From an ESG and risk management perspective, economic inequality destabilizes markets.
Significant research highlights the growing wealth gap globally, including in the U.S. A recent study illustrates that the top 1% of households own more wealth than the bottom 90% combined. This gap is only growing. In 2015, the top 1% of Americans made 26.3x as much income as the bottom 99%. In 2013, they earned 25.3x as much, according to the Economic Policy Institute.
This wealth gap has real impacts on people. As recently noted by Marketwatch, “The median net worth of Americans currently hovers at $68,828 per household. One in five Americans say they have more credit card debt than they do in emergency savings and less than 40% of Americans say they have enough savings to cover a $1,000 emergency room visit or car repair.”
Such inequality increasingly matters to investors.
From an environmental, social, and governance (ESG) and risk management perspective, economic inequality destabilizes markets. From an impact investing perspective, such inequality is also a matter of human dignity and an obstacle to be overcome. Even mainstream investors, such as Ray Dalio, of the reputable mainstream hedge fund, Bridgewater, are noting the crisis of economic inequality.