The Schwab Foundation’s Global Alliance for Social Entrepreneurship has outlined ways businesses can tackle systematic economic exclusion as its research revealed Black people have a 16% less wealth (per capital) than their white counterparts.
In the report, Innovating for Equity: Unlocking Value for Communities and Businesses – in partnership with Echoing Green, the GHR Foundation and Dalberg – the alliance found that in the US and UK, the per capita wealth for Black people is less than a sixth of their white counterparts. The report gives case studies to demonstrate the extremity of the racial wealth gap, for example, Hello Tractor, a smallholder farm in sub-Saharan Africa, is an enterprise that facilitates accessible tractor hiring, affordable equipment financing and easier fleet management. Compared to Europe, farmers pay an additional 15-40% over the cost of agricultural inputs due to import and distribution mark-ups. Further, working capital loans for farms in the region can average a 34% interest rate, compared to 6% to 11% in Western Europe.
The report urges key stakeholders to work together to reduce the racial wealth gap in order to drive economic growth. It offers three approaches for collaboration between social innovators, philanthropic organisations and governments to leverage diversity and foster economic growth, featuring successful partnerships with companies and governments who have tackled these issues.
The first pathway is expanding market, an approach that highlights the value of providing products and services that meet the needs of different communities. The second is unlocking talent, which spotlights how more equitable hiring practices can unlock untapped talent pools, reshape employment opportunities and remove existing barriers. The final approach is broadening networks. This focuses on the importance of building a more diverse and inclusive supplier ecosystem.
François Bonnici, director of the Schwab Foundation and head of foundations at the World Economic Forum (WEF), said: “This report represents a call to action for leaders from across the public and private sectors to address racial and ethnic equity – not just as a moral imperative, but as a clear and compelling business case. By doing so, they can contribute to a more just and equitable society and unlock new avenues for sustainable economic growth and innovation.”
Cheryl Dorsey, president of Echoing Green, added: “Supporting these largely untapped areas of innovation and growth has the potential to include millions of customers, employees, entrepreneurs and investors in the global economy. Now is the time for corporations, policy-makers and innovators to come together and drive meaningful, system-wide transformation.”
