The UN-linked club for institutional investors the Principles for Responsible Investment has just published a paper on income inequality and what investors might do to respond.
It is very welcome to see PRI taking interest in this issue. It would be even better if their work encompassed the more pernicious and troubling wealth inequality and not just income inequality — after all, the evidence suggests that wealth inequality troubles people rather more than income inequality, not least because of its persistence. PRI suggests that investors should consider active intervention on:
- employee relations and the structure of labour markets
- corporate tax policies
- executive pay
This work would be still better if it applied the broader concept of fairness, not simply inequality. Applying a fairness lens to these issues offers a helpful way forwards, and considering the fair treatment of workers, fair taxation and what is a fair level for senior executive pay are good focuses.
We could extend this further, though, and the corporate world might take strides forward if investors paid fuller attention to the issues of fair treatment of suppliers, the fair allocation of returns from business success more generally, and a fair voice in public policy matters, among other key issues.
There is much work for investors to do in this space.