SEC in Focus: Lack of Diversity Among Asset Managers

Plus: How Amazon advances clean energy goals, while nurturing innovation and shareholder capital.

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By Jason Gold, Senior Fellow at PPI

In July 16 the Securities and Exchange Commission (SEC) hosted a discussion on improving diversity and inclusion within the asset management industry.

The SEC doesn’t have a long history of using its powers to focus on diversity, but SEC Chairman Jay Clayton sounded an optimistic note: “We should continue to ask ourselves how we want participation and representation in our markets to evolve, at all levels,” Mr. Clayton said at the meeting.

But government can’t do it alone. To wit- just 69 of 1,367 entities surveyed by the SEC in 2018 completed an assessment of their diversity policies and practices, according to the agency.

Some diversity advocates implored the SEC to increase pressure by declining to meet with firms that ignore its diversity surveys.

While the increase of these discussions by the government is welcome, withholding access to your government is never a good idea.

One chart explains the reason the SEC hosted this discussion

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Why is this chart so important? It speaks to opportunity — which is the essential precondition of equality. Simply put, how can we expect investment capital to flow to minority and women entrepreneurs if it’s not flowing through the hands of diverse capital allocators?

Congressional Red Alert: Local governments need help — ASAP

Still not convinced this recession is different? Take a look at this graph from the Federal Reserve of St. Louis:

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This chilling drop-off is one of several reasons to get emergency funding directly to states and cities in the next stimulus package. The chart dates back to 1955 and shows that local governments who are hemorrhaging money are shedding jobs at a record pace. (Previous recessions are shaded)

In March 2020, local governments employed nearly 14.7 million people. Two months later that number dropped to 13.4 million with more cuts expected soon. Those job losses moved across various sectors including fire, police, teachers, and frontline healthcare workers.

How Amazon advances clean energy goals, while nurturing innovation and shareholder capital

Amazon announced it has teamed up with We Mean Business, a global non-profit working with business to accelerate the clean energy transition.

This push by Amazon is reflective of a larger trend by cash rich companies and is an important focus by businesses that have significant resources to allocate. If you dig closer, you will find more and more of these proposals have a capital investment component in clean energy technology. From the press release:

Climate Pledge signatories will explore investment opportunities, including through Amazon’s Climate Pledge Fund, in companies whose products and services will facilitate the transition to a zero-carbon economy.

New York uses green infrastructure investment to get its economy back on track

Amid a massive economic crisis on the heels of serving as America’s first Covid-19 epicenter, New York’s Governor Andrew Cuomo has forged ahead with plans for an historic solicitation of renewable energy via offshore wind farms. Combined with a $400 million multi-port public/private infrastructure investment, these actions are key components to get New York State’s economy back on track and progressing towards its mandate to secure 70% of its electricity from renewable sources by 2030.

“During one of the most challenging years New York has ever faced, we remain laser-focused on implementing our nation-leading climate plan and growing our clean energy economy, not only to bring significant economic benefits and jobs to the state, but to quickly attack climate change at its source by reducing our emissions.” Gov. Cuomo said.

Glaring omission in the CARES Act commission highlighted

Thornell, et al, make a pretty convincing case in Barron’s that the oversight commission for the CARES Act as currently constructed, is problematic to help get money needed to the 8.7 million employees of minority-owned businesses, hardest hit since the crisis began and overlooked in previous stimulus packages. Why? There are no minorities on the current commission. The solution according to the authors? Add more members to the commission, and this time- include minorities.

From the piece: “No requests were made of the Treasury Department and Federal Reserve Board to explore the array of economic implications for communities of color or inquire about possible strategies to address them. The Treasury and the Fed wield powerful economic tools to manage the pandemic’s devastation on businesses, workers’ livelihoods, family savings, and consumer confidence.”

Agreed. I highlighted similar inclusive governance challenges in an op-ed for The Hill in April arguing why Biden needs some diversity in key economic cabinet posts that have never been led by a minority.

Meanwhile… “Inside the Klubhouse”

The Institute for Diversity and Ethics In Sport (TIDES) at the University of Central Florida last week released its 2020 Racial and Gender Report Card for the NBA. Commissioner Adam Silver, owners, and players have been longtime leaders on social issues among all mainstream sports, so these results are no surprise:

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Case in point from the San Antonio Spurs last week. Coach Gregg Popovich, a 5x Champion, top 3 all time, future hall of fame coach, swapped roles with assistant coach Becky Hammon, who took over head coaching duties for the Spurs against the Milwaukee Bucks.

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Radically Pragmatic. We seek to advance progressive, market-friendly ideas that promote American innovation, economic growth, and wider opportunity.

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