Ashley Putnam: Welcome to our second episode of Workforce Realigned, a special five-episode podcast series within Economy Matters that explores how innovative finance is reshaping the future of work. Workforce Realigned is a production of the Federal Reserve Banks of Atlanta and PhiladelphiaOff-site link in partnership with Social FinanceOff-site link. My name is Ashley Putnam, and we're glad to have you back. So last week, we heard from Neel Kashkari and Raphael Bostic about the critical economic moment we're in, and why it's so important for us to think about how we finance worker education and training to build a more inclusive future. Today, I'm excited to hear about the potential of these new approaches and these outcomes-based funding mechanisms to reshape our economy around impact. I'm excited to welcome Sir Ronald Cohen, who is the chair of the Global Steering Group for Impact Investment and is also the cofounder of Social Finance in the U.K., U.S., and Israel. He has been called by some the godfather of impact investing, and I think today you'll hear why. I'm also excited to be joined by Gayatri Agnew, who is the senior director at Walmart Philanthropy and a city council member at the City of Bentonville. So let me turn it over to you first, Ronnie. You write about this impact revolution in your book Impact: Reshaping Capitalism to Drive Real Change. What do you mean by the impact revolution, and how does that impact us?

Sir Ronald Cohen: Well, it's wonderful to be here with you, Ashley, and with you Gayatri, to talk about these very important issues, which affect so many people's lives. So the impact revolution, in my view, is being driven by three very powerful forces, which are converging in our time. The first is a massive change in values, where consumers and talent that want to purchase the products of or work for companies which are creating environmental or social harm, where investors have become aware of the implications for their portfolios of these changing preferences and they're now directing $40 trillion to achieve more than profit, in the terms of my book to achieve some combination of risk, return and impact. So these changing values are a massive trend and it's not just a passing thing; it's here to stay.

The second is massive leaps in technology, which enable us to deliver more impact globally than humanity has ever been able to contemplate. The power of artificial intelligence, machine learning, augmented reality to deliver impact is just massive. And that is another very powerful trend.

And the third one is breakthroughs in technology, which enable us to measure the impact of companies. And when you take these three powerful trends together, they're actually in the process of changing our whole economic system. Because when investors begin to optimize risk, return, and impact on the basis of reliable information, impact accounting data, they influence companies to do the same. And when investors and companies do that, our whole economies are churning out solutions instead of creating or aggravating problems.

Now it comes at a juncture in history, which is one where, because of COVID, governments need these changes in order to bring businesses and investors alongside them in bringing solutions to our social and environmental challenges. Governments are going to emerge from this crisis, as you well know, Ashley, with more debt than ever. And with hugely amplified social issues that arise from high levels of unemployment, the poverty that creates high levels of homelessness and all the other social ills that flow from poverty. And so the conversation we're having today is extremely relevant because it begins to focus us on how government, nonprofits, and businesses can use these new approaches together to meet our great challenges.

Putnam: Thank you so much. And I think what you're highlighting and what your work for years has highlighted, right? You've been in this work of impact investing for a few decades now, and there is this sea change that is happening to thinking beyond just the bottom line to thinking about that triple bottom line, and to thinking about how we move from shareholder capitalism to stakeholder capitalism. And I'm so excited to have Gayatri here to hear a little about, for your work, the Walmart Foundation, and how you think about that triple bottom line in terms of your impact and the work you're able to do there.

Gayatri Agnew: Yeah Ashley, thank you. Thank you so much. It's great to be, Ronnie, here with you, and with Ashley to have this conversation. As you were talking, I was just thinking, "Yes, all those things." Because this really is the confluence of multiple actors working together in a new and different way to facilitate impact that isn't happening today, right? So our economy is not working the way it needs to, to support a whole host of workers in the U.S. context in particular, right? And we need to change that, but we isn't a single actor. It's not government, it's not business, it's not individual citizens. It's the interplay between them that needs to shift. And so I'm thrilled to have the opportunity to have this conversation with you guys today.

