Institutional investors have increasingly begun to realize that inequality – or the gap in income and wealth between the very affluent and the rest of society – has become one of the most noteworthy socioeconomic issues of our time. It has the potential to negatively impact institutional investors’ portfolios as a whole; increase financial and social system-level instability; damage output and slow economic growth; and contribute to the rise of nationalistic populism and tendencies toward isolationism and protectionism.
A new report by The Investment Integration Project (TIIP) and The Principles for Responsible Investment (PRI), Why and How Investors Can Respond to Income Inequality, addresses three areas that are key leverage points relevant to income inequality and material to long-term investors:
- employee relations and the structure of labour markets;
- corporate tax policies and practices;
- levels of CEO compensation.
For each of these themes, the report explores key aspects of the current structures that are exacerbating income inequality and how investors might encourage new ones appropriate for the 21st century. The report suggests paths that investors might take to adopt a balanced view of how to create value and manage system-level risks and maximize rewards, while still operating profitably and with competitive returns.
Download the full report here.
Download the executive summary of the report here.
Read op-ed by Dr. Bob Eccles in Forbes here.
Through the pursuit of these practical opportunities, investors can help change frameworks in ways that result in greater income equity.
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