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Summit for State Treasurers, Pension Funds and Asset Owners to Reverse Economic Inequality
The Ethical Capitalism Group, in partnership with the CFA Institute, PRI, McKinsey Global Institute and the Global Partnerships Forum (GPF), hosted a Special Summit at the United Nations, for State Treasurers, Pension Funds and other Asset Owners. The summit focused on the investment and business case for reversing economic inequality by focusing on its inter-connected issues, the productivity crisis and lack of broad-based innovation.
The summit was opened by Mr. Amir Dossal, President and CEO of Global Partnerships Forum, with an introductory speech given by the event and intellectual curator, Katherine Venice (CEO of The Ethical Capitalism Group).
Nobel laureate Professor Edmund Phelps gave the keynote speech, followed by a speech from Harvard’s Forum for Growth & Innovation leader and winner of the Harvard Business Review/McKinsey Award for his work When Growth Stalls, Derek van Bever.
Professor John Kay CBE and the Executive Director of the Council of Institutional Investors, Ken Bertsch, were moderators. Professor William Lazonick, another recent winner of the Harvard Business Review/McKinsey Award for his work Profits Without Prosperity provided the podcast-to-go.
Panelists included Mark Machin, CEO of CPPIB (Canada Pension Plan Investment Board, the third largest pension fund in North America), Anne Sheehan of CalSTRS (the fourth largest pension fund in North America), Michael Garland (Assistant Comptroller at the New York City Comptroller’s Office) and Brandon Rees (Deputy Director of the Investment Office at AFL-CIO).
Expert commentary was provided by Tim Koller and Dr Mekala Krishnan of McKinsey Global Institute.
Some of the largest pension funds and asset owners from across the US, Canada and beyond, came together to discuss how to engage, as the largest shareholders of publicly-listed companies, with investee companies to shift core corporate strategy away from rationalization, towards instead investing in innovation and workers as core productive assets and drivers of long-term, sustainable growth and value-creation.
Rationalization, as the entrenched core corporate strategy across corporations around North America and beyond, has been a key driver of economic inequality, by focusing on squeezing workers and input costs to driver short-term profits. Many of the world’s leading business experts and academics have criticized the focus on rationalization as destructive of long-term growth and value-creation, and thereby long-term investment returns for Main Street’s savers and pension-fund beneficiaries. Leading experts and think-tanks have advocated for corporate strategy to instead focus on investing in workers as core productive assets and drivers of innovation, thereby driving long-run productivity growth and investment returns.
As such, this summit helped draw a pathway forward for the only feasible solution to reversing economic inequality – and with it, a reversal of the dearth of broad-based innovation across the economy and a solution to the productivity crisis – that exists in the world today.
The summit, held at the United Nations, thereby advanced meaningful action on a number of the Sustainable Development Goals, by addressing key goals of reducing inequality and poverty, increasing decent jobs and boosting sustainable growth.
The social justice case for reversing economic inequality has been well flagged, as has indeed the business and economic growth case – by entities including, for example, the OECD, the World Bank, the WEF, and the Coalition for Inclusive Capitalism.
Furthermore, with corporate profit growth currently at the low end of its historic range since 1960, and real returns for American equities over the next 20 years are forecast at just 5% p/a (using McKinsey Global Institute’s research), down from 8% per annum over the last 30 years, these issues must be addressed as a priority.
The summit was co-hosted by the CFA Institute and PRI (Principles for Responsible Investment), and supported by Global McKinsey Institute.
About The Ethical Capitalism Group:
A recently launched social enterprise (prioritizing its social mission instead of profit-generation), The Ethical Capitalism Group’s mission is to enable the investment chain to better serve and create better returns for Main Street’s savers and pension-fund beneficiaries; and to make the economy work better for Main Street, by constructing and harnessing the business and the investment case for reversing economic inequality, thereby delivering the only market-based solution to economic inequality that exists in the world today. The Ethical Capitalism Group provides a collective engagement platform for institutional investors and asset owners, focusing on long-term corporate strategy at investee companies, thereby fulfilling its mission. For further information, visit: www.ethicalcapitalismgroup.com
About the Global Partnerships Forum:
The Global Partnerships Forum is a unique 501(c)(3) not-for-profit knowledge platform, providing changemakers with the tools to build innovative partnerships. It convenes thought leaders, policy makers, entrepreneurs, philanthropists, and investors to address global challenges, and foster economic growth by moving the needle from aid to investment. For further information, visit: http://www.partnerships.org
About the CFA Institute:
The CFA Institute is the largest association of investment professionals in the world, whose mission is to lead the investment profession globally by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society. The Future of Finance initiative leverages the CFA Institute’s global network of members to help shape a more trustworthy, forward-thinking investment profession that better serves society.
For further information, please visit: https://www.cfainstitute.org
About PRI (Principles for Responsible Investment):
The PRI is the world's leading proponent of responsible investment, supported by the United Nations. An international network of investors working together to put the six Principles for Responsible Investment into practice, PRI and its members believe that institutional investors have a duty to act in the best long-term interests of beneficiaries. In this fiduciary role, environmental, social, and corporate governance (ESG) issues can positively affect the performance of investment portfolios, as well as economies and ultimately the environment and society as a whole.
For further information, please visit: https://www.unpri.org
About McKinsey Global Institute (MGI):
Named the number one private-sector think tank in the world in the 2016 Global Go to Think Tank Index Report, MGI’s mission is to help leaders in the commercial, public, and social sectors develop a deeper understanding of the evolution of the global economy and to provide a fact base that contributes to decision-making on critical management and policy issues.
For further information, please visit: https://www.mckinsey.com/mgi/overview