The Milken Institute: Redefining the Blueprints for the American Dream

At a crucial time in America where certain communities are often overlooked, diversity is important because it allows for these groups, previously barred from the methods needed to improve financial situations, to have access to the American Dream. The Milken Institute is a nonprofit, nonpartisan thinktank with a priority of accelerating measurable progress toward that American ideal of the pursuit of happiness. Through a combined focus of financial, mental, physical and environmental health, Milken uses innovative research to develop blueprints for tackling some of the world’s most crucial global issues. 

According to the Milken Institute, the low representation of women and BIOPOC (Black, Indigenous, and people of color) in the 86 trillion-dollar asset management industry is a barrier to effective and ideal capital markets. The demand for equitable representation in the institutional investment industry has accelerated. 

Like many academic institutions case studies and research of business and finance are used to teach aspiring methods for understanding financial profitability. The approach has always been along very traditional lines which have kept a myopic view of accessibility in broadening investment base. Through the Milken Institute’s effective efforts of prioritizing diversity, equity and inclusion, they recognize that the tried-and-true traditional methodologies have not given access to a large swathe of the population. The Milken institute formed the Inclusive Capitalism Executive Council to re-examine and broaden the outreach for inclusivity. In December of 2022, the council released a report called the Path to Inclusive Capitalism, An Asset Owner Guide for Investment Portfolios. This report was the groundwork for the newly released companion report, Inclusive Capitalism: Seven Strategies for Specific Action in Asset Management.

Building upon industry findings, the Inclusive Capital Executive Council guiding Blair Smith, Senior Director of Financial Markets at the Milken Institute; Troy Duffie, Director of Milken Institute Finance; and Melanie Schwartz, a senior associate at the Milken Institute created a new report that intends to directly address the 1.4 percent representation of women, indigenous, black and people of color (BIPOC) in the industry by serving as a guidebook for the first report by laying out seven efficient steps and value-creating opportunities that are designed for institutional investors, including public and private pension plans, family offices, foundations, and other allocators leading to establish a commitment to diversity, equity and inclusion.  

The seven core fundamentals of the report are: 1: Data metrics and tracking diversity among geographical landscapes to provide a clear alignment on diversity data; 2, Expanding the Talent Pipeline where studies show that increased diversity of talent selection for roles influences performance positivity and profitability; 3, Mentor and Track where adequate mentorships allow for level playing fields for individuals from all backgrounds; 4, Standardizing A Governance Diversity Pledge where a diversity pledge for one’s organization communicates to specific and external stakeholders the specific commitment to addressing diversity within one’s organization; 5, Promoting Diversity Among Asset Management includes core examples and key themes that support the strategic goal that inclusion enhances performance and better reflects the needs of investors to create a more competitive supply chain, while supporting social values that advance equitable access to opportunities for diverse communities; 6, Standardize a Scorecard Focused on Inclusive Capitalism, an in depth look at organizing data metrics to a scorecard holding industry wide institutions accountable of diversity and inclusion; and lastly 7, Convening Intentionally, focuses on the relationships between an asset owner who can invest, for example, a small amount of their portfolio with women and diverse- owned firms. Intentional spaces foster engagements that lead to better allocation than just homogeneous results. 

These seven principles explored through case studies, research and analysis outlined in Milken’s new report ensure a better tomorrow through the creation of programming aimed to achieve the American dream through building an inclusive network. Through the Milken Institutes seven steps, a practical and reliable framework urges firms to send intentional signals to the market strengthening diversity, equity, and inclusion. In return, the Institute and it’s research and reports are the cornerstone for equitable opportunity to upward mobility providing for liberty and the pursuit of happiness.