US impact coalition calls for White House initiative to lead reforms for fairer economy
The US Impact Investing Alliance, B Lab and a coalition of more than 50 impact-focused organisations have called for a new White House initiative to help the Biden-Harris administration to address America’s most urgent crises.
The proposed White House Initiative on Inclusive Economic Growth would play a role in coordinating and shaping federal policies to tackle four issues exacerbated in the past months: the health emergency, the uneven economic fallout of the pandemic, racial inequalities and climate change.
The administration had already indicated that it “meant business about inclusive growth” and that equity would be a “hallmark of their agenda”, said Darren Walker, president of the Ford Foundation, speaking at the campaign’s launch on Wednesday. (Ford Foundation is not part of the coalition, but has signed a separate letter of support for the campaign, along with 17 other philanthropy leaders.) This White House was “poised for action, and looking for partners” and the coalition was committed to work with it, he added.
This White House is poised for action, and looking for partners - Darren Walker, Ford Foundation
The initiative would aim to prioritise structural reforms to the economy and capital markets, including supporting a shift from shareholder primacy to stakeholder capitalism and an increased focus on community investing.
“This is a very unique time,” Fran Seegull, president of the US Impact Investing Alliance told Pioneers Post. The crises that became salient in the past year, together with a growing awareness of the long-term role of the current form of capitalism in shaping those, “really set the stage” and created an “imperative for action”, she said. “America was, and is, hurting”.
These were issues that impact investors and impact entrepreneurs worked on, “day in and day out, year in and year out”, she added. “Impact investors and business leaders are ready to go with tools and capital to promote a just and equitable recovery.”
America was, and is, hurting - Fran Seegull, US Impact Investing Alliance
Andrew Kassoy, co-founder of B Lab, the non-profit organisation behind the B Corp movement, said the government should “harness the power of the private sector” to achieve the transition to stakeholder capitalism.
“The fact is that B Corps and businesses like them, and the impact investors that invest in them, can't create an inclusive economy in a system where the norms and the rules of shareholder primacy work against it.
“We also need government to play a role in upgrading those rules so that all corporations and investors are responsible for having a positive impact on workers, communities and the environment.”
Future-proofing progress
The coalition wants the initiative to be seated at the National Economic Council – the advisory body on economic policy to the president, and hopes to find an ally in the NEC’s director, Brian Deese. Appointed by Biden, Deese was the global head of sustainable investing at BlackRock and worked on the drafting of the Paris agreement under the Obama administration. The president has described him as “a true expert on climate policy”.
The initiative had bi-partisan appeal, Seegull said, so the coalition was taking a “calculated risk” in asking for it to be embedded in the White House, as its association with the Democrat administration could lead some Republican lawmakers to withdraw support.
The initiative would encourage collaboration between different agencies and government departments for better efficiency, rather than looking at issues in a fragmented way. Its role would also involve reaching out to Congress to gather support from lawmakers should legislation be needed – any budgetary changes would need congressional approval, for example.
What has shifted is a recognition that some challenges are systemic, and therefore require a change in the rules of the game - Andrew Kassoy, B Lab
Policy proposals include more support for community investing, with increased funding for community development financial institutions (or CDFIs, specialised organisations that provide financial services to low-income communities and those that can't easily access financing) and better coordination of government bodies involved. The initiative could be a single point of contact for the different agencies and departments involved in community investing, helping them to work together more efficiently to “start flowing more of this money to the communities that really need it”, Seegull said.
Recommendations also include pushing for true “stakeholder governance” in companies, including requirements for better reporting and transparency, and to increase the role of workers in decision-making, Kassoy said.
Seegull acknowledged that market forces – led by consumer demands and investors – had already led some companies to commit voluntarily to better capitalism. But market forces alone might not be enough: a combination of self-regulation and regulation may be needed to “create an economic system that works for everyone.”
At the launch, Kassoy said: “What has shifted is a recognition that some of the challenges that we face are systemic in nature, and therefore they require a change in the rules of the game for everybody.”
Seegull said she hoped that the initiative would become a permanent feature of government, regardless of the administration in place. “In our world of impact investing, we've seen the pendulum swing back and forth, based on the party in power,” she said: there was a need to “future-proof” progress. Regulation, legislation and market forces could help prevent backsliding, together with pressure from a new generation committed to a better form of capitalism. “Once impact is transparent, there’s no going back,” she said.
Top picture: US president Joe Biden (credit: Gage Skidmore from Surprise, AZ, United States of America, Wikimedia Commons)
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