Rise Up, Emerge: The Greenlining Institute’s 2020 Annual Report

Overview

We are pleased to present to you the Greenlining Institute’s 2020 Annual Report. 

In our report, Rise Up, Emerge, we reflected on the historic 2020 year and the ways communities stood up and confronted our systems of deep-seated racism. We also examined the actions that The Greenlining Team took to build a future that honors and values Black and Brown lives by design. 

Collectively, The Greenlining Institute continued to make steady progress to reverse historic disinvestment in communities of color and proactively shape a more equitable future for all. Thank you to our many supporters and allies for making the following possible:

  • Successfully supported a grassroots Stockton community coalition to secure a $10.8 million Transformative Climate Communities grant and leveraging millions more
  • Convened over 1,300 racial justice advocates and allies for our first ever virtual Economic Summit, “We the Future”
  • Launched the People of Color Small Business Network to provide culturally competent business coaching to Black-, Latinx-, and immigrant-owned small businesses in East Oakland
  • Secured $5 million from the California Advanced Services Fund for 6,000 laptops or internet hotspots to close the digital divide for California students
  • Graduated five new Leadership Academy Fellows to realize their goals to be effective racial equity policy change leaders

While the challenges confronting us are vast, we are energized by this once-in-a-lifetime opportunity to radically reshape a more just future. Of course, we don’t do this work alone. Thank you to all of our coalition and community partners, supporters, and funders who continue to support our work to build a just economy where race is never a barrier to opportunity.

 

A Fair Financial System: Regulating Fintech and Nonbank Lenders

The market share of home purchase mortgage originations has steadily and substantially shifted from banking institutions to nonbank lenders over recent years. In 2019, The Greenlining Institute found that five of the 10 largest home lenders in California are nonbanks, and based on 2020 HMDA data, Rocket Mortgage and United Wholesale Mortgage are the biggest mortgage lenders in both the nation and California. And yet, these lenders are not subject to the community reinvestment or transparency regulations that govern traditional banks. Nonbank lenders are exempt from the requirements of the Community Reinvestment Act, a federal law passed in 1977 to reverse redlining and meet the credit needs of low-to-moderate income communities. CRA is critical for obligating banks to meet the needs of LMI borrowers and, although race-blind, is an important tool for addressing the widening racial wealth gap and increasing access to first-time homeownership.

EXECUTIVE SUMMARY

Nonbank mortgage lending has grown exponentially in the last decade, to the point that most traditional banks have partnered with nonbanks to provide services and products. Nonbanks’ utilization of fintech technological innovation, including algorithmic data to determine qualified borrowers, could increase economic opportunities for communities that have historically been without financial services. However, lack of data transparency—combined with the fact that these firms are subject to fewer regulations than their bank peers, with no obligations for community reinvestment—raise concerns that the rise of nonbank lenders could exacerbate inequities in low-income communities and communities of color.

Through conversations with community organizations and consumer advocates, as well as a comprehensive literature review, The Greenlining Institute developed recommendations for nonbank lenders and regulatory agencies at the state and federal levels that will embed greater equity into our financial system. These policy changes will require nonbank lenders to meet and surpass the standards held by their traditional bank peers, resulting in greater access to safe mortgages, expanded first time homeownership programs, access to entrepreneurship, affordable housing development and community-driven investments into low-and moderate income communities.

POLICY RECOMMENDATIONS FOR AN EQUITABLE FINANCIAL SYSTEM:

