Withdrawal from diversity, equity and inclusion (DEI) programmes by major companies like Meta and Amazon has grabbed headlines this month. For those of us who see an inclusive and equitable world as a goal to strive for, this news is concerning, but not surprising – the backlash has been brewing for some time.

It could feel like a scary time for those of us working to create a more equal society through working in impact investment, we might want to recoil and give up. But this is exactly the time to reflect and advocate for alternative visions for change.

While impact investment seeks to do good, with its origins in finance, it has naturally adopted a lot of the working practises of mainstream finance. This, over time, had led to questions such as: is capital reaching the most in need? Do decision-makers really understand the problems that need to be tackled? Is inadvertent harm being created?

These are all questions related to DEI – which essentially seeks to acknowledge and support people from a wide range of backgrounds, including but not limited to gender, sexuality, race, class, disability and other characteristics.

Why DEI in impact investing is so important?

In the past year, I’ve heard more concerns in the impact investing space that echo concerns of those who are against DEI – a global elite that is more interested in saying what good they’re doing, than actually doing anything.

I joined the UK impact investment space in 2014, and immediately felt it was alienating – finding that, as a young woman of colour, I was the odd one out in the room. And the financial jargon was intimidating. I started championing DEI – partly hoping that people like me could feel a sense of belonging and contribute better to the space. But I also believe that incorporating DEI into the investment decision-making process can yield better outcomes, ultimately addressing structural and systemic inequalities.

The impact space has become more inclusive over time, channelling more capital to historically disadvantaged groups and addressing issues of systemic inequalities. It has changed its norms and ways of working to prioritise people and planet.

Training impact investors to be better at diversity

In the UK, for example, I am involved with sector-wide initiatives such as the Diversity Forum for Inclusive Social Investment and the Equality Impact Investing Project, to support and train investors on incorporating DEI into their organisations and investment processes.

There are also many funds and investors who see investment potential in historically disadvantaged groups, adopting investment philosophies including gender lens investing, racial equity investing, LGBTQ+ investing and more. Given the erosion of support for DEI in the broader corporate and investment space, how will impact investors react? I think they have two choices. Impact investors incorporate DEI not because they embrace identity politics or want to be tokenistic – they genuinely care about addressing systemic inequalities and disadvantage.

Has impact investing been captured by big finance?

The impact investment space, as it scales and becomes more mainstream, seems to be captured by elite and big finance interests, rather than genuinely working for the interests of those who feel disenfranchised. Impact investment conferences seem to be a space for the wealthy and powerful to feel good about themselves, rather than making real changes. There continues to be lack of transparency over how impact is measured and how decisions are made.

Or, impact investing could take this opportunity to confront the backlash head on, revisit its founding ideals, and address some legitimate concerns around growing too detached and comfortable; in short, refocus on ‘impact’.

First pubished in Alliance magazine