State of the Field: Where JEDI Investing is Today

Generally, investor interest in themes of racial, ethnic and social justice has been housed under sustainable, responsible, and impact (SRI) investing, with some wider commitments to diversity, equity, and inclusion (DEI) as well. In the wake of George Floyd’s murder and the subsequent social justice movements, investors (in particular in the US) have paid greater attention to racial/ethnic and social justice investing.

This interest has manifested in both public and private market strategies. Investment products include the Adasina Social Justice All Cap Global ETF, a highly diversified, global, all-cap portfolio that allows investors to align their portfolios with social justice values is a great example. Other allocators are incorporating a gender and JEDI lens, or social inclusion lens, as part of their impact investing screens.$

With regards to some mainstream approaches and strategies, gender and a wider EDI/DEI lenses are either pursued as standalone international strategies or tend to fall under Environmental, Social and Governance (ESG) streams, where there is an estimated USD$35 trillion assets under management (AUM) globally. Increasingly, ESG allocations are coming under increasing scrutiny due to underlying data, measurement and scoring challenges, and the fact remains that many funds focus on one distinct set of problems while ignoring others. Nonetheless, it’s worth citing the size of the ESG market as a key opportunity for JEDI investing.

Noting this is not a perfect representation given the make up of the underlying data points were not publicly available, we look at the ESG volume of the estimated USD$35 trillion, to attempt a sizing of the gender and JEDI investing opportunity. We estimate that gender, racial/ethnic diversity and other forms of social justice fall under ‘sustainability-themed investing’ ($1.01 billion), ‘norms-based screening’ ($4.68 billion) and ‘impact investing/community investing’ ($444 million).

Nonetheless, while not a perfectly rigorous methodology, aggregating these three data points, we arrive at a rough estimation of about $6 billion - less than .02% of the $35 trillion ESG total. The idea is here not to quantify with perfection, but to make the point that capital being allocated with a gender and JEDI lens is a drop in the ocean. 

Volumes of capital, while growing, are still paltry in comparison to more conventional and wider ESG flows. Aggregate assets under management by women, BIPOC and other under-represented minorities amount to a mere 1.3% of assets in the $69T asset management industry. Similarly, only 2.3% of venture capital went to women founders in 2021, down from 2.8% the prior year, while Black and Latina founders got a mere 0.2%.

The investment industry looks on track to get to USD$160 trillion in AUM with an ESG mandate by 2036, focusing on climate and sustainability solutions. Those allocations could have a transformative impact if they all had a gender and social justice lens, yielding not only better financial outcomes but better overall outcomes for everyone.