NONBANK LENDERS CAN MAKE THESE CHANGES TO BECOME BETTER COMMUNITY-SERVING INSTITUTIONS:
  • Maintain a race-based lens by ensuring that safe products and services are accessible to the most underserved communities, and hiring diverse staff and leadership.
  • Build community partnerships: Nonbank lenders should develop and strengthen relationships with community organizations in order to effectively understand the capital needs of their borrowers, create products that effectively serve the community and fund essential, local nonprofits led by people of color.
  • Prioritize culturally competent products, especially when it comes to services and marketing. Loan underwriting, including fintech algorithms, should consider a customer’s ability to repay, rather than relying on mostly the client’s credit history.
STATE AND FEDERAL LAWMAKERS CAN IMPLEMENT THESE URGENT POLICIES TO DRIVE GREATER COMMUNITY INVESTMENTS:
  • The Biden Administration should work with Congress, the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation to strengthen the Community Reinvestment Act and for Congress to expand the scope of the CRA to include nonbank lenders.
  • California regulators should update existing California lending law to include consumer safeguards and transparency requirements to ensure equitable lending practices.
  • California should build on the regulatory minimum set at the federal level and develop a state CRA similar to Illinois and Massachusetts. This would include modernization of the CRA parallel to what we propose at the federal level to include a variety of lenders and services and to expand the CRA to have a race-conscious element through a fair lending review.

Through data transparency to ensure equitable lending, increased oversight for a quickly expanding industry, and an expansion of the Community Reinvestment Act in California and federally, we can build a stronger financial system that includes nonbank mortgage lending.

Low and Zero Emission Zones: Opportunities and Challenges in Designing Equitable Clean Transportation Policies

Executive Summary

Low and zero-emissions zones (LEZs and ZEZs)—designated areas of a city in which vehicles must meet certain emissions requirements to enter—are a policy tool available to cities to im- prove air quality, reduce congestion, raise revenue, and achieve climate goals. If thoughtfully developed and implemented, these zones can also address racial and economic equity in communi- ties disproportionately burdened by vehicle pollution.

This document summarizes the key findings of a primer developed by the Union of Concerned Scientists and the Green- lining Institute. The primer is not meant to be prescriptive; rather, it should help policymakers and stakeholders understand and evaluate the utility of LEZs and ZEZs for their communities, and provide considerations toward equitable policymaking should they choose to pursue such zones.

Making Equity Real in ZEZs

The primer investigates whether ZEZs can be designed equita- bly and, if so, how such zones can be implemented in California while considering the diverse needs of each community as well as regulatory constraints.

Equity concerns about existing ZEZs include a general lack of information and education for laypeople about these zones; the ability to pay fees, fines, and penalties for using a gasoline or diesel vehicle within the zone; ensuring a focus on the greatest sources of pollution inequity—often medium- and heavy-duty vehicle emissions; potential economic and pollution displace- ment burdens on low-income communities and communities of color; and the fair use of revenue generated from ZEZs.

The Greenlining Institute gathered qualitative information from various stakeholders working on air pollution mitigation efforts in communities located in East Los Angeles, Fresno, the Inland Empire, San Diego, and Stockton. The following six points consistently emerged from the stakeholder interviews, and are critical to consider in the development of any ZEZ:

  • Risk of burden on local residents
  • Enforcement and accountability concerns
  • Trust between local government and community members
  • Distribution of benefits and complementary policies to achieve increasing equity benchmarks
  • Targeting emissions sources that are appropriate for a given community
  • Funding oversight

How LEZz and ZEZs Can Benefit Communities

One of the major potential benefits of a ZEZ is a reduction in harmful tailpipe pollution. Exposure to air pollution generated from on-road vehicles harms people and is linked to many ail- ments, including asthma, cardiovascular disease, and stroke.

ZEZs have the potential to eliminate tailpipe emissions in a targeted area. By replacing combustion engines with electric motors, the vast majority of vehicle emissions can be eliminated. If these zones are placed to benefit disadvantaged communities that currently have high exposure to air pollution, the zones have the potential to start to reduce existing inequities in pol- lution burden between racial and economic groups. While a community-wide ZEZ may not be possible today, even a partial removal of tailpipe pollution via a ZEZ for larger trucks would have benefits; see the table on the next page for a summary of the ways in which emissions zones can make a difference in communities.

