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Analysis

December 9, 2021

Better Markets Examines Ways the SEC Can Address Racial Economic Inequality Through Regulation of Securities

A new Better Markets report examines ways in which the Securities and Exchange Commission can address racial economic inequality through regulation of the securities markets. We show that corporate policies on racial justice have a direct impact on stakeholders and corporate profits and that they are clearly material to investors. We also cite evidence that companies with greater ethnic and cultural diversity outperform less diverse firms.

Our report reviews tools the SEC can use to combat racial economic inequality, including disclosure, proxy voting and proxy advice rules, enforcement, and expertise within the agency’s Office of Minority and Women Inclusion.

In addition to the well-established importance of conveying material information to investors, the emergent ESG movement also promises forward progress in addressing racial economic inequality. Under Chair Gary Gensler, the SEC has shown welcome signs that it will move proactively to exercise its authority in this area, and we commend it for undertaking the initiatives it has placed on its agenda.

Our report, however, calls on the agency to do more to meaningfully reverse the legacy of slavery, segregation, Jim Crow, and racial discrimination that continues to contribute to serious racial economic inequality in our society. That history continues to contribute to serious racial and economic inequality in our society and a profound racial wealth divide.

Read the full report here or click the button below.

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