Just picking up on a couple of themes that Ronnie highlighted and to contextualize these for our company, for Walmart, a couple of quick things. One is that you mentioned shareholder capitalism. Our CEO, Doug McMillon, serves as the chairman of the Business Round Table, and he took over that role in January of 2020, just shortly after the Business Round Table issued their statement around the purpose of a corporation. And I just raised this because if you, like Ronnie and I, are nerdy enough to follow this day in and day out, if you follow this work, this is actually a really critical moment and shift in how business themselves defines their role in society. Now, is every business living up in every way to that redefining of their purpose? Not yet, but that's a process, and it starts by redefining the purpose of a corporation as being present in society to serve more than our shareholders.

The other thing I would point to, with what Ronnie was talking about on reporting and what is shared out; what is the risk, return, and impact? Walmart as a company shifted in 2019 to issuing an ESG report on an annual basis. Previously, we had disclosed relevant and material data related to, for example, social or environmental impact, but we hadn't been releasing an ESG report. We had actually been releasing a lovely report called our global responsibility report. I sometimes think of it as our mix of a glossy brochure about our social good and some impact. But the ESG report is more like a fact book and a data-driven analysis on how we show up in the world and what we do. It starts with, where's the money, and what's the money measuring? And so I think this shift to public reporting for a corporation like Walmart in an ESG format is a massive shift on the journey toward fixing and addressing aspects of the injustice that exists in our current economy. So I love it.

Putnam: One of the things you said that has really resonated with me about what it means to realign workforce funding and workforce systems is that the crucial thing about partnerships, about working across silos and working in different ways and rethinking how the private sector and public sector come together to accomplish these goals that we all share in this need to do something about inequality, to do something about economic mobility. So I'd love to hear, Ronnie, when you think about that work, about working across sectors and about whose role coming together to do this, how have you seen that play out, this theme for these deeper partnerships that are needed?

Cohen: That's a great question, Ashley. There are people who believe that the markets and private enterprise can bring the whole solution. And there are people who believe that only government can bring the whole solution. And the reality here is that markets are playing a huge role now, but they need the help of government to do their job properly. Let me explain. What Gayatri has just been referring to, this emphasis on outcomes, is reflecting itself in the measurement of impact for companies. Technology has given us the breakthroughs we need to be able to measure the impact that a company creates through its operations on the environment, through its employment, on people and through its products on people and the environment.

And when you begin to measure impact in monetary terms, and you can begin to integrate these numbers in financial accounts, you give the tools to investors to make discriminating decisions about which companies they're comfortable investing in. And to the extent that values have changed, as I have explained, if you achieve risk, return, impact, you have a much better shot at growth and profitability than if you don't, because it's easier for you to recruit customers and to recruit talent and to attract loyal investors.

The problem we have is that the reporting, which is improving as Gayatri has been saying, and Walmart is a very good example of a firm which is really trying its hardest now to measure the outcomes from its operation to the impact. Although it's improving, we don't have uniformity of reporting. Companies are selecting certain impacts, which seem important to them. They're often not measuring them exactly in the same way. They're sometimes monetizing them, but when they do so it could be on a different basis. And that's where, Ashley, we need government to step in now. We need government to step in and say, "Look, companies have to publish impact figures, which are audited, just like their financial figures." We have the ability today to prepare this information and to reflect it in accounts. We need the same accounting basis for every company, and we need every company to provide the figures on it.

And I compare our current juncture to the 1930s. After the crash of '29, investors realized they had no transparency really on the profit of companies, because each company picked its own accounting principles, and there were no auditors to verify the numbers. And the US led the world in '33 and '34 in mandating gap accounting and the use of auditors. We're in the same position today with $40 trillion seeking to achieve impact as well as profit, something equivalent to half of all professionally managed assets in the whole world, but without the information on which to make decisions in a reliable way. And so I'm very hopeful that some governments, the Biden administration may be the one to lead this time, or the Johnson administration in the U.K. or the EU or some Scandinavian country or the Netherlands or New Zealand. There are many countries in the world that are interested in this subject, but we need to lead in the same way that we did in the ‘30s now and bring full transparency to investors so that markets can do their job in changing the behavior of companies to create impact.

Agnew: I don't disagree, but I'll just give you guys a couple of examples of sort of, I think where this gets really bumpy is not the question of sort of regulation or not, it's the question of measurement. What should you measure and what matters? And so I won't name any names or pick on any certain ESG investor standards, but it might be that there is one that looks at fuel utilization. How much fuel do you use? Now that's a materially relevant question if you're thinking about impact on the environment, but what if you outsource all of your shipping? Then technically you use no fuel. But is that the same as saying that you don't right have that environmental footprint from an admission standpoint. And so the maturity of metrics with which we use to measure the social value or social impact, negative or positive in communities, I think that's to me where the most collective effort is needed so that we get those metrics right.