Policy Recommendations

Where needed, states should make regulatory changes to allow LEZs to be designed by cities such that specific needs of the communities are addressed, and encourage these zones to be developed with public oversight and stakeholder engagement. They should also provide cities with technical assistance, fund- ing, and measurement, evaluation, and learning resources needed to make the most of pilot projects, especially in under-resourced communities.

If local entities are interested in designing an LEZ pilot, they can help maximize a zone’s benefits and mitigate potential harms by communicating early and often with their stakehold- ers, including vulnerable communities and affected businesses; conducting comprehensive feasibility and risk assessments and communicating the results; and seeking and incorporating pub- lic feedback at all stages of design, implementation, manage- ment, and operation.

There are additional factors to consider when considering these zones in communities of color. Enforcement mechanisms must not perpetuate systems of oppression; for example, it is not recommended that police enforce the zone, and fines must not further harm the most economically disadvantaged individuals. Community stakeholders also must be at the table to decide what enforcement mechanisms—such as automatic license plate readers—may be appropriate.

Sustaining Clean Mobility Equity Programs

Executive Summary

Establishing long-term financial sustainability for clean mobility equity programs represents one of the largest challenges that these programs face. In Clean Mobility Equity: A Playbook, The Greenlining Institute conducted an equity evaluation of a selection of California’s clean mobility equity programs, which include electric vehicle carsharing, shared mobility hubs, community-driven mobility pilots and more. Some are still in the pilot project phase and others operate more as full-fledged programs. In this evaluation, a common theme that emerged was that uncertain financial sustainability and stability limits the ability of these programs and pilots to grow and serve more low-income, disadvantaged communities, and communities of color. While the Low Carbon Transportation Program and other state funding sources provided seed funding for many of the clean mobility equity pilot projects that we evaluated, we need strategies to maintain these services after the initial grant runs out.

Therefore, we used Greenlining’s Six Standards for Equitable Investment and the Making Equity Real Framework, to explore several ways that these programs may be able to generate and sustain the funding needed to continue the operation of clean mobility equity programs.

Six Standards for Equitable Investment

Our Greenlined Economy Guidebook introduces six standards for equitable investment that are intended to address the failures of equity in our current models of investment. Without clear standards, we end up reinforcing the structures that caused problems in the first place.

  1. Emphasize Anti-Racist Solutions

  2. Prioritize Multi-Sector Approaches

  3. Deliver Intentional Benefits

  4. Build Community Capacity

  5. Be Community-Driven At Every Stage

  6. Establish Paths Toward Wealth-Building

Making Equity Real Framework

Greenlining’s Making Equity Real Framework can be overlaid with Six Standards for Equitable Investment to ensure that they are applied in a comprehensive manner every step of the way.

1. Vision and Values

  • How will equity be described as a core component in the context of the overall mission/goal?

2. Process

  • How will equity be embedded into the process of how the effort will be developed?
  • How will equity be embedded into its implementation?
  • How will decisions be made or influenced by communities that have less political power or voice?

3. Outcomes

  • How will implementation lead to equity outcomes?
  • What explicit equity outcomes will be described?

2. Measurement and Analysis

  • How will equity progress be measured?
  • How will we know that equity goals and community benefits will be achieved?

This report outlines a variety of concepts that still need much more exploration, development and experimentation. As that unfolds, Greenlining’s Six Standards for Equitable Investment and the Making Equity Real Framework should be applied across the development and implementation of the Four Components of Sustaining Clean Mobility Equity Programs that are laid out below.

Four Components of Sustaining Clean Mobility Equity Programs

The analysis outlined above helped identify four central components of a funding sustainability strategy that we will describe in more detail below:

1. Secure Reliable, Equitable Funding

2. Cultivate Community Partnerships

3. Improve Cash Flow

4. Augment Revenue Sources

Together, these four components aim to support the long-term sustainability both of the overarching clean mobility equity programs and of the specific mobility services and projects that they fund. However, bolstering each of these components will require policy and structural fixes from the top down and from the bottom up. To foster long-term sustainability of both programs and communities, we first need to prioritize the development of community vision, priorities and partnerships.

