“These are tumultuous times.” It sounds like a cliché, but one could argue that it’s an apt description of life on planet Earth right now. As the world continues its struggle with mitigating the devastating effects of the novel coronavirus, the world has witnessed, yet again, horrific scenes of police violence and brutality against Black Americans. As socially responsible investors, we are well aware of the economic and racial disparities that exist across the world and, most especially, in the US—one of the wealthiest nations on the planet. Moments like these, however, bring those disparities into stark relief, reminding us that if ever there was a time to invest in shifting the paradigm of wealth inequality and institutionalized racism, the time is now.
The pandemic has left hundreds of thousands of families across the globe grieving the loss of someone they love. While it’s true that COVID-19 is an “equal-opportunity” pathogen, there can be little doubt that some communities have been hit much harder than others, both economically and physically. In the US, people living in poverty are twice as likely to die of the coronavirus than their wealthy counterparts and almost three times as likely if they are poor and black. According to the non-partisan APM Research Lab, the picture is even more dire when we look at individual states. In Michigan and Missouri, Black residents have been dying at a rate that is five times that of whites. In Kansas, the multiple is six.
It doesn’t take rocket science to understand why this is so. In the US, the poverty rate for Black Americans is double that of whites, and the median net worth of white households is 41 times that of Black households. Inadequate access to quality healthcare and food—and living with the stress of food and housing insecurity—takes its toll on the body, making it more vulnerable to chronic diseases like asthma, hypertension, heart disease and diabetes. We know that these health issues dramatically increase the risk of death from COVID-19. In addition, the jobs that pay the least in this country––retail, hospitality and childcare––can’t be done remotely and are overwhelmingly filled by Black and Latinx workers. Benefits like paid sick leave and health insurance are scarce, so people who are sick can’t afford to see a doctor or stay home. Social distancing simply isn’t an option for most essential workers. Is it really any wonder that the Black community is suffering such a devastating blow? The statistics are a shameful indictment of the status quo.
The racial disparities in COVID-19 deaths that are ravaging poor and Black communities is not unique to the United States. Other developed nations are reporting similar statistics, and conditions in developing countries make the spread of the virus inevitable. We know how important hand washing is to controlling infection, but there are 3 billion people in the world who currently can’t wash their hands at home because they lack access to soap and water. The World Bank estimates that global poverty will increase for the first time since 1988––and that COVID-19 will push 40–60 million people into extreme poverty (adding to the 736 million who already suffer extreme poverty, defined as living on less than $1.90 per person per day).
The scope of racial and wealth inequality is vast, and addressing it can seem daunting. The pandemic and recent spate of police killings of Black people have spurred many investors to ask what they can do. Here are three suggestions:
1 INVEST IN COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS
CDFIs focus on increasing prosperity in low-income and underserved communities. They provide loans at affordable interest rates to finance projects and businesses that will benefit the community. They also provide banking services and mortgages for community members. Some CDFIs are Black or minority owned, and investing in them can have an even bigger impact on bridging the racial wealth divide.
2 INVEST IN COOPERATIVES
Cooperative businesses are companies that are owned and operated by the people who produce or use their products and services. They are often values-driven organizations that put the welfare of the workers and the community they serve at the core of their operating principles. When workers have an ownership stake in the business they work for, they have a vested interest in seeing it succeed, and the business has a vested interest in supporting and meeting their needs. Co-ops in underserved communities not only provide vital services to the community, but they create jobs with living wages and health benefits. And they keep dollars invested in the local economy. Many CDFIs specifically support the creation and growth of co-ops. Lending money to these organizations allows them to offer the capital and technical assistance that co-ops need to flourish and thrive.
3 INVEST IN CLIMATE STABILITY
Climate stability is inextricably linked to fighting poverty, both in the US and around the world. The World Bank estimates that the climate crisis will force 100 million people into extreme poverty over the next decade if the world doesn’t take urgent action to change the current warming trajectory. Investing in renewable energy and efforts to help vulnerable communities prepare for and adapt to the changing climate is yet another way investors can use their assets to help bridge the economic divide.
These actions might seem small and inconsequential, but when we aggregate our small actions as investors, they can power significant transformation.
Photo collage by Kate Poole. Natural Investments advisors Tiffany Brown and Kate Poole shared the anti-racist investment framework they developed for their business, Chordata Capital, during a recent webinar: https://bit.ly/Blackeconomicliberation