I love the analogy to the accounting standards, but I think we also need to hold space for the complexity of both the environmental ecosystems that we are disrupting through business operations and the human system sort of, if you think about the relationship of companies to employees, people want different things from work. And so to measure in a way that assumes only certain outcomes are sought by work actually misses the point of the impact. So I agree with all of it, but I also think we just have to be so careful and diligent about measuring the right things versus believing that measurement will drive us to better choices simply for the sake of measuring something.

Cohen: Let me respond just to guide you by saying, I totally agree with her. And an impact accounting system has to be as comprehensive and inclusive as a financial accounting system, and I think technology today enables us to do that going all the way through the supply chain, the logistics of a company, its operations and its employment and its product. So it has to be comprehensive in order to be, in order to be fair. Now it's interesting that where this whole impact revolution started, where risk return impact came into the life of our world was precisely with the outcomes-based approaches that you mentioned Ashley. We had never, before the social impact bond was invented, had the security where the returns to investors depended on achieving a social improvement, right? Now, it was easier to measure that and in situations Gaietry is talking about, where you're measuring the impact of massive conglomerates, [inaudible] operating in dozens of companies with dozens of different products.

But the concept of outcomes funding say in the context of employment today, which is going to be such a salient issue for the next several years for us is extremely important because to the extent that we focus on paying when success has been achieved in placing people in jobs, we use our government and investor and philanthropic dollars much more effectively than when we just fund activities. And I just want to give an example now with the career impact bonds that are beginning to be implemented, northeast by Social Finance U.S. led by Tracy Palandjian who has helped to bring us all together. Here, you have a mechanism where a pool of capital funds the reskilling of people who are entering new skill jobs or jobs in the healthcare industry as examples, and the repayment comes from the increased earnings that the people you have funded achieve.

So they're paying for the outcomes, and to the extent that you can manage to do that, that money can be recycled to support a growing number of people. Now, there are mechanisms for government to do that, and indeed, the budget a few years ago included a hundred million dollars for outcomes funding. I believe that governments will set up massive outcomes funds for the reskilling of young people, for the reskilling of older people whose jobs have disappeared. And so you have a variety of different mechanisms that enable you to bring either government capital or philanthropic capital or investor capital and deploy it more effectively in improving employment and lives.

Putnam: Thank you. Yeah, I am very excited, of course, to talk about workers and outcomes-based funding for the future of work. Because to be honest, this was a critical topic before we got to the current economic crisis, right? We were already seeing increases in inequality. Last week, we talked about what this means for economic opportunity and economic mobility. And we know that coming out of this, there is going to be a need for a massive investment in skills and in reskilling and in helping workers and systems adapt to the future. And so, Gayatri, I'm wondering if you can share some of the work you all have been doing. I'm particularly excited about the rapid reskilling, the investments you all have made there collectively. And how are you thinking about connecting workers in this really critical time?

Agnew: So five years ago, six years ago now, walmart.org, which is the philanthropic arm of Walmart Corporation, embarked on a journey to see how we might enable greater economic mobility for frontline U.S.-based retail workers. Not just Walmart associates, but think McDonald's, Starbucks, Home Depot, Lowe's—anyone working in an hourly wage job who may not have the same kind of access that a college-educated white- collar worker has to retooling their skills, to reskill, to upskill, et cetera. How might we use skills as a lever to enable greater economic mobility for workers? And so we've been on that journey for six-plus years. Because we sit inside of Walmart the corporation, we're able to see what our business, our core business Walmart U.S. stores is doing with their 1.1 million U.S.-based workers, over a million of whom are in our frontline roles, right? So how our programs and initiatives that they're running, whether it be college completion initiatives, our US-based academies program or these high-quality completion focused initiatives that allow for on the job training for our associates.

