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“We need greater transparency.” with Candice Georgiadis & Erika Karp

We must work much harder to broaden the applicant pool for high level job openings. (And that needn’t mean settling for other than the most qualified!) As part of my series about “the five things we need to do to close the gender wage gap” I had the pleasure of interviewing Erika Karp. Erika is […]

We must work much harder to broaden the applicant pool for high level job openings. (And that needn’t mean settling for other than the most qualified!)

As part of my series about “the five things we need to do to close the gender wage gap” I had the pleasure of interviewing Erika Karp. Erika is Founder and CEO of Cornerstone Capital Inc. Cornerstone was created to catalyze the flow of capital toward a more regenerative and inclusive global economy. The firm seeks to optimize investment performance together with social impact through rigorous research that systematically integrates Environmental, Social and Governance (ESG) factors into portfolio design. In seeking positive societal impact at scale, Cornerstone offers impact investment advice underpinned by rigorous research. Prior to launching Cornerstone, Erika was Managing Director and Head of Global Sector Research at UBS Investment Bank, where she chaired the UBS Global Investment Review Committee and managed a global team of analysts and strategists. Erika served on the UBS Securities Research Executive Committee and the Environmental and Human Rights Committee of the UBS Group Executive Board. Erika is a founding Board member of the Sustainability Accounting Standards Board (SASB), a member of CECP’s Strategic Investor Initiative Advisory Council, and an advisor to the Omidyar Network’s Know the Chain initiative. She served as an advisor to the Clinton Global Initiative (CGI) and a member of the World Economic Forum (WEF) and the UN Global Compact. Erika speaks at events including those of the OECD, the UN Global Compact and PRI, Oxford University, The Forum for Sustainable and Responsible Investing, Ceres, The Aspen Institute, and the White House. She holds an MBA in Finance from Columbia University and a BS in Economics from the Wharton School. Erika presents and writes extensively on topics including: sustainable investing and finance, corporate strategy and business models, transparency and excellence in the areas of Environmental, Social and Governance performance, and employee engagement/diversity in the workplace. Her work has been featured by Bloomberg Businessweek, Barron’s, The New York Times, Euromoney, the Financial Times, Investor Relations Magazine, The Guardian, and Forbes. For driving collaboration across the capital markets, she has been named among the nation’s “Top 50 Women in Wealth” by AdvisorOne; one of the “Purpose Economy 100,” the “Good 100” and one of 50 “Conscious Capitalists” who are “Transforming Wall Street.”


Thank you so much for joining us, Erika! Can you tell us the “backstory” that brought you to this career path?

I’ve always been attracted to the markets. As a child I learned about the critical nature of honor in the capital markets from my father. And I’ve always felt that investing possesses tremendous power to transform society. At the same time, I was keenly aware of the injustice, insensitivity, unfairness and disrespect embedded in so many of our traditions and institutions.

Then I learned the discipline of sustainable and impact investing. I came upon it organically, in the course of my role as Head of Global Sector Research for UBS Investment Bank. A central part of my job was to probe our analysts’ thinking about key issues that might affect sectors across regions, and when needed to help amplify their voices. It seemed obvious to me that those issues would include environmental impact, treatment of employees, impact on communities, ethical corporate stewardship. I realized that traditional investment considerations were insufficient to the task of true long-term analysis, and that a full consideration of all material factors, and a full assessment of all forms of capital — whether financial, natural or human — are essential to fulfill the true meaning of capitalism.

This realization made me want to fix it. Literally, to fix capitalism. Now. So it was basically impatience that led me to start my own company.

Can you share the most interesting story that happened to you since you began this career?

Hmmm,

Michelle Obama’s behind?

Cutting off Bill Clinton and a half-dozen leading CEOs?

Ruffling tradition at the UNGA?

Being assigned an errand by Prince Charles?

I can give you more details on any of these true stories…

Can you share a story about the funniest or most interesting mistake you made when you were first starting? Can you tell us what lesson you learned from that?

“3x as long, 3x as much”. Nobody tells you that starting a business is like jumping out of a plane and building your parachute on the way down. In the early days I wanted to do it all, all at once, and had orchestrated an ambitious plan that matched my sense of urgency. But the reality is, while starting any business is difficult, starting a financial services business is monumentally more challenging. The investment advisory business is all about relationships. You have to establish trust, and that takes time. Even though I’m still filled with a sense of urgency about the importance of investing the way we do it at Cornerstone, I’ve become more patient. I enjoy the process of getting to know potential clients, learning what matters to them, and figuring out how we might be able to help them.

Ok let’s jump to the main focus of our interview. Even in 2019, women still earn about 80 cents for every dollar a man makes. Can you explain three of the main factors that are causing the wage gap?

In my view it’s about access. Access to information, access to authority, access to power. The status quo has been working for those making the decisions.

Can you share with our readers what your work is doing to help close the gender wage gap?

  • Firstly, we’ve made our own company to be an example of excellence through diversity. Cornerstone is certified as a women-owned and controlled business and as and LGBT-owned business. Our board of directors is 70% women and staff is 60% women and/or people of color. Secondly, we allocate capital to asset managers who deeply embed gender equity into their investment processes. When we research asset managers to consider approving them for use by our clients, we look closely at the gender implications of their investments as well as the policies and diversity profile of the manager themselves. Thirdly, we publish thematic research that shines a line on the ways in which the capital markets can integrate progressive actions in gender / LGBTQI justice. We’ve written three pieces on this topic already about advancing access in gender lens investing, investing for gender and LGBTQI equity, and gender-based violence as an emerging investment risk.

Can you recommend 5 things that need to be done on a broader societal level to close the gender wage gap. Please share a story or example for each.

We need greater transparency. Listed companies should be disclosing diversity and pay data. We also need corporate leaders to behave with transparency and to advocate for pay parity. For me, transparency has meant coming out as gay at a time and place when this was rarely done — 25 years ago, on a trading floor. But I felt that in order to do the best job I could, I needed to be honest. And while there were difficult moments, my ability to be open and serve as a role model did lead to positive changes in policy toward LGBTQI employees at my firm.

We must work much harder to broaden the applicant pool for high level job openings. (And that needn’t mean settling for other than the most qualified!)

We need high-functioning, well-governed corporate boards that embrace greater diversity by introducing more formal recruiting processes.

We must fund access to education, training, safety, and opportunities to facilitate a move toward gender equity if we are to accelerate the rate of progress. And there needs to be accountability and incentivization from top to bottom in organizations.

Parents, caregivers, and teachers, from the very beginning, must instill a sense of worth, value, resourcefulness and resilience in our girls.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

We must restore trust in the capital markets to be a part of the solution to the world’s greatest challenges as expressed by the SDGs, rather than part of the problem. ALL investing should be sustainable and impact investing.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“There is no justice until those who are unaffected are as outraged as those who are affected” — Benjamin Franklin

I’m fighting against climate change, knowing that the world’s poorest people are disproportionately more affected than I am. I’m fighting against wealth and income inequality, even while I have been privileged. I am fighting for racial justice as a white woman, and for veterans’ justice while I have not served in the military. My weapon is capitalism.

We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this, especially if we tag them. 🙂

I would love to meet Ellen DeGeneres because she is awesome and because she’s working to save the gorillas.

Thank you for all of these great insights!

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