Driving Climate Justice in the Golden Age of Conscious Investment

Kalika Farmer Pip Deely

The correlations between human health and the health of the planet are abundant. Biodiversity -- the diversity of all living things -- is crucial to our future as a human race, as it ensures food security, combats disease, benefits business, and lays the foundation for many livelihoods. According to the World Economic Forum's Nature Rising Report, more than half of the world's GDP is nature-dependent. For this reason and for the sake of environmental conservation, investing in ethically driven, climate-positive companies is crucial for society to move forward and prosper.

"...more than half of the world's GDP is nature-dependent. For this reason and for the sake of environmental conservation, investing in ethically driven, climate-positive companies is crucial for society to move forward and prosper."

Biodiversity for the Earth isn't the only type of diversity that needs promoting. In order for the government and private sector to address climate change from all angles, diversity and inclusion are necessary across organizations, in our leadership, and in our investment decisions. Without diversity and inclusion, innovation stalls and economic and racial disparities deepen -- further hindering access to education and investment opportunities for communities of color and marginalized groups.

"Without diversity and inclusion, innovation stalls and economic and racial disparities deepen..."

"5 reasons why biodiversity matters – to human health, the economy and your wellbeing" published by World Economic Forum on May 22, 2020.

The Education, Workforce & Funding Gaps

According to the US Chamber of Commerce report, "America's Opportunity Gaps: By the Numbers," racial disparities in learning start before formal schooling, and there's a direct correlation between socioeconomic status and early-stage learning development. On average, math scores for Black students entering kindergarten are 21% lower than those of white students.

In the workplace, the Proceedings of the National Academy of Sciences analyzed hiring data from 1990 to 2015. Findings indicated that white applicants received 36% more callbacks than equally qualified black Americans and 24% more callbacks than Latinos.

"In the workplace ... Findings indicated that white applicants received 36% more callbacks than equally qualified black Americans and 24% more callbacks than Latinos ... Overall, women held 38% of manager-level positions, while men held 62%."

Diversity among management roles is just as bleak. According to the "Women in the Workplace 2020" report by McKinsey, for every 100 men promoted to manager, 85 women were promoted. Among the women of color who advanced, 58 were black and 71 Latinas. Overall, women held 38% of manager-level positions, while men held 62%.

As for investments, in 2019, women received a mere 2.8% of venture capital funding across the startup ecosystem, yet they own 39% of all businesses in the US. Meanwhile, only 1% of VC-funded startup founders were black. According to a study conducted jointly by RateMyInvestor and Diversity VC, most venture-backed founders are "still overwhelmingly white, male, Ivy League-educated and based in Silicon Valley."

"As for investments, in 2019, women received a mere 2.8% of venture capital funding across the startup ecosystem, yet they own 39% of all businesses in the US. Meanwhile, only 1% of VC-funded startup founders were black."

The Climate Justice Gap

Racial disparities are also linked to climate change. A study published in PANS found that Black and Hispanic communities are exposed to far more air pollution than they produce. Adding salt to the wound, coastal areas in the South, where African Americans make up much of the population, are at high risk of sea levels rising.

Climate change is already here. It's just not evenly distributed. Without climate justice and equal access to education and opportunities for all, we're seeing how unprecedented natural disasters and the resurgence of COVID-19 continue to propel injustice.

Decolonizing Investments

The good news is that a growing number of venture capitalists are making it a point to close the funding gap, which can directly address the other divides. Slowly but surely, investment strategies are progressing. According to a recent diversity and inclusion report by Morgan Stanley, 75% of VCs strongly agree that "it is possible to have an investment strategy that intentionally invests in women and multicultural entrepreneurs, while still maximizing returns." The percentage was at 55% in 2019.

According to a recent diversity and inclusion report by Morgan Stanley, 75% of VCs strongly agree that 'it is possible to have an investment strategy that intentionally invests in women and multicultural entrepreneurs, while still maximizing returns.'"

If those of us in the private sector become conscious of our biases and make checking our privilege a priority, the business landscape can change, and so can our planet's climate. One way checking privilege can transpire is by implementing accountability practices. As the Morgan Stanley report states, VCs can do this with their existing investments. Of the investors surveyed, 80% said it's "important for a portfolio company to share publicly the gender and racial/ethnic diversity of their partners, board of directors and C-suite."

"If those of us in the private sector become conscious of our biases and make checking our privilege a priority, the business landscape can change, and so can our planet's climate."

Taking Accountability

At Delphi VC, we implement accountability in our investments by virtue of what our portfolio companies are creating. Diversity and sustainability live in the DNA of every ethically-driven investment we make, as each company is focused on reducing waste, democratizing finance, or providing holistic health and wellness through frontier technology.

Keeping climate change at the forefront, this convergence of conservation and capitalism is the driving force of all our business practices. We believe it is the future of the private sector and the government, and we see the era we're living in as a golden age of conscious investment -- a time when it's possible for human health, our planet's health, and racial equality to progress together -- because in order for society to move forward and prosper they all need to thrive.