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Tanay Tatum-Edwards on Leveraging Capital Markets For Social Change

Tanay Tatum-Edwards is a 2019 Echoing Green Fellow and the founder and CEO of FreeCap Financial, a research company that provides investors and money managers with intelligent, social-justice oriented data to equip individuals and collectives with the tools they need to enact positive change in this world. In September 2021, FreeCap released their first product, a report and accompanying dataset that helps investors leverage capital markers to dismantle the prison industrial complex and take steps to end mass incarceration. Echoing Green asked Tanay about important insights from the report, the crucial role of data and transparency in ending mass incarceration, and how Echoing Green has supported her leadership journey.

What was your “moment of obligation” in starting your organization? What circumstances or life experiences led you to start your organization?

While working in asset management, I had the opportunity to attend an impact investing conference session where I was one of a handful of people of color in the room. When the topic of racial justice investing came up, someone raised their hand and asked, “How can I invest? what products are there?” And there was no response. At that moment, I understood there was a need for something like FreeCap in the industry that I worked in, but there weren’t enough people with the lived experience to create the solutions.

Around the same time, I had a loved one who just came home from prison. When we talked about his experience interacting with companies, it just became incredibly apparent that companies are profiting off mass incarceration and have a direct incentive to keep folks in prison. I was working in an industry interested in racial justice investing. Still, they couldn’t see tackling mass incarceration as a racial justice solution because they weren’t connected to the problem closely enough. That’s when I realized I had to be one of those people to get into the fight and started researching how we could leverage capital markets to create social change on this issue.

In September 2021, FreeCap Financial released the first data set rating the S&P 100 based on their criminal justice footprint. What are some of the findings of the report?

When we began our research process, we were interested in answering the question, “what would it look like for companies to be allies on this issue, as opposed to causing harm?” The most significant area we saw an opportunity for companies to do good was fair chance hiring, also referred to as second chance hiring, making it easier to employ people when they come home from prison. Half of our metrics focus on what companies need to do to be best-in-class in this area. The other half focuses on prison-risk mitigation and how companies can limit their exposure to the prison industrial complex.

We found that less than half of the companies we’ve researched explicitly ban prison labor in their supply chains. These policies are critical because subcontractors are not monitoring them if they are not included in the supplier code of conduct. Therefore, prison labor subsidizes the production of products that eventually reach consumers. It’s essential to have those policies in place. Once large companies at the top have that policy, we then see that their suppliers follow it, essentially disrupting the chain of command that leads to hiring prison labor. Another important finding is that less than one-third of companies have made a formal commitment to second-chance hiring, indicating that most companies have not thought about this issue and are still using background checks to screen applicants. There’s a lot of work to be done in that space as well.

At Echoing Green, we’ve been thinking a lot about accountability. How does transparency and accountability relate to the work of FreeCap?

A big part of FreeCap’s theory of change is that by creating transparency, you provide investors and community organizers the tools that they need to hold companies accountable. When I initially applied to Echoing Green, I wanted to create a fund that would make it easy to divest from the prison industrial complex. I found in that process that there wasn’t enough information on what companies were doing to structure a product like that. And even after we divest, we still need a way to identify where to invest our money actively. We also realized that we could defund the prison industrial complex by feeding data to the entire ecosystem and allowing every fund to screen these companies. So, we decided to go out and collect that data ourselves.

Transparency is crucial to holding companies accountable for their actions, and you’ll find that companies can be incredibly responsive. For example, the company that scored the highest in our data set this year is Starbucks. A little over a decade ago, Starbucks had prison labor run their supply chains. But the backlash from consumers has resulted in them having the most robust anti-prison labor policies than any of the other companies we researched. They’ve taken many steps to make sure they audit their supply chains and that they’re doing more good than harm. Without that level of transparency, Starbucks could still have prison labor in its supply chain.

How has the Echoing Green Fellowship supported your growth as a leader and FreeCap’s organizational goals?

Echoing Green was the first group to take a chance on us, and I have such an appreciation for the Fellowship and the community. As a Black woman, I knew that what I was doing was incredibly risky, and I needed a community of people to support me along that journey. Echoing Green has and continues to be that for me, especially when I have moments of self-doubt or when I need a pep talk to remind myself why I do this work. What’s also great about Echoing Green is that so many people want to mentor people of color, and Echoing Green does that, but they also give you money. The funding piece is the barrier many of us face while doing social innovation work.

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Do you have a favorite Echoing Green Fellowship moment?

There was a moment in our Black Male Achievement Convening in Baltimore in 2019 where Beyoncé came on the speakers, and I got everyone on the dance floor to do the electric slide. So, I take credit for that moment in Echoing Green history.

You recently participated in one of Echoing Green’s Brain Trusts — a structured “brainstorming” session available to Echoing Green Fellows. Can you talk about this experience?

It was awesome because I participated in a Brain Trust with General Atlantic, a company in the financial services space. So the participants in my Brain Trust intuitively understood my industry. The first piece of advice was the idea that there might be people who aren’t investors who would be interested in my work and thinking about how to make this data accessible to them. The second piece of advice was to be intentional about marketing and branding. And so, thanks to the follow-on funding that I received from Echoing Green, FreeCap was able to bring on public relations support for the launch of the report. That was something that I wanted to prioritize in our budget because of the feedback that I got from the Brain Trust group.

What does the future you’re fighting for look like? In other words, what would the world look like when you consider your work to be “done?”

FreeCap is fighting for a future where you can no longer profit off the exploitation of Black and Brown people. That’s our mission, and we’re using every kind of capital market incentive structure to change how we practice capitalism. We want to create a world where the way we make money reflects our values, which means it’s not profitable to exploit people.

What’s next for FreeCap?

You can now visit our website to download the report and read it, and if it resonates with you, forward it to whoever manages your money, whether it’s your 401K provider or the robo-advisor you use on your phone. In the long-term, our goal is to replicate what we’ve done with criminal justice to other social justice issues and be the leader in racial justice financial data—reaching the scale of a Bloomberg or Morningstar but focusing on social justice data sets.

About this series

Since 1987, Echoing Green has supported bold leaders from all over the world who see possibility in the face of the most existential challenges of our day. In a series of interviews with Echoing Green Fellows, we explore the connections these visionary leaders make between movements, experiences, and geographies to create a future free from racism and its far-reaching consequences where all people can thrive

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