Turning Words Into Action – How Impact Investors Can Develop A Culture Of Accountability
A recent New Yorker piece profiling Frank Ramsey (an early 20th century philosopher) included a quote that caught my eye and has been on my mind for a while: “the meaning of a sentence is to be defined by reference to the actions to which asserting it would lead…”
In other words, the meaning of words is not centered on intentions, ideas, wishes or the spirit but on action (that it leads to) – and if doesn’t lead to any action, the words are rendered meaningless.
This idea of words v. actions rose to the forefront over the past few weeks with the Black Lives Matter movement stirring thousands to protest and demand action and governments, corporations and investors issuing various statements outlining their plans and intentions to contribute to solutions to racial injustice in the United States. The question still remains: what actions will those statements lead to?
As impact investors, we ask ourselves the same question – what actions can we take today, tomorrow and on an ongoing basis to solve for the racial, social and economic injustices that we see all around us?
Introspection, rightfully so, was the first dominant reaction. As we looked at our individual selves and our communities, there has been a considerable volume of words exchanged - about being allies and listeners, while chanting at protests, through highlighting injustices hiding in plain sight and in amplifying the message that we need to do and be better.
As we look to what to do next – we will find various ways to act with our time, money, influence and other resources, but as impact investors, one thing that we could all do together is to establish a culture of accountability.
Photo by Mercedes Mehling on Unsplash
How can we each do this as impact investors? As we make statements and outline plans, let’s first ensure that the plans are specific, actionable and measurable. For that to be possible, you need to understand where things stand today – for example:
Do your investments target issue areas that impact social and racial injustices?
How much of your portfolio is managed by funds with non-diverse teams?
How many fund managers engage with companies on diversity and inclusion topics?
Are you invested in companies that do not have diverse leadership teams?
Do you evaluate diversity as part of your decision-making process?
Is your cash deposited at a national bank or a community-focused local financial institution?
Once you have taken stock, it is important to set specific and measurable goals so you can be sure that you are taking ACTION. For example, if 50% of the funds you are invested in engage on diversity and inclusion issues with companies, you can aim to increase that to 100%. This could mean asking managers to improve their engagement strategies or shifting to a new fund. If diversity is not a part of your decision-making process today, you can target having a thorough evaluation of diversity of decision-makers, leadership teams, consumers and beneficiaries as part of every (100%) investment decision.
Ultimately, we need to create a "culture" of continuous accountability to hold ourselves and others accountable to these goals. Progress might not be perfect or smooth, but you have to ask the question again and again - every few weeks, every few months – until the goal is achieved and we can replace them with newer and higher goals. Incorporating some questions as a standard part of your check-in with investment advisors, fund managers, entrepreneurs and other parts of the ecosystem that you influence will help keep these issues alive.
Impact investing is more than just a way of investing – it’s a way of living! We can only hope that this practice of asking questions and seeking action can extend to other areas of our lives – to the local politician, friends and family, your school and/or university, your local businesses, the non-profits you grant to, the community you are a part of, and what and where you consume. Don’t ask the question or raise your voice just once, ask it again and again, till each sentence blooms into action and takes on meaning like never before.