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Showing posts from 2019

The Economic Impact of the Racial Wealth Gap, Racial Bias in Small Business Lending and Racial Bias in Investment Management

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Suddenly, it looks like Black people have a lot of friends....several articles have just been published that may point to a revision in management's attitudes about how racial bias has affected Black People:

Racial divide exposed in lending to the smallest of small businesses 
Sole proprietors who are African-American or Hispanic are less likely than their white counterparts to have their funding needs met and are more likely to be discouraged from applying for credit, according to a new report by the Federal Reserve Bank of New York.
https://www.americanbanker.com/news/racial-divide-exposed-in-lending-to-the-smallest-of-small-businesses

Study Reveals (Asset) Allocator Bias Against Black Fund Managers:
When evaluating top-performing managers, institutional investors favored teams led by white men, according to new research from Illumen Capital and Stanford SPARQ.
https://www.institutionalinvestor.com/article/b1gpxh3rph9y69/Study-Reveals-Allocator-Bias-Against-Black-Fund-Managers

The e…

The Internet Governance Forum by Sachin Meier, Impact Investing Intern, Georgetown University.

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Last Thursday, the Internet Governance Forum was held at the Center for Strategic and International Studies. Sponsors included Facebook, Amazon, Comcast, the Charles Koch Institute, and ICANN (the Internet Corporation for Assigned Names and Numbers). The conference covered many topics – from blockchain, AI, and 5G to monopoly power and antitrust, privacy, and consumer protection.

Commissioner Christine Wilson of the Federal Trade Commission discussed the myriad problems surrounding Facebook and its "reckless" behavior with respect to user privacy, data collection and targeting. She took a strong stance on the need to directly regulate Facebook and “put a speed bump in front of Mr. Zuckerberg”. She was keen on controlling Zuckerberg’s power within his own company by dictating the composition of Facebook's Board of Directors and regulating other executive powers Zuckerberg holds within the company. She also suggested a more general, industry-wide reform of social media co…

The Responsible Business Summit West: October 9-10, 2019

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The Responsible Business Summit West will challenge 250+ CEOs, sustainability leaders, Investors, Government representatives and NGOs to show how they’re going to leverage new technologies and investments to deliver the blueprint for the future economy – over two days you will learn how to move from dialogue to action on the key opportunities that lie ahead. Grasping the chance presented whilst simultaneously responding to investor demand to be more transparent on ESG related risks is no straightforward task. Keynote speakers include:

oAssistant Secretary-General, UN Environment oPresident & CEO, Oxfam America oPresident & General Counsel, DSM North America oPresident, CDP North America oPresident & CEO, Fairtrade USA oExecutive Vice President and Group President, Sempra Energy oChief Environment Officer, Microsoft oChief Sustainability Officer, Hewlett Packard Enterprise oChief Sustainability Officer, FedEx oChief Sustainability Officer, MetLife oChief Sustainability Officer, Master…

Second IRS Hearing on Qualified Opportunity Funds. Tisa Forrest, Johns Hopkins University, Impact Investing Analyst

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On July 9, the IRS held the second hearing on Qualified Opportunity Funds following the second tranche of proposed guidance on Opportunity Zones issued on April 17. The first hearing in February followed the initial regulation issued on October 19. The panelists of Internal Revenue Service and Department of the Treasury employees asked speakers to discuss problems and examples of possible solutions that can help them clarify the regulation.

The panel emphasized that they are governed by the language within Opportunity Zone legislation. They are not legislatures themselves. They stressed that their job is to work within the guidelines of the laws congress passes.  The 19 speakers each discussed what they thought would help improve the legislation.

The initial hearing covered an array of issues and clarifications for the Treasury Department to address. During this second hearing, speakers had a narrower list of issues to address, largely technical and tax related.  This is expected to …

Libra Hearings on Capitol Hill. Tisa Forrest, Johns Hopkins University, Impact Investing Analyst

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On June 18, Facebook released it’s white paper on the new digital currency, Libra.The news led David Marcus, Chief Executive Officer of Calibra, to appear before the House Financial Services committee on July 17 - a day after appearing before the Senate Banking Committee.
House Financial Services Committee members questioned whether Facebook would have overwhelming control overthe Libra Association’s 27 other members and if they were to be trusted with 2.7 billion users’ financial data, given past privacy violations.
Facebook’s trustworthiness has been in question since the 2016 Cambridge Analytica data scandal.Most recently, charges brought in March by the Department of Housing and Development concerning Facebook's alleged violations the Fair Housing Act have not helped the firm gain favor with the public.
Last month, Facebook was removed from the S&P ESG 500 index because of privacy concerns and a lack of transparency as to why certain user information is collected and shared…

Financial Services Subcommittee Hearing on “Building a Sustainable and Competitive Economy: An Examination of Proposals to Improve Environmental, Social, and Governance Disclosures.”

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Last week the House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets held a hearing on “Building a Sustainable and Competitive Economy: An Examination of Proposals to Improve Environmental, Social, and Governance Disclosures.”

