The Domino Effect

Impact Reflection | January 14, 2022

The tremendous energy for racial justice that we’ve seen in the last eighteen months has created a strong foundation for investment managers to build on in their existing advocacy efforts. They engage with the companies in their portfolios with an intention to create long-term change, and not just respond to a single issue in the moment.
Following George Floyd’s murder in May 2020 and nationwide protests regarding systemic racism in policing, there were a slew of public pledges made by organizations large and small to help tackle racial inequity. It was a catalyzing moment building on efforts of the Black Lives Matter movement to promote a broader understanding of systemic racism.
Companies large and small were eager to prove their bona fides and to reassure their own customers and investors that they were on the right side of efforts to create real change. Corporate pledges totaled in the tens of billions of dollars for internal change to create a more level playing field for workers of color, efforts to make service delivery more equitable, and provide financial support to underserved communities and nonprofits working on racial justice. This national “George Floyd moment” gave companies, investors and consumers shared language with which racial equity could be discussed.  Social activism also gave investment managers new momentum in pushing companies to create and implement new standards to help make racial equity systemic.
We are now watching each domino tip the next in sequence. Following George Floyd’s murder, weeks and months of social action ensued, keeping racial justice as an issue in the headlines. That in turn led to corporate commitments that are evidence of a leap forward in many entrenched areas related to racial equity. As companies follow through on their promises, investment managers will be tracking their progress and can engage them in subsequent steps for change as well. That accountability and continued engagement give investors confidence that their asset allocation choices are making a difference.

Promises Made – Hiring and Promotion

Discrimination in hiring, pay rates, training, and promotion make it substantially harder for workers of color to achieve comparable career success to white workers, and thereby build family wealth over time. Data shows that workers of color, and particularly black workers, are not promoted as frequently as white employees, especially into pivotal initial managerial positions. The problem worsens as you go up the corporate ladder and is more significant at all levels for women of color.1

Few companies make public the data on hiring and promotion they are required to file with the Equal Employment Opportunity Commission, making it hard to know where they stand, or if they are improving equity or not. In September 2020, Target published some data on diversity for the first time. The report showed that 40 of their 777 senior level employees were black (5.1%) and 50 were Latino (6.4%). In May 2021 they announced that they had increased the number of black senior leaders by 40%.2 While it isn’t clear how many of their senior leadership are physically located at their headquarters in Minneapolis, this new 7% number still falls significantly short of the 19% black representation in the city as well as the national black representation of 13%.

Twitter is another company trumpeting its recent success in increasing Black and Latino representation in their US workforce.3 Because Twitter has shifted to a remote work model, in addition to requiring a candidate of color as part of the finalists for any position above entry level, they have also deliberately targeted recruiting in areas with larger minority populations such as South Florida, Texas, and Southern California. They report similar improvements to Target, but in neither case is full data public.

While the headlines and corporate news releases sound good, there are skeptics who feel it isn’t enough. “While companies have pledged millions to groups including the NAACP and Equal Justice Initiative, the amounts are only a fraction of the companies’ wealth and don’t do enough to address the systemic issues within those businesses,” said Kemi Role, director of work equity at the National Employment Law Project, a New York-based worker advocacy and research group.4

Making Connections for Investors

ESG analysts have long known that systemic change is hard to achieve, but continual efforts to establish priorities and hold companies accountable do create progress. Racial equity has become a more pressing concern for many investors and consumers, but how to truly create systemic impact via investment is a tricky issue. While the desire to have a positive impact may be straightforward, executing inside an investment portfolio often is not.

Tremendous pressure on well-known companies has supplemented existing efforts by investment managers to press corporate management to measure and to publicly commit to progress. Social activists also help identify areas for investor engagement, and innovative investment companies such as Adasina Social Capital are sharing their research databases, including their Racial Justice Exclusion List.5

This is a developing area for financial advisors, and for investment management in general. As fiduciaries for our clients, we must also incorporate the potential impact on conventional concerns around portfolio diversification and investment return.

We Are Optimistic

Our intention at North Berkeley is to provide our clients an opportunity to understand how their investments can contribute to positive change. A primary vehicle for that positive change is direct conversation between asset managers and corporate management.6 Whether that conversation is a private one with management or is made public via shareholder resolutions at a company’s annual meeting, real progress can take many years.
While we know that profit-driven corporations cannot alone create systemic change, the collaboration developing between social activists and investors is powerful. The next domino beyond corporate policy is public policy. In the long term, the combination of investor engagement and government-driven policy has the ability to usher in a more equitable economy.


1 Courtney Connley, “Why Black workers still face a promotion and wage gap that’s costing the economy trillions,” April 16, 2021.

2 Target News & Features, “Target’s Racial Equity, Action and Change Progress,” May 18, 2021.

3 Jeff Green and Kurt Wagner, “’Work From Anywhere’ Helped Twitter Boost Black, Latino Hires,” Bloomberg Equality, January 12, 2022.

4 Bowdeya Tweh, Patrick Thomas, and Sebastian Herrera, “Apple, Google Join Roster of Companies Pledging to Donate, Change Practices on Race,” The Wall Street Journal, June 12, 2020

5 Adasina Social Capital website.

6 Read more in North Berkeley’s recent blog post: How Data and Disclosure Drive Impact Investing Decisions

Kate King, CFP - Partner and Chief Investment Officer 

About Kate Campbell King, CFP®

Kate Campbell King is the Founding Partner and Chief Investment Officer at North Berkeley Wealth Management. Kate provides clients with a unique approach to their financial decision-making.

Read more about Kate

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This commentary on this website reflects the personal opinions, viewpoints, and analyses of the North Berkeley Wealth Management (“North Berkeley”) employees providing such comments, and should not be regarded as a description of advisory services provided by North Berkeley or performance returns of any North Berkeley client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. North Berkeley manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

By |2022-01-28T15:07:58-08:00January 14th, 2022|