A coalition of more than 50 impact-oriented organizations, spearheaded by the U.S. Impact Investing Alliance and B Lab, just stepped up to the bat in a big way, pushing for the creation of what they’re calling a White House Initiative on Inclusive Economic Growth. The aim would be to coordinate federal policies focused on boosting stakeholder capitalism and community investing.
Ultimately, the objective is to redefine capitalism—to go beyond incremental change, the better to address a trifecta of massive crises: the economic fallout from the pandemic, a widening racial wealth gap and the impact of climate change.
“We believe that solving these social, economic and environmental challenges requires us to look at the underlying economic structures that have, in fact, given life to some of these challenges,” says Fran Seegull, president of the Impact Investing Alliance. “We’re asking to partner with government in a more formal way in order to address some of the challenges at hand.”
Shifting to stakeholder capitalism would involve financial market reforms changing the rules and incentives for companies and investors, alike, to ensure they account for the impact of all stakeholders, such as the community and employees. It also could involve such steps as requiring the disclosure of ESG issues. The focus on community investing would mean efforts to build generational wealth and create new jobs and opportunities for underserved communities, as well as updating the Community Reinvestment Act (CRA).
A Who’s Who
Signatories include a who’s who of impact investors, foundations and other organizations, from Omidyar Network to Opportunity Finance Network and the Global Impact Investing Network (GIIN). While each of the groups has its own policy recommendations, the point of the announcement was to hold off on specifics and advocate for the bottom line—a coordinated initiative created by the White House.
“There are a lot of organizations that are in this space of stakeholder capitalism and community investing that have been focused on public policy for a long time,” says Andrew Kassoy, co-founder and CEO of B Lab. “They’re putting aside individual policy preferences to say that the most important thing is for the Biden administration to create a White House Initiative on Inclusive Economic Growth, which would create a way for us all to interact with them on a broad policy agenda on issues related to economic growth.”
Plus, another group of 18 heavy hitters specifically from the foundation world—Ford Foundation, MacArthur Foundation, Rockefeller Brothers Fund and Skoll Foundation, among others—also signed on to a separate letter. “They understand that systems change requires a partnership between the private sector and philanthropy, alongside government,” says Kassoy.
Since the initiative would involve multiple agencies, ranging from the SEC to the SBA, not to mention Congress and the executive branch, the proposal suggests situating the initiative at the National Economic Council, which would assume a coordinating role.
The press release announcing the effort included support from Rep. Dean Phillips (D-MN) and Sen. Mark Warner (D-VA). Such endorsements are critical, of course, since some of the changes under consideration require Congressional legislation. Other steps, like the creation of the initiative, can be completed through an executive order, while still others fall under regulatory rules.
The effort really kicked off in December, with a more-informal letter to the White House that presented some issues the administration could address to bring about structural changes in the economy.