huge significance, just over 5% of publicly traded funds are run by women, and less than 4% are run by people of color. Worse than that, due to bias in manager selection and allocation, firms owned by women and minorities combined manage just 1.3% of assets in the $69 trillion asset management industry. This data suggests that 98.7% of all investment decisions are being made by white men. It’s up to investors to shift these numbers by allocating to diverse managers in order to achieve more balance in our economy.

For purposes of this study, “substantial” ownership was determined to be 25% to 49% of a firm, and “majority” was 50% and higher. The financial industry clearly has its work cut out in terms of paving the road for possible onramps for diverse managers. Investors can accelerate this much-needed change by signaling the demand and by making allocations to Black-owned funds and firms.

The importance of an investment policy statement for racial equity investing

The purpose of an investment policy statement (IPS) is to spell out the goals and stated objectives of any given portfolio, providing direction and parameters for the investment managers. The IPS can serve as a central document, grounding all stakeholders on both the goals, expectations as well as strategies to be used. Oftentimes strategies such as asset class allocations, as well as time horizons or any constraints are articulated within the IPS. For institutions and pensions, as well as endowments and family offices, the investment policy statement can be used as a market signal, as well as a document sharing expectations with fund providers on just what types of products and assets will be needed.

Increasingly, institutions are seeking to articulate their values in addition to asset allocation goals within their IPS. When adopting new strategies or shifting objectives, the IPS is the place to communicate parameters for investment decisions.

Current examples include U.S. based Nia Community Investments, for which all new investments and managers must be led by women and/or people of color. The Rockefeller Brothers Fund recently announced a commitment for 25% of their endowment to be managed by women and diverse managers. These trendsetting entities are models that other capital allocators can follow.


We are at a time of inflection, where all of our actions matter. It’s time to “own what we own” and align all of our actions and our assets with the world that we want to see — a world that is just and inclusive. May we each take the time to look at our investment process, and take steps to move our money toward justice.

Series: Racial Equity Month 2020

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