How are they impacting both the bottom line for our company but also the economic mobility of our workers, right? So that's the place we have been experimenting and trying to figure out, how do you move the needle? And a couple of quick sort of learnings and observations out of that, and I promise I'll get to your reskilling question, but one is that our system—so despite all of the rhetoric around not everyone needs to go to college, which I very much agree, right? You can get a good job on a path that isn't through college, but our system, and when I say system, I primarily mean the way we fund continuing education after the 12th grade is funneling people into college. So that is, if you just follow the money, you don't follow the learner. You don't say to a student finishing the 12th grade, what aspirations do you have for your life? What would you like to do? But you just follow the flow of the money, the money is flowing through initiative and examples of Pell Grants or the higher education act or the way we move dollars to learning.

It's flowing to higher education. Where it's not flowing is rapid reskilling. The idea that in three months, six months, nine months, someone could earn the marketable skills that they need to access a good job. And so to Ronnie's point earlier, you have a broken part of the market. The market is not fixing this problem. In fact, if anything, the way that financing moves through the education system is actually making it worse and not better. And so what we've set out to do is just explore the what if question, right? Because ultimately, philanthropic capital is nothing if not risk capital to test what could work, not what we know works. I don't actually think philanthropy should play much of a role in funding what we know works. I think there's other mechanisms we can use that fund. When we know you're going to get a high-quality outcome, probably that's government or maybe that's even a market force.

But when we actually don't know the answer and we're asking, what if or how might we, then you're going to need some capital. You'll need some risk capital to play around with that. And so we were following the work of the social impact bond. That's the efforts that have occurred in the U.S. and love that work. I think it hasn't yet gone deep enough into short term high quality rapid reskilling, but it's because there's just not enough evidence there yet. There's just not an evidence-based large enough to say these are the programs, these are the job pathways, these are the economic returns of investing in a worker's six-month course allowing them to get on the job and to work in an apprenticeship program to become a plumber or an apprenticeship program to become an electrician. And so, we've made several investments that are basically doing two things.

On the one hand, we're trying to aggregate access to the job pathways. So what job might I be able to access on the other side of what training? So the job path and the training, and we're working with a partner's skill-up to that, to build that sort of course catalog, if you will. That's old-fashioned college language, but I don't have better language for it, right? So that course catalog that says, this is an outcomes-based pathway that leads to this outcome, and that's part of the puzzle. The other part of the puzzle is then how do you finance the test of what happens if you are enabling a learner to access that job pathway, that learning and employment pathway that results in a good job. And so that's where the financing piece comes in, and we've helped to provide some seed capital to build a larger fund, the SkillUp Together Fund, which hopefully folks will be hearing much more about, which is literally risk capital to test outcomes. That's the best way to describe it.

And hopefully, what we will see is that folks are able in relatively short order, certainly in less than a four-year journey through a college degree are able to access good jobs and higher wages. I think that'll be true for some of the pathways. I think it will not be true for other pathways, but what's important about that is we will learn from the outcomes. We'll use those outcomes to reshape and influence our thinking, and then we will start again. And so hopefully that will allow us to build a more robust system that allows for greater economic mobility in our labor market.

Putnam: Thank you. And very exciting work, congratulations to you all. And I'm really excited; I'm looking forward to learning more about some of those outcomes. I want to pick up on this, how might we. It's a framing that I love. I have a background in design thinking, and we're constantly thinking about how do we redesign our labor market? How do we redesign workforce investments? And so I want to ask you, how might we get more people involved in this work? What does it mean if you're trying to talk to other employers, training providers, governments at different levels, how might we really share the learnings from your respective work on outcomes to get more people thinking about these new kinds of investments and, Ronnie, I'll start with you with that question.

Cohen: So what's interesting, Ashley, picking up again on something that Gayatri has said, is companies are beginning to innovate where impact is concerned. So for the first time, in my knowledge, certainly, I think in history, Novartis issues a $1.8 billion bond where its rate of interest paid to the investors in the bond actually falls if they achieve certain social objectives of providing the pharmaceutical products to underserved populations in developed and developing countries alike. So investors are now being offered new products by companies which are not unlike social impact bonds. They're also outcomes based, they also optimize risk, return and impact, but they're now being used to fund companies directly. We've seen that happen in green bonds, Ashley. We've seen green bonds coming out, where in a similar way, the rate of interest is adjusted downward for the company if it achieves the original environmental objectives which it set up when it raised the money.