While many of these examples are California-focused, the recommendations included can also apply to other states and the federal government as they develop their own clean mobility equity programs.

Solving the Medical Debt Crisis

Executive Summary

Medical debt is the number one cause of bankruptcy in the United States, with 62% of bankruptcies caused by medical bills. In 2016, one in six Americans had past due medical bills, resulting in $81 billion in debt. In a 2015 survey by the Kaiser Family Foundation, 26% of Americans aged 18 to 64—52 million— said that they struggled to pay medical bills. Medical expenses were the largest factor increasing the number of people in poverty last year.

Medical debt is not distributed equally across communities:

  • Nationally, about a third of Black adults have past-due medical debt, compared to just under a quarter of White adults.
  • In California, 31% of people of color have some type of past-due debt in collections, compared to only 19% of White residents.
  • Twelve percent of people from communities of color in California owe medical debt.

The COVID-19 pandemic threatens to worsen health disparities and the burden of medical debt on communities of color. Health care costs due to COVID-19 have already left people in severe debt, and layoffs due to COVID leave historical numbers of people unemployed and uninsured. Communities of color have been especially devastated by the pandemic, leaving them especially vulnerable.

Recommendations

  • Expand comprehensive financial assistance policies for all large, for-profit health care facilities, including ambulatory surgical centers and outpatient clinics.
  • End the practice of turning over medical debt to third-party collection agencies and prohibit such agencies from reporting medical debt to credit reporting bureaus.
  • Mandate public reporting of debt collection practices by healthcare providers.
  • Center medical debt elimination as a part of the state’s COVID-19 recovery package via measures such as the proposed COVID-19 Medical Debt
  • Collection Relief Act, which would suspend the collection of medical debt retroactively from February 1, 2020 until the “end of the public health emergency” and ban wage garnishment and bank account seizure.
  • Cancel medical debt outright. The government can purchase medical debt from debt collectors and health care providers at discounted rates, aiding consumers while avoiding a financial windfall for debt collectors.
  • Incorporate debt cancellation into California’s larger strategy toward reparations for racial injustice. Closing the racial wealth gap by addressing debt (including medical debt) in California requires a reparations package for the Black community.

Clean Mobility Equity: A Playbook
Lessons from California’s Clean Transportation Programs

Executive Summary

California is a world leader in climate change policy and programs—and a key cornerstone of the state’s strategy has been decarbonizing the transportation sector. California’s investments in clean transportation programs have ballooned in a relatively short time, and include financial incentives for electric vehicle purchases, electric vehicle carsharing mobility hubs and community-driven clean mobility pilots. These programs range widely to meet various needs across urban, suburban and rural communities. Over time these programs have intentionally centered equity, prioritizing the needs of low-income communities of color. Clean mobility programs can not only help fight climate change and clean the air, they can improve mobility for residents of underserved communities, reduce traffic and dependence on cars, and be engines of economic empowerment that help reduce the racial wealth gap.

We need to better understand whether and how clean transportation programs truly address equity in a comprehensive and effective way and make use of knowledge gained in recent years. This report reviews California’s clean mobility equity programs, noting successes, pitfalls and areas for improvement.

This report serves as both a guide for California as we continue evolving our clean mobility programs to more meaningfully center equity and as a guide for other states and the federal government as they move to develop and implement clean transportation equity programs.

Best Practices that Make Equity Real in Clean Mobility Programs

Over the past three decades, The Greenlining Institute has helped to redirect billions of dollars into the communities we represent, but these programs have always operated within the confines of an extractive and exclusionary economic system. To greenline community investment, we have developed a set of rules to govern funds and programs intended to address poverty and inequity. Without standards, we end up reinforcing the structures that caused these problems in the first place. These standards are meant to address failures of equity in our current community investment model.

