SOCIAL EQUITY INVESTING

In this report, Cambridge Associates reviews the current state of social equity in the United States, highlights eight core social equity issue areas (gender equity, education, civil rights/civic practices, transportation, racial equity, affordable housing, financial inclusion, and health and wellness), and discusses the lessons learned in constructing portfolios with these investments. Social equity investing is defined in the report as investments to promote equal opportunity and access for all, regardless of background. 

According to the report, strategies focused on racial equity can be divided into two areas — increasing capital access and allocation, which seeks to increase capital flows to communities of color and address the historic and continued capital gaps in those communities; and improving business lines and practices, which seeks to ensure that existing businesses, products/services, and policies are positively supporting communities of color. The report's authors suggest that capital access and allocation strategies might include focusing the search for investment managers on firms that are owned or led by people of color or investing in a venture strategy with a specific focus on racially and ethnically diverse entrepreneurs, while strategies that focus on business practices might include backing startups that create affordable and accessible financial tools.