And so I think what's interesting about this impact revolution is that it actually is like the tech revolution. It's coming to everyone. It's coming to investors, it's coming to big businesses, it's coming to entrepreneurs, it's being driven by consumers, it's being driven by employees. It is actually a real revolution, and it is going to be as destructive of the businesses that don't manage to harness it to their advantage and the advantage of that employees and their investors, as the tech revolution was. Where we saw companies that refused to accept that tech was going to be a permanent part of the scene in their sectors. We've seen these mammoth companies overtaken by new entrants who came from nothing in 20 or 25 years to be among the biggest companies in the whole globe.

So I think, because it spreads across all of these different sectors, the influence of government in encouraging it, in raising the visibility of it, the mere fact that you are organizing ... at the Philadelphia Fed, that you are organizing this webinar to spread the word on the understanding of these ideas, is an example of what needs to happen. We all need to understand it better and to share it. And that's the primary reason I wrote Impact actually. Because up until Impact appeared, there was a nihilistic view of how impact was going to change a whole economy. How it actually represents the next frontier for society and for capitalism, bringing investors and companies and employees and philanthropists to try to achieve impact as well as profits.

Putnam: Thank you, yes. And I think that mindset is really shifting, right? And there really seems to be this growing awareness around the need for all of us—employers, governments—to really be thinking about how we have impact and do well and do good. And I think that absolutely translates to your work, Gayatri. And I'm curious, how would you answer the, how might we question? How might we get more folks like you involved in this work and share some of your ideas around rapid reskilling and your triple bottom line investments in workers in our economy?

Agnew: Yeah, Ashley, thanks for the question. And I think what we're fundamentally trying to answer, and it's so macro it becomes hard to hold space for it, is how might we create a society where more families are able to flourish? It's that simple. So I grew up in a family, I was raised by a single mom who was on welfare, and she struggled a lot until she found stable employment. And her finding stable employment had a catalytic effect on me going to college, which had a catalytic effect on and so on and so forth. And so for me, this is generational and this is systemic. I think we can make tremendous progress, with the example of the SkillUp Together Fund. It's like this tiny microcosm for demonstrating a "what if" statement. But fundamentally what we're trying to rewire are the component parts of an economy that says that people should be valued, not for the work they do, but for the worth they have.

And so one of the interesting things about Walmart is, it’s a company that was built by the ingenuity of middle America. Sam Walton's story is sort of the ultimate entrepreneurship story in America. And what a lot of folks don't realize is we don't require college degrees for our store managers and never have. We have 75 percent of our management promoted from hourly associates. And so we've actually been this engine of economic opportunity, and I think one of the reasons for that has been the universal value that's been placed on someone's ability to do a job. So the question has never been, "What degree do you have?" It's been, "What skills do you have and how can you use them to advance your community and your company?" And if we use that lens, and we look at talent as an asset to a community, a function or a need, not an asset limited to the utilization of a corporation but an asset to a community, it actually shifts the whole dynamic in the way that Ronnie was talking about, about impact.

And so, we've got an investment in the state of Colorado that's built a talent strategy for their state. There's some fascinating work happening in Rhode Island, in Texas, as examples. Where similarly, they're looking at the people in their community, as a government, and they're saying, "What is the talent asset that we, as a community, bring to the table?" And if we can start to think just in that more holistic way about the role that people play in work, not the role that people play for work. I think it will ultimately move the needle, but there's a lot of noise in that. And some of it is super warranted; there's a lot of injustice in how the current system moves and flows and how the puzzle pieces are connected.

But I just truly believe that the best way forward is to see that every human has incredibly valuable skills, which may or may not have been learned in a classroom, which may or may not have been learned in any kind of a formal way. If we can create more mechanisms in society for those skills to be recognized and valued or enhanced through up-skilling and reskilling, our labor market will shift because the way we engage people in our labor market will shift. So I may have gone a bit more macro than you wanted, but you've got to go up there in order to come all the way back and say, "Now, how do we measure a reskilling fund and why does it matter?"

Putnam: I see Ronnie has a response to this.

Cohen: I was going to add to what Gayatri very correctly and eloquently has put forward. The truth is technology now enables us to go micro. To look at a company, like Apple or Costco, to look at the diversity in their workforce and compare it with the diversity outside of their facilities. To put through enumeration levels to the people from minority groups or different genders, who are underrepresented. To arrive at the figure for that, to look at the advancement of these people through the actual laws of the company relative to other people. And to look at differences in pay, gender pay, and so. And so you can look at the wage bill of an Apple and the Harvard data, the Impact Rated Accounts Initiative, which I chair and which Tracy is a leader, and you can say $10 billion wage bill in the United States paid annually by Apple.

