The state's insurance commissioner says insurers' assets could
help reduce wealth inequality.
California Insurance Commissioner Ricardo Lara
is trying to reduce wealth inequality in the state by updating the state’s
community investment matchmaking program.
Lara wants to help black-owned investment
firms, and firms owned by other types of people who may be underrepresented in
the world of investment banking, such as women, and military veterans, get
insurance company money for affordable housing projects and environmental
projects in California.
Lara hopes to make that happen by adding an
Invest in Our Diverse Communities Initiative to the California Organized
Investment Network (COIN) program.
Resources
The California Department of Insurance started
the COIN program in 1996, to help channel some of U.S. insurers’ $7 trillion in
assets into projects that could help low-income people or communities, rural
communities, and other capital-starved people and communities in California.
The COIN program promotes projects
that will help the environment, or help low-income or moderate-income
people or communities, through an Impact Investment Marketplace website. The
listed projects must ”provide safe, sound and solvent investments offering
an acceptable risk-adjusted financial return for that asset class,” according
to the program website.
Managers of the new diverse communities
initiative will look for capital-ready projects that meet COIN requirements,
and that are owned and managed by what California classifies as “diverse
firms.”
California will classify an investment firm as
being diverse if it’s owned by someone who is a woman, a military veteran,
LGBTQ+, Latinx, Asian Pacific Islander, Native American, or black, department
officials say in the initiative announcement.
The COIN program will highlight the diverse
communities projects on the Impact Investment Marketplace site, officials say.
“The COVID-19 pandemic has exposed the
inequality in wealth that continues to persist in communities across our state,
which I believe the insurance industry can help to tackle through socially
responsible investments,” Lara said in a comment included in the initiative
announcement.
The diverse communities initiative can help
insurers support projects that will improve California residents’ way of life,
and provide homes for people who need homes, Lara said.
Some investment specialists argue that
managing a portfolio of investments to support a pension or insurance business
is so important, and so difficult, that simply using legal, ethical and prudent
methods to generate the highest possible rate of return is the most socially
responsible thing the portfolio manager can do.
The U.S. Department of Labor, for
example, recently proposed new
restrictions on investment managers’ ability to add
socially conscious funds to 401(k) plan menus, because of worries that efforts
to be socially conscious could interfere with efforts to maximize returns.
But state and federal have been running
socially conscious investment programs for years.
From 1907 through 1963, Texas tried to
encourage life insurers to contribute to the development of Texas by requiring
out-of-state life insurers selling coverage in the state to invest 75% of their
Texas reserves in Texas securities.
The Global Impact Investing Network, an
organization that supports socially conscious investment projects, says 88% of
the participants in its latest annual survey reported that they have met or
exceeded their financial return expectations.
No comments:
Post a Comment