In this report we identified 10 ways that California clean mobility programs uphold our equity standards and present them here as best practices that should be replicated and scaled in all clean mobility programs.

  1. Emphasize Anti-Racist Solutions

  2. Prioritize Multi-Sector Approaches

  3. Deliver Intentional Benefits

  4. Build Community Capacity

  5. Be Community-Driven At Every Stage

  6. Establish Paths Toward Wealth-Building

Recommendations

1. Immediately increase funding in California and nationally scale programs that comprehensively approach mobility equity and are led by communities, such as the Sustainable Transportation Equity Project.

  • California has developed community-driven clean mobility equity programs in which residents decide which transportation modes work best for them. Yet compared to other programs, these are insufficiently funded and cannot meet demand. State and federal funds must support mobility programs that holistically reduce greenhouse gases, air pollution and vehicle miles traveled while prioritizing the needs of low-income communities and communities of color. We must prioritize, replicate and scale community-driven clean mobility equity programs.

2. Institute structural reforms to interagency coordination and funding to maximize available resources for clean mobility investments and to target them to the people with the most barriers.

  • California has multiple state agencies pushing forward their own clean mobility programs and investments—all with varying approaches to equity. For example, California’s Air Resources Board and Energy Commission both offer electric vehicle incentives and electric school bus replacement programs. This has led to duplication and inefficiencies. We need a coordinated federal and state strategy that ties together all of these efforts and maximizes available resources and efficiencies.
  • Our limited available electric vehicle incentives should solely be targeted to the people who face the most barriers to access. The Clean Vehicle Rebate Project has been allocated hundreds of millions of dollars over the years, yet it disproportionately benefits middle and higher-income White people. Our limited federal and state funds should instead be designated for more equitable programs like Clean Cars 4 All and the Clean Vehicle Assistance Program that are designed to reduce transportation disparities, not widen them.

3. Phase out programs that continue to entrench our dependency on single-occupancy vehicles.

  • California has disproportionately funneled dollars into the programs that subsidize electric vehicle purchases—yet this is not sufficient to solve the climate crisis. Governments at all levels should still continue to facilitate a transition to vehicle electrification focusing on the people who face the most barriers to access, but in the long run must foster policies that reduce congestion, vehicle trips and unsustainable land use patterns. While some regions are indeed inherently more car dependent, in these areas state and federal funds should fund programs that reduce the need for costly car ownership, such as Our Community CarShare, Green Raiteros, Ecosystem of Shared Mobility, the Agricultural Workers Vanpool Project, the Rural School Bus Pilot and more.

Algorithmic Bias Explained: How Automated Decision-Making Becomes Automated Discrimination

Introduction

Over the last decade, algorithms have replaced decision-makers at all levels of society. Judges, doctors and hiring managers are shifting their responsibilities onto powerful algorithms that promise more data-driven, efficient, accurate and fairer decision-making. However, poorly designed algorithms threaten to amplify systemic racism by reproducing patterns of discrimination and bias that are found in the data algorithms use to learn and make decisions.

The goal of this report is to help advocates and policymakers develop a baseline understanding of algorithmic bias and its impact as it relates to socioeconomic opportunity across multiple sectors. To this end, the report examines biased algorithms in healthcare, at the workplace, within government, in the housing market, in finance, education and in the pricing of goods and services. The report ends by discussing solutions to algorithmic bias, explores the concept of algorithmic greenlining and provides recommendations on how to update our laws to address this growing problem.

What is Algorithmic Bias and Why Does it Matter?

Algorithmic bias occurs when an algorithmic decision creates unfair outcomes that unjustifiably and arbitrarily privilege certain groups over others. This matters because algorithms act as gatekeepers to economic opportunity. Companies and our public institutions use algorithms to decide who gets access to affordable credit, jobs, education, government resources, health care and investment. Addressing algorithmic bias, particularly in critical areas like employment, education, housing and credit, is critical to closing the racial wealth gap.