If you take all of these differences in diversity, gender pay, advancement and so on, it's a charge of minus $2.7 billion. And if you compare it with Costco, which employs twice as many people—160,000 people—the charge is only a billion. Only in inverted commas. Because it's more diverse. And I think if we'd begin to measure, then we can begin to manage. But if we continue to stay only at the macro level, we won't be able to do it. And the same goes for environmental, Ashley. We haven't talked much about environmental, but the environmental movement is finally erupting now onto the world scene. If you look at the Harvard data, 1,800 companies’ environmental impact appears in dollar terms.

If I say to you, as a peep into the future, 250 of these companies create more environmental damage than profit in a year. Six hundred create 25 percent or more of their profit in environmental damage. And together these 1,800 companies create $3 trillion of environmental damage in the single year, then you begin to understand how the availability of this data enables the companies to manage the challenges they face. And enable investors to engage with the companies that they're serious about improving their performance on the impact side. And perhaps to separate themselves from those that stubbornly refuse to do this, like those that didn't see the arrival of technology.

Agnew: Can I jump in on that? Just because, Ronnie, you set this up. So in September of this last year, our CEO gave a speech about Walmart's aspirations around becoming a regenerative company. There were certainly some places where that made headlines. It was a massive deal to me because I've spent a lot of time thinking about the difference between a sustainable company and a regenerative company. And Ronnie, what you just said is starting to be how do we measure the difference between those two? Because it's one thing just not to be detractor from, or take away from, which would be the sustainable version we're holding flat at. But how might we actually add more value to? And so just really tangibly, part of our sourcing strategy, particularly, for example in Latin America, has been around small holder farmer production. That's good for Walmart because it diversifies the supply base of where we're buying a product like coffee or bananas, but it's also incredibly good for local economies, both for women and for smaller holder farmers who have less capital to invest in larger production. And so you get this incredible synergy across both that helps maintain surety of supply for a corporation as large as ours, but it also allows for that economic security and economic development of whole regions. But it has to be conscious because the system doesn't push us to do that. Actually, the system sort of pushes us not to.

And so you have to step back, you have to be able to measure, you have to be able to come with a case of why does this actually set the business up for long-term growth and success, even if there are short-term impacts, for example, on how much we're willing to pay for bananas or coffee and how much consumers are willing to pay for those same commodities. Just a tangible example, Ronnie, of what you're talking about, that move toward regeneration versus just sustainability.

Putnam: I want to pivot as we're wrapping up here. There's a couple of things that came up in this that really made me think—what I love about this conversation is that we're not talking about these kinds of investments because they're charity. These aren't things that are good to do because it's a nice thing to do or it's the morally correct thing to do, but these are investments in our collective economic wellbeing. And, Gayatri, the way you frame talent as an asset really got me thinking about—we had a study recently come out from the San Francisco Fed that saw massive losses to GDP from gender and racial disparities.

I'm wondering how we can start to reframe some of these conversations away from, this is a good thing or a nice thing or a charity, to this is an asset. Human beings are an asset. Investing in your human capital, investing in your people is a really critical asset to the future of our economy. And I'm curious as you start to have these conversations, what's the reception that you're getting to that reframing of talent as asset?

Agnew: Yeah. I think, Ashley, the first thing that's most critical and probably most commonly misunderstood is how we approach our work in walmart.org. And I'll just use that as an example to answer your question. When I started six years ago, the primary task that I was accomplishing in my day job was making philanthropic grants. And absolutely philanthropy has a role to play in social and systems change, but much more so than the $300 million that Walmart distributes philanthropically on an annual basis, the $500 billion that we actually are rolling through our company from a revenue standpoint has significantly greater capacity—we're just talking numbers here—to make impact and potentially to facilitate change.

And so our chief sustainability officer, Kathleen McLaughlin, has just been brilliant about bringing this frame of shared value into our enterprise. Into saying, look, we can always make a grant to feed someone, but wouldn't it be better if we could make sure that a family can actually afford to buy healthy food in their community? So the idea of shared value just being that if we can do well for a company, for a company's bottom line and their business needs while also doing good for a community, isn't that always going to be the preferred path forward?

