Principal Financial Group 2023 Sustainability Report: Advocating for Financial Inclusion
Inclusive financial access
Originally published in Principal Financial Group 2023 Sustainability Report
Advocating for financial inclusion
Inclusive financial access
We believe financial education and opportunity can lift up people of all backgrounds, all around the world. We’re working to reach them with information and resources that resonate with additional support from Principal® Foundation.
Our approach
It’s important to us to meet people where they are on their financial journey and develop pathways to economic mobility and financial empowerment. To do this, we need to better understand the barriers of reaching financial security across the globe—and why certain groups are more affected than others. This helps inform the role we can play to broaden access to financial security.
One of our core strategies is to better serve diverse businesses, which historically have had barriers to access financial products and services. In 2021, together with Principal Foundation,1 we committed to double the number of diverse small and midsized businesses (SMBs) we support through product access, capital access programs,2 community development, and financial education by 2025.
We’re working toward this goal by:
- Making insurance and savings products more accessible to diverse business owners.
- Advocating for more equitable access to capital for diverse businesses and entrepreneurs.
- Providing insights, education, and support for diverse SMBs to tackle common obstacles and take action on issues that are important to them.
- Providing financial education that empowers diverse SMBs to make informed financial decisions, manage risks, and position their businesses for long-term success and sustainability.
Our actions and performance in 2023
Starting from a 2020 baseline, we aimed to support 14,614 diverse entrepreneurs and SMBs by 2025, with an annual target of 2,923. In 2023, we ended the year supporting 4,740 diverse entrepreneurs and SMBs, exceeding our annual target and achieving our five-year goal in our third year with a total of 14,745 diverse entrepreneurs and businesses supported.
We are excited to have reached this milestone before our goal date, but remain steadfast in our commitment to advancing our support for this business community. Therefore, we have set a new goal to triple the number of diverse SMBs we support by 2025, an increase of 30,000 diverse SMBs from our 2020 baseline.
Progress toward our updated 2025 diverse SMB goal:
- Goal: 30,000
- Progress 2024: 14,745
Product access
Out of our total number of SMB customers in the U.S. in 2023, 10.9%3 were owned by diverse business owners, namely women and people of color.
- 7.5% SMBs owned by women in 2023
- 3.4% SMBs owned by people of color in 2023
Between 2022 and 2023 we saw approximately a 3% increase in SMBs owned by women and a 6% increase for SMBs owned by people of color.
Capital access programs
In collaboration with First Women’s Bank (FWB), we’re advocating to increase financial security for more people, particularly women, who continue to be underserved. FWB is the only women-founded, women-owned and women-led commercial bank in the U.S. with a strategic focus on the women’s economy. As a Mission Partner, we’ve demonstrated our commitment to close the gender gaps that persist in pay, leadership, benefits, and access to capital. Our leadership teams have worked with First Women’s Bank to pursue sustainable public-private approaches to paid family medical leave through involvement in industry trade organizations.
Community development
In 2023, we continued to strengthen our membership of the Small Business Digital Alliance (SBDA) by hosting an in-person event in Denver, with financial professionals and SMBs. The all-female panel explored the role digital tools and resources play in increasing financial wellness for employers and employees. Topics covered included what financial wellness means to small business owners, how digital tools can create efficiencies in business, and how digital tools and resources can help recruit and retain employees in a tight labor market. We also participated in two webinars hosted by the SBDA targeting the SMB market. One webinar focused on educating SMBs on how they can benchmark their benefits offerings, the real cost of employee benefits, and how they use benefits to improve company culture. The second webinar focused on how small businesses can prepare and safeguard their businesses against cybersecurity threats.
Financial education
Principal Foundation furthers its financial education by providing funding to nonprofit organizations that support SMBs. An illustration of this support is our funding of 1863 Ventures’ 3Rs (Recovery, Rebuild, Resiliency) business development program. This national non-profit is dedicated to the business development of New Majority Entrepreneurs—individuals who have historically been marginalized. The 3Rs program offers financial education, business coaching, technical assistance, and access to capital. In 2023, they supported almost 1000 diverse owned businesses and entrepreneurs.
