In the first 100 days of the Biden administration, there was a focus on what the government should do to create an economy that works for everyone. Considerably less attention was focused on what businesses, investors, and advocacy groups could do to get us closer to that goal and how they might work with the government to achieve that.
To look at where the business and investor communities stand—and at where they might be going—the Aspen Partnership for an Inclusive Economy, JUST Capital, and US SIF: The Forum for Sustainable and Responsible Investment gathered leaders who have been thinking about our present problems and looking for a path to a more equitable tomorrow. The conversation featured 13 experts in the field including Senator Mark Warner of Virginia and Bharat Ramamurti, deputy director of the White House National Economic Council.
“Capitalism, when it works, has a history of bringing more people out of poverty than any other system,” Warner said, “but I think we have to acknowledge that, at least in modern America, it is not working for enough people.” To many business leaders today, that statement is a guiding principle as they seek to do better.
1. The digital economy is upon us.
Senator Warner pointed out one good thing to come of the COVID crisis: the acceleration of the nation’s move to a digital economy by at least a decade. While that represents a tremendous opportunity to accelerate inclusion alongside technological advances, it also underscores that things aren’t going back to the way they were.
“We are not going to be able to fit everybody back into the 20th-century model where everybody works in a classic 40-hour workweek,” he said. “We need to acknowledge that people are going to have potentially—by choice or by economic necessity—multiple gigs.”
Warner called for leadership to address three major hurdles that this new economy creates: The need for a new social contract that includes portable benefits, the need to incentivize business investment in human capital, and a new way of measuring corporate behavior. Many investors are beating the drum for the latter (often shorthanded as ESG, for Environmental, Social, and Governance issues) because they believe that this broader way of measuring corporate performance is a better measure of corporate sustainability and that it’s simply the right thing to do.
2. Companies need to act now.
The drive for an inclusive economy started long before Biden was sworn in, driven by visionary business leaders and sustainable and impact investors. But lately, new energy is coming from consumers and from employees—particularly younger ones—who are demanding that their companies respond to social and environmental issues.
Heather Higginbottom of JP Morgan Chase PolicyCenter believes that our country, our society, and our businesses will be stronger if we jointly address issues like racial inequality and climate change. “My concern is that we might miss that moment. That we might get out of COVID, take off the mask, go back to our offices, and leave behind what we came to understand quite intimately over the last year,” she said. “We are collectively responsible. The government, the business sector, and nonprofits have to come together to try to move the needle and address some of those challenges.”
Investors, increasingly, believe this as well, according to Randall Strickland, director and investment advisor for Pathstone. “Many [asset owners] are accepting the fact that things like climate change, things like racial equality and other issues, do represent systematic risks,” he said. “The fact that we’ve gotten past that is tremendous progress.”
3. Society’s problems are systemic—and business are part of the system.
While environmental concerns have long been a focus of ESG investors “the pandemic has made so clear how important it is to understand how corporations treat their workers, as well as their customers and the communities they operate in,” said Jon Hale of Morningstar. Investors are now equally concerned with issues of diversity and inclusion, he noted. “Shareholders at dozens of companies this year are asking firms to disclose publicly the data that they have to file with the government, showing the racial, ethnic, and gender makeup of its workers so that as companies make commitments to improving diversity, investors and other stakeholders will be able to better measure their progress.”
“I think the past year has shown us many of what I would call ‘Rosie the Riveter moments’,” said Xavier de Souza Briggs of the Brookings Metropolitan Policy Program. “Reminders of how workers—especially workers on the bottom of this economy, disproportionately women and people of color and immigrants, but millions of others as well—pulled up the whole economy.” Most people now recognize that these workers are critical to making our economy work, and they expect businesses to be moral leaders and make sure they are protected and rewarded.
4. Biden needs business, and so do Americans who want change.
“The elephant in the room is that so many people have lost faith in government as a vehicle that can really tackle social problems,” said Joe Keefe of Impax Asset Management. “I really think it’s important in the early days for the administration, by going big, to have some success, and be able to demonstrate how some changes in public policy can move the market, and benefit the market, and benefit workers, and benefit consumers.”
In a time of political gridlock, it may be that corporations will respond to Americans’ demands better than their own government will. “Healthy pressure is a good thing,” said de Souza Briggs. “I want to see investors, both institutional and retail, and customers continue to send signals to companies about what they expect.”
Holly Ensign-Barstow of the nonprofit B-Lab sees rising pressure on businesses to be forces for good. “Consumers and employees want to buy from and work for companies that do more than just make a profit,” she said. “They want companies to have a purpose and to be part of the solution to global challenges, instead of roadblocks to progress.”
“I think we’re at a unique moment here, in which people from across the political spectrum, people from business or representing workers, have all come around to the idea that we need to make some changes,” said the White House’s Ramamurti. “My hope is that we can look back at this moment—at this administration—and say, not only did we recover strongly from the pandemic, but we were able to seize this moment to push American capitalism into a better place, one that produces better outcomes for workers and makes American business more competitive for decades to come.”
You can watch the entire event here.