Recommendations for Fixing Algorithmic Bias

There is a growing body of research outlining the solutions we need to end algorithmic discrimination and build more equitable automated decision systems. This report will provide recommendations on three types of solutions as a starting point:

  1. Algorithmic transparency and accountability
  2. Race-aware algorithms
  3. Algorithmic Greenlining

Investing In Climate Equity

Lesson and Opportunities for Increasing Green Bank Investments in Communities of Color

By Irene Farnsworth & Rawan Elhalaby

Racial and Economic Inequity is the Root of the Problem

The Greenlining Institute’s mission is to advance economic opportunity and empowerment for people of color. Redlining and other manifestations of racism have excluded people of color from homeownership, banking and other forms of wealth building. The disinvestment and disenfranchisement that resulted from redlining locked in poverty and pollution in communities of color.

New, more subtly racist policies persist today, and the effects of this historic and current discrimination are reflected in racial disparities across homeownership rates, income, wealth, access to banking and more. Indeed, people of color are experiencing the lowest levels of wealth in decades, while White communities achieve record wealth. Our recommendations focus on how climate change adaptation and mitigation investments can be tools for wealth-building in communities of color and LMI communities, and how these investments can simultaneously help make communities more resilient to the present and future threat of climate change.

“Energy efficiency isn’t just about the energy aspect – we need to focus more on the impact side. What is it doing for our people? Our communities?”

Duanne Andrade, Solar Energy Fund

Introduction

Investments in green technology, clean energy and climate adaptation are growing rapidly in the United States. In a first, the country is expected to use more renewable energy than coal in 2020, and many banks are starting to expand their loan products and philanthropic investments in “green” products and technologies. While these gains are cause for celebration, the economic benefits of these green investments are not distributed equitably, and the status quo does not serve the needs of communities of color and low- and moderate-income communities (LMI). LMI communities and communities of color bear the brunt of climate change and environmental degradation around the world. The racial wealth gap and larger social and racial inequality in the United. States exacerbate environmental disparities and make it more difficult for communities of color and LMI communities to benefit from green technologies, climate adaptation and clean energy.

Private, green investments have the potential to achieve the dual goals of mitigating climate change and closing the racial wealth gap, but they must be intentional to do so.

The need for banks and financial institutions to increase their sustainable and climate-friendly investments is well known, particularly in communities of color and low-income communities. Currently, these types of investments are funded through a patchwork of grants and loans provided by cities and states, foundations, small and large banks, and community development financial institutions. The private sector lags behind in funding clean energy, and we need its robust participation to reach our climate goals.

This report seeks to learn from existing examples of green investing and offer recommendations for furthering green investments by financial institutions. To that end, this report focuses on the following questions:

  • What are banks and financial institutions currently doing to support green investments in LMI communities and communities of color, and what opportunities exist to expand the amount and scope of investment by incorporating green investments into the Community Reinvestment Act which already obligates banks to meet the credit needs of low-income communities?
  • How have local and state governments incentivized investments by financial institutions in LMI communities and communities of color to participate in green technologies, and what lessons can be learned from these examples?
  • How can these investments translate into wealth and asset building opportunities for communities of color?

We also offer recommendations for how the financial sector, nonprofit organizations and advocates can work together to direct banks’ community investments in a racially equitable and environmentally responsible way.

Building a Diverse, Equitable, and Inclusive Cleantech Industry

Introduction:

The Greenlining Institute has advocated for racial and economic justice since our inception in the early 1990’s,1 and we believe that diversity, equity and inclusion should be used as tools for racial justice to benefit low-income communities of color. This report focuses on the need for DEI in the cleantech industry, and particularly on startup companies in this growing field. California’s clean energy economy, powered in part by the cleantech sector, is creating good jobs and simultaneously helping the state meet its climate goals. This projected economic growth is ripe for policies, strategies and programs to promote DEI. Throughout this report, we will explore the challenges and opportunities of how small, emerging cleantech companies and their collective industry can advance DEI in their products, services and companies with the ultimate goal of bringing underserved communities to the forefront of the clean energy future.

