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.

PRI’s page on income inequality and what investors might do to respond

Online version published as Funds industry must aim for fairness

Fabulous roundtable discussion this week hosted by Blueprint for Better Business, a vibrant mix of thoughts setting the groundwork for a planned gathering at the RSA in March. Among my favourite comments were:

“All resources are constrained, so all decisions disadvantage someone.”

“But too often companies operate under the assumption that constraints do not exist.”

“The benefit of constraints is that they drive challenge and innovation.”

“The word equality deadens conversations.”

“Business needs to be underpinned by fairness as it needs cooperation, it is always based on contracting with other parties.”

“We need trust to do business — not all payments are held in escrow.”

My article, published by @FT today (hard copy Monday October 22nd):

‘We need to make the direct benefits of business apparent to many more people’

“An unfair capitalism will never regain people’s trust. Science, however, suggests we do not need to seek equality to generate trust. Rather, we need to aim for fairness. This will give us a chance of a financial system that people can believe they have bought into.”

https://www.ft.com/content/ab554c2f-b627-3dc0-8d4a-50953e55b790