And so we've sort of rewired how we do our own philanthropy. And we always start with shared value, which is not philanthropy, just to be very clear. So, part of my job now is philanthropy, but another part is serving as a shared value advisor to our business. And our business leaders get to plenty of shared value without our advice, but what if we come in and we help them think through, how could we drive even greater impact? So we start with shared value, then we say, hey, but you know, there's still parts of the system that are just broken. The market is not going to fix on its own the need to elevate the role of short-term high-quality credentialing to allow workers to access higher wage and higher-quality jobs, but philanthropy could by using that philanthropic risk capital to rewire some of the parts of the system that don't work to prove that they could work and then to try to reconnect them to the actual market side of the system. And sometimes you can reconnect it to market, sometimes you can't. There are things we do as a society that is the right thing to do and it costs a lot of money. It doesn't all have to become a market-based solution, but talent development has a direct market value. And so we are far too dependent on a charitable system for talent than we are in a market system for talent. I think that's the core of what you're asking is how do we move to talent-based, impact-based system for how we do talent development, where part of the value and the impact is the wages that individuals are able to earn as a result of the skills that they have.

Cohen: I think it's inevitable, Gayatri, that we're going to get there. And I'll tell you why I think it's inevitable. Because when you look at the Harvard data, you already see a correlation between the companies that pollute more and lower stock market valuation. So investors are tilting the scales now in favor of companies that do a better job of preserving the environment. And when we begin to get data flowing about diversity and differences in gender pay and so on and so forth, we're going to find the same thing happening. We're going to find the investors tilting the scales in favor of companies that are doing a better job of it.

Now the reason it's becoming inevitable, and this is very interesting that we're saying this at the Philadelphia Fed webinar, is that this basically says impact information has become price sensitive. And if it is price sensitive information which is affecting the valuation of companies on the stock exchange, then regulators have to step in to make sure that every investor has access to the same information. And the information has been verified as being true through auditors.

And I think we're at the threshold now where the world's regulators are beginning to look at this whole area of impact accounting and saying, what do we need to do here so that investors have the information which is material to that decision-making? And the sooner we can have a common basis for publishing this information, which means the sooner governments and their regulators make it mandatory for companies to do that, then the sooner we're going to see our economy step into risk-return impact.

Agnew: Just picking up on what Ronnie just said, and Ashley, you raised gender earlier, it's worth just us all reflecting on the fact that the systems we're trying to change are made up of people. And it's the people in those systems that make decisions based on the lived and life experience that they've had. I don't think it should shock us that the business system in which—this stat always shocks me but it remains true—there are more CEOs named John than there are female CEOs. Fortune 500 companies has gotten us into a place where we haven't necessarily taken a close look at things like, hey, equity, or at things like composition of diverse teams.

So if we are going to try to change a system, and if we are going to ask the people in those systems the what if question, the more diversity of lived experience that we can have in the people answering that question and in decision-making roles in terms of influencing what kinds of outcomes we might choose to look at, the better. And it's absolutely not a critique of the many brilliant white men who have led companies. It's simply that if they all are white men, then you're not getting as much diversity of lived experience as if they are not. And so it on the one hand sounds so simple to say. On the other hand, I think sometimes we forget how much history and culture goes into how the systems we live in today have come to be systems, which means it's going to take people rethinking those systems from inside those systems to rebuild and reshape them.

Cohen: I was going to add the systemic dimension. Capitalism, capitalist system has served humanity wonderfully well for 250 years or more, but its consequences today are so great on the environment and on social issues that even governments can't cope with them. And so we have reached a juncture in the development of humanity and the development of society and the development of capitalism, where we can't just rely on the invisible hand of the market. We have to bring impact as the invisible heart of the market to guide the invisible hand.

Putnam: I hope you left today's conversation feeling as I did, hopeful and excited about the potential of some of these partnerships we discussed here to really drive our economy and rethink capitalism around not just profit, but impact. I hope you'll join us for our next episode where we're going to speak a little more about some specific types of bonds and how government can be a part of this impact revolution we've talked about today. Thank you for joining us for the second episode of Workforce Realigned. You can find more online at workforcerealigned.org.Off-site link. I'm Ashley Putnam, and it's been a pleasure to be your host.