Purpose of This Report and the Intended Audience

This resource guide is a compilation of the key recommendations we have provided to the early stage CalSEED cleantech companies. It is intended for very early stage cleantech startup companies that are working to advance “technology that places an emphasis on environmentally friendly products, services or practices.”4 We acknowledge that many early stage companies may not have a large number of employees or significant financial resources to, for instance, staff a team of DEI experts. However, we believe that there are several DEI strategies that early stage companies can implement from a company’s inception, and the recommendations we offer are meant to serve as a starting point to building robust DEI practices in a company. This guide is not intended for utilities, energy service providers, state and local agencies, government or other regulators of energy services.

At Greenlining, we understand that DEI must be a long-term and continual effort that is meaningfully embedded into all aspects of a company, internally and externally. Internally, DEI must show up in the workplace culture, policies and processes inside the company in order to ensure employee and employer well-being. Externally, DEI can be used as a tool to create social impact in cleantech products and services that can help create equitable outcomes for underserved communities. Part I of this guide provides foundational information about DEI in small, early stage cleantech companies by defining key terms and explaining the vital importance of incorporating DEI values and policies at the early stages of those companies’ inception. Part II reflects on the challenges currently present for small, early stage cleantech companies and offers strategies for how to advance DEI in startup companies that provide cleantech products and services.

2020 Bank Board Diversity

Communities of color have historically been and continue to be excluded from powerful positions in government, corporations and financial institutions. For three decades, The Greenlining Institute has advocated for racial inclusion in spaces of power, including corporate boards of directors. These institutions broker power and negotiate racial equity, ultimately deciding who gets access to capital, what resources a child inherits, who can own a home and who can start a business. The COVID-19 pandemic has compounded inequities in communities of color:

Black and Brown communities have disproportionately suffered, with deaths at a rate at least two times higher than other racial groups. Forty-one percent of Black business owners are experiencing significant decreases in revenue, and job losses are higher for all communities of color.1 The compounding inequities exacerbated by COVID-19 remind us that representation in decision-making positions matters, as we again examine the executive boards of California’s top financial institutions.

Why Diverse Bank Boards Matter:

Increased diversity and inclusion in the executive boards of financial institutions is not enough to make financial services and access to capital available to women and people of color. However, boards set the culture at banks. Greenlining’s Diversity, Equity and Inclusion Framework8 shows that when companies intentionally create diverse, equitable and inclusive work environments, they help to correct income disparities that then inform broader economic conditions in marginalized communities. For financial institutions especially, leadership and senior management should reflect the communities they serve in order to create inclusive decision-making bodies and promote a system of shared prosperity that ensures accessible capital and financial services.

Banks doing business in California should reflect a state population of more than 64% people of color. In order to fight redlining and promote economic development in communities of color, boards need to reflect the diversity of the population they serve and consider equity when recruiting board members.

Additionally, research shows that companies in the top quartile for ethnic diversity are 30% more likely to have financial returns above their industry’s national average.9 And companies with greater gender diversity are 15% more likely to achieve the same. Diverse businesses outperform homogenous companies, keep top talent, maintain employee satisfaction, improve customer relationships, and create a cycle of increasing returns.

Report Findings:

Bank Boards are Still Not Diverse

While California's top banks have made some strides in increasing board diversity over the years, progress largely stalled this year. There still remains a pressing need to include more people of color, especially women of color. In most cases where we were able to compare 2020 figures with 2019, diversity remained the same or decreased.

  • Racial Diversity: East West Bank ranked highest, with people of color making up 63% of the board (five of eight board members).
  • Gender Diversity: Citibank ranked highest, with women making up 44% of the board (seven of 16 board members).
  • Women of Color: East West Bank ranked highest, with women of color making up 25% of their board (two of 8 board members).