Several pieces of legislation, or bills, have been proposed, (but not filed yet) in the US House of Representatives regarding Environmental, Social and Governance (ESG) reporting by large corporations.

●HR ___: ESG Disclosure Simplification Act of 2019 (Rep. Vargas)
●HR ___: Shareholder Protection Act of 2019
●HR ___: Corporate Human Rights Risk Assessment, Prevention, and Mitigation Act of 2019
●HR ___: To require issuers required to file an annual or quarterly report under the Securities Exchange Act of 1934 to disclose the total amount of corporate tax such issuer paid in the period covered by the report, and for other purposes
●HR ___: Climate Risk Disclosure Act of 2019 (Rep. Casten)

The US Securities and Exchan…

Semiannual Monetary Policy Report Hearing

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Last week, Chairman of the Federal Reserve, Jerome H. Powell appeared before the House of Representatives Committee on Financial Services to present the Semiannual Monetary Policy Report. Chairman Powell opened his remarks by stating that “the economy performed reasonably well over the first half of 2019 and the current expansion is now in its 11th year.” Inflation has run below the FOMC 2% objective, trade tensions and concerns about global growth have weighed on economic activity."
The Current Economic Situation
Labor Market: job gains remain healthy, with the unemployment rate falling to 3.7% in June. Employers are increasingly willing to hire and train workers with fewer skills.Unemployment for African Americans and Hispanics remain well above the rates of whites and Asians. Urban employment rates are higher than those in rural communities. Labour force participation by those in their prime working years is lower in the US than in comparable nations.
GDP: GDP increased to last…

Why the Fed is wrong about Libra

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The Federal Reserve Act (FRA) requires the Chairman of the Federal Reserve System to testify before the House Financial Services Committee and the Senate Banking Committee twice a year, in February and July, on how the Board handles monetary policy and its observations on economic developments.

In keeping with that requirement, the current Chairman of the Federal Reserve, Jerome Powell, testified before the House on July 10th. He indicated as follows:

Economic activity increased at a solid pace in the first part of 2019. The labor market has continued to strengthen: unemployment fell from 3.9% (Dec) to 3.6% (May), wage gains remained moderate. Inflation has been running below the Federal Open Market Committee’s (FOMC) longer- run objective of 2 percent. In June, the FOMC judged that current and prospective economic conditions called for maintaining the target range for the federal funds rate at 2 1⁄4 to 2 1⁄2 percent. Inflation: Consumer Price Index = 1.5 (May).Economic Growth: 1st qt…

Senate Budget Committee briefing on “The Reasons Opportunity Zones Won’t Work". Willem Sheetz, Impact Investing Analyst, University of Wisconsin (Madison)

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The 2017 Tax Cuts and Jobs Act (TCJA) provided new tax incentives for investments made through qualified Opportunity Funds in targeted communities around the United States. These tax advantaged investment areas, known as Opportunity Zones (OZs), were authorized to promote economic development in 8700 disadvantaged communities, selected by state governors and certified by the United States Treasury Department. The rationale behind OZs is simple: giving tax breaks to investors will spur economic growth in impoverished communities. However, it is important to consider the context in which this program was created. The TCJA was passed by a Republican House, Senate, and President. OZs are not a new idea and they have been tried and tested by conservatives for decades, as in Margaret Thatcher’s “enterprise zones.” Versions of OZs were then adopted in the United States at the state level, ultimately culminating in the 2017 TCJA. However, as uplifting as the OZ program seems on its face, it …

Why Regulating Facebook's Libra is a Waste of Time

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Facebook’s recently announced cryptocurrency pilot, Libra, claims it will “transform the global economy.”

The company hopes that anyone would be able to send Libra through platforms like Facebook messenger and WhatsApp to act as an intermediary for transferring traditional currencies. The ultimate goal is to have this currency accepted as a (general) form of payment. And other financial services will be built on top of its blockchain-based network, called the Libra Blockchain, a “proof of authority" permissioned blockchain system.

See: https://www.americanbanker.com/opinion/regulating-libras-a-waste-of-time

Diverse Asset/Money Managers. Tisa Forrest, Johns Hopkins University, Impact Investing Analyst

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The House Financial Services Committee Subcommittee on Diversity and Inclusion held a hearing on Tuesday June 25, 2019 to explore the challenges minority- and women- owned (MWO) firms face competing in the asset management industry.
According to Bella Research Group’s Diverse Asset Management Project Firm Assessment, MWO firms account for approximately 8.6% of all asset management firms but only manage 1.1% of all assets under management, $785 billion out of $71.4 trillion, and are underrepresented as managers in every asset class but over-represented in the top quartile of fund performance.
False assumptions harm opportunities for MWO firms. Bella’s concluded that compared to peers who manage similar asset classes, 25% of women-owned and 28% of minority-owned asset management firms fall in the top quartile on average for fund performance.
Studies have shown that minority and women-led investment firms invest in more diverse entrepreneurs and businesses, enriching  communitiesand cr…

Diversity in the Boardroom. Tisa Forrest, Johns Hopkins University, Impact Investing Analyst

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On June 20 the House Financial Services Committee held a hearing on diversity in America’s boardrooms.