Additionally, this year Principal provided support to SCORE, a nonprofit organization that aims to foster vibrant small business success through education and mentorship based on their business lifestage, particularly women and people of color. Principal helped with the amplification of their web resources for women entrepreneurs, which have been viewed by almost 6 million visitors.
Find resources for women entrepreneurs here
Extending reach to international markets
To reach a broader audience and extend greater financial access, our global offices provide local education and support to their communities.
Our Principal Investment Opportunities video series in Thailand provides investment outlooks, market updates, fund recommendations, and other key insights.
In 2023, Our Dejando Huella program in Chile donated a total of 717 hours in various activities related to inclusion and skills development for students in vulnerable schools, such as job preparation talks, job interview preparation, vocational mentorship, and digital literacy.
In Brazil, we have set a goal to impact 188,000 people through financial education programs by 2026. In 2023, we reached 144,542 people.
FuturEd, our free virtual financial education platform in Brazil, offers a course with three modules (financial planning, private pension, and investments), 19 lessons and more than two and half hours of content. Since it was created, FuturEd has been viewed 13,343 times.
In 2023, we launched the second season of Foca nos Sonhos (Focus on Dreams), our videocast series that talks to young people in Brazil about financial education in an uncomplicated and humorous way. All episodes are led by a digital influencer and have the participation of professionals who address stories, learnings, tips, and reflections on financial organization and planning for the future. The weekly videos can be viewed on Brasilprev’s YouTube or Instagram. The first season, released in 2022, reached more than 30 million people on YouTube, Instagram, and Facebook. In 2023, that number reached 53 million people.
Global Financial Inclusion Index
Clear and consistent measures of progress matter in financial inclusion. This means using data-driven insights to understand the barriers to financial security, and setting goals and establishing accountability to address gaps.
This year we continued our partnership with the Centre for Economics and Business Research (Cebr) to release the Global Financial Inclusion Index (Index). The Index ranks 42 markets on three clearly defined pillars of financial inclusion: government support, financial system support, and employer support. Now in its second year, the report provides a comprehensive and comparative evaluation of financial inclusion on a global scale.
This year’s results demonstrated that financial inclusion has improved globally. However, the world’s largest economies are generally stagnating or deteriorating in terms of financial inclusion, while financial inclusion is advancing most rapidly in markets developing technology- enabled financial systems.
Read more: Global Financial Inclusion Index: 2023 report (PDF)
What’s next
We will continue our annual research with the Index which will help enable Principal and others in the industry to take more informed approaches to promoting financial inclusion and gain a clearer understanding of the barriers to financial security. The findings will help inform future products, services, investments, and philanthropic efforts to broaden financial access. We will also expand our support of diverse entrepreneurs and SMBs as we work toward our new goal.
To learn more, read the Principal Financial Group 2023 Sustainability Report.
1Principal Community Relations supports the communities where affiliates of the Principal Financial Group®, Des Moines, IA 50392 operates. Insurance products and plan administrative services provided through Principal Life Insurance Company®, a member of the Principal Financial Group, Des Moines, IA 50392. Principal Financial Group Foundation, Inc. (‘Principal® Foundation’) is a duly recognized 501(c)(3) entity focused on providing philanthropic support to programs that build financial security in the communities where Principal Financial Group, Inc. (‘Principal’) operates. While Principal Foundation receives funding from Principal, Principal Foundation is a distinct, independent, charitable entity. Principal Foundation does not practice any form of investment advisory services and is not authorized to do so.
2Capital access programs refer to investments in and grant-making to third-party organizations that provide access to capital. Grants are made from Principal® Foundation.
3Represents small and midsized businesses in the U.S. owned by women or people of color. Not captured here is approximately 0.1% of small and midsized businesses that are owned by people of color who are also women.
Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.
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