Inclusion in financial systems can help individuals benefit from market growth, save for retirement, and reduce burdens on social support mechanisms.
Racial justice reached a flashpoint in the summer of 2020, motivating many institutions to finally commit to change. Corporations, including large banks, made ambitious pledges to close racial wealth gaps or reduce economic inequality, but they often failed to recognize that financial inequality is both a symptom and a driver of systemic racism and socioeconomic disparities.
In 2022, Boston Common engaged 11 large US banks on Inclusive Finance commitments to assess progress under those commitments—whether they are sufficient and what challenges remain. Our findings suggest banks are taking genuine steps but the level of ambition does not meet the challenge of adequately addressing the systemic drivers of financial equality. While many banks have made inroads in strengthening governance structures, current programs fail to sufficiently consider ecosystem factors in strategy, are not integrated into core business models, and often broadcast new regulatory requirements as commitments and pledges. Stakeholder voice, accountability, integration, and regulatory support are critical to avoid repeating past failed inclusive finance initiatives and spur meaningful change. Boston Common calls for accountability, transparency, impact, and innovation from large US banks to address the needs of BIPOC (Black, Indigenous, and people of color) and low-income communities.
Please watch for our upcoming engagement report on Inclusive Finance.