Rhia Ventures and Adasina Social Capital Announce Next Steps toward Increasing Racial Equity in Investment Decision-Making
The Due Diligence 2.0 Commitment brings long overdue innovation to asset management industry standards for risk assessment and stimulates capital flow to underrepresented and under-considered asset managers.
Launched by Adasina Social Capital in 2020, the Due Diligence 2.0 Commitment (DD2.0) has attracted more than 100 signers who agree it’s time for a due diligence upgrade. Rhia Ventures is assuming ownership of DD2.0 under its Racial Equity Asset Lab (The REAL), which offers tools and resources to advance racial equity in impact investing and investment decision-making.
The asset management industry’s lack of diversity is no secret. Only 1.4% of $82.24 trillion US-based assets under management is managed by diverse-owned firms. A mere 0.2% of venture capital partners are Black women, and just another 0.2% are Latina. Traditional fund manager due diligence frameworks have largely reinforced and maintained racial disparities in access to capital across systems and society.
The DD2.0 framework was created to catalyze movement of capital to include greater numbers of racially diverse managers. It challenges asset owners and financial advisors to leverage their position as capital movers to address systemic racial inequities. DD2.0 includes nine shifts allocators can make in the due diligence process to remove systemic barriers to underrepresented asset managers of color while continuing to meet fiduciary responsibilities.
“Adasina has had the distinct honor of guiding this initiative to its current state of success,” says Rachel Robasciotti, Founder and CEO of Adasina Social Capital. “Our journey has been powered by a shared vision and an incredible community of dedicated supporters committed to enhancing the flow of capital to BIPOC asset managers. We are immensely thankful for the opportunity to pause and celebrate the early success of this transformative community-centered movement, and we enthusiastically support Rhia’s leadership for the next stage.”
Rhia Ventures CEO Erika Seth Davies adds: “It’s an exciting time for finance innovation and an inflection point for the industry. Despite the political retrenchment we’re seeing against DEI initiatives and sustainable investing, investors and financial advisors are increasingly seeking resources like DD2.0 to replace outdated industry standards for due diligence that may overlook potential financial returns by reinforcing existing social inequities.”
Asset owners, consultants, and financial intermediaries have signed on to DD2.0. As part of an evaluation and redesign process, Rhia will be seeking feedback and dialogue from DD2.0 users to guide further refinement of the framework as an industry resource.
Diversity, equity, and inclusion (DEI) policies and environmental, social, and governance (ESG) investment considerations remain broadly popular among business leaders, investors, and consumers because of the additional edge and rigor they lend to decision-making. Rhia Ventures and Adasina Social Capital are excited to embark on this new chapter toward a “Due Diligence 3.0” to continue transforming the decision-making process for allocating and managing capital.
DD2.0 was co-created by Brent Kessel, Rachel J. Robasciotti, Tracy Gray, and Erika Seth Davies, with input and contributions from Monique Aiken and over a dozen asset managers. The founders discussed the origins of DD2.0 on ImpactAlpha’s The Reconstruction podcast.