The witness list consisted of Ms. Chelsa Gurkin, Acting Director of the Education, Workforce and Income Security team of the U.S. Government Accountability Office, Mr. Luke Visconti, Founder and Chairman of DiversityInc, Mr. Ron Lumbra, Managing Partner of Heidrick and Struggles, Ms. Linda Akutagawa, Chair of the Alliance for Board Diversity, the Former Ambassador to Argentina, Vilma Martinez, and Dr. Stephanie Creary, an Assistant Professor of Management at the Wharton School of Business of the University of Pennsylvania.

The hearing examined options for diversifying the gender, racial and ethnic composition of corporate and federal boards. Each witness presented testimony on how to address the issue of diversity on corporate boards and identify the conditions that lead to meaningful diversity so that more companies can follow the lead of firms that have been successful.

Deloitt…

ESG Investing - Shifting Towards Sustainable Financial Markets? Tisa Forrest, Johns Hopkins University, Impact Investing Intern

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The following is a review of a webinar on Environmental, Social and Governance (ESG) Investing presented by Franita Neuville, CFA. 
To set the stage based on a Greenwich Associates 2018 Future of Investment Research Study, 50% of CEOs, portfolio managers and investment analysts surveyed expect to decrease reliance on traditional investment bank research and to rely more heavily on alternative (ESG and other) data in the future.
In the Private Equity Responsible Investment Survey, 2019, the top issues impacting investment decisions were business ethics, bribery and corruption, with 89 and 97% of surveyed private equity investors saying this is a concern when exploring and implementing investment approaches. The least important issues in the private equity survey were responsible marketing and volunteering, with survey responses of 29 and 13% respectively. Diversity and community investment were also low on the list of issues at 41% and 37%, respectively.
Top Barriers to ESG Integration
As …

“America’s Health Future” by Sachin Meier, Georgetown University, and Andres Merida, James Madison University, Impact Investing Interns,

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On June 4, 2019, the Washington Post hosted a forum titled “America’s Health Future” to discuss the future of healthcare, individual health, nutrition, and technology. Four discussions focused on these subjects from different aspects and fit well together under the central theme of the future of American health. 
The event opened with an interview of Bernard J. Tyson, CEO of Kaiser Permanente by Ceci Connolly, President and CEO of the Alliance of Community Health Plans. Mr. Tyson introduced Kaiser Permanente’s brand new program entitled Thrive Local, which emphasized outpatient and home care, which Kaiser Permanente encourages to mitigate the costs of hospital stays. Additionally, they aim to align patients, caretakers, and doctors’ incentives by moving away from a fee-for-service model, which incentivizes doctors to aim for more frequent visits while pressuring patients, especially low income patients to avoid hospital visits. Thrive Local is an extensive program, with the intention o…

Women and Investing - Tisa Forrest, Johns Hopkins University, Impact Investing Intern

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Review of New York Life Investments Webinar: Women & Investing. Lessons for Success: Strengthening Relationships & Transforming Your Business
Introduction
Forbes estimates women control $14 trillion in assets and that this number is increasing. They control 70-80% of the purchasing decisions, have longer life expectancies, but hold a disproportionate percent of life savings in cash.  Women aren’t all the same, but many feel advisors paint them with the same brush. Women represent a compelling opportunity by increasing their involvement in the financial planning process, helping improve financial literacy, gaining greater financial independence. Main Takeaways from the NY Life Survey on Women and Investing

1. 62% of woman believe their investment needs are truly unique and feel as though they’re treated differently when working with financial advisors
2. 67% leave their financial advisor for something other than financial reasons: mainly a lack of personal connection and poor se…
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Impact Investing Forum North- Crowne Plaza Times Square Manhattan, New York, NY- September 23-24, 2019.
www.opalgroup.net/trk/iifnb1908.html
15% discount code: CIRIIFN2019
The Impact Investing Forum will look at many of the asset classes that encompass this space. We invite you to join us and meet top influencers, experienced investors both public and private, money managers, and service providers that are leading the charge in this ever growing space. Themes of defining impact investing, portfolio construction, asset class opportunities, and the role of the investor are just a few of the stimulating topics to be covered at this event.

Opportunity Zones Forum - June 3, 2019

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Opportunity Zones Forum Crowne Plaza Times Square Manhattan, New York City June 3, 2019 www.opalgroup.net/trk/ozfb1918.html
15% discount code: CIROZF2019
The program will discuss how this program is encouraging long-term private sector investments in low-income urban and rural communities nationwide. Not only will this event explore the OZ investment process and regulations, but the forum will also explore current opportunities of the program and future potential implications of investing through Qualified Opportunity Zones.

Blockchain, Cryptocurrency and Africa by Diya Wang (Georgetown University) and Zhiqiang Qing (University of Maryland), Interns

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Impact Investing