The Predistribution Initiative (PDI) was founded in early 2019, by a team of professionals focused on environment, social and governance (‘ESG’) issues and impact investing. Those co-founders are Delilah Rothenburg, the current Executive Director, Amanda Feldman and Raphaele Chappe.

They were concerned that investment structures and practices in ESG and impact investing fields were creating systematic risks for large institutional investors and systemic risks for society; risks that were not being addressed.

This concern aligned with the concept of predistribution, that rather than addressing economic inequality through redistribution by taxes, benefits and philanthropy, such inequality ought be prevented from occurring in the first place.

PDI focuses on addressing ESG issues and impact investing by restructuring guidelines and industry standards to focus more on improving investment practices and structures to better address systemic risks and align with long-term sustainability.

To avoid a top-down approach, PDI aims to co-create investment solutions with partners from diverse backgrounds and perspectives, including asset owners, asset managers, labour advocates, civil society, and others. This is achieved through workshops, research, publications, stakeholder engagement and field building.

Its first project was researching the heightened pay gap ratio between asset management executives and the average worker in portfolio companies, in addressing economic inequality and other systemic issues.

Other examples of research include analysing:

• appropriate thresholds for leverage and other aspects of financial engineering.
• how to compensate non-investor stakeholders for the value that they create and risk that they take.
• alternative valuation methodologies and portfolio construction to promote long-termism and systematic risk management.
• appropriate tax structuring that allows for efficiency, but not tax avoidance.
• incentive structures for investment teams and evaluation methodologies to encourage stronger ESG integration and systematic risk management.
• the potential to mainstream multi-stakeholder governance models and regenerative investment structures.

Purpose:

Co-create improved investment practices and structures that share more wealth and influence with workers and communities and that ultimately address systemic and systematic risks including inequality, climate change, biodiversity loss, among others.

Funding sources are the founding team, foundation grants, ‘pro-bono’ support from law firms and the provision of infrastructure from a ‘fiscal sponsor’.

Find out more