Since Bill McGlashan, the cofounder of a prominent social and environmental impact investing fund, TPG Rise, was charged in the recent college admissions bribery scandal, people in the impact investing community have faced another fierce round of questions about their relationships with economic inequality, power, and privilege.

Joining broader criticism of philanthropy and impact investing from Anand GiridharadasRob ReichEdgar Villanueva, and others, the news cast a scathing spotlight on the specific issue of inequality. While the accusations against McGlashan may have nothing to do with the Rise investment strategy, they do raise questions about his compensation, particularly in comparison with an average employee or customer of a company in Rise’s portfolio. Why are fund managers paid so lavishly relative to other stakeholders?

With annual executive compensation at some of the largest private equity firms—including those launching impact funds—hovering around or even exceeding $100 million, those of us in the impact and environmental, social, and governance (ESG) investing communities need to recognize that paying such incredible amounts may be exacerbating the very problems we seek to solve. Unless we do more to address this glaring cause of income and wealth inequality in our own backyard, we may not only worsen social inequities and instability, but also compromise the financial performanceof our own investments.

Wealth and income inequality have been discussed widely in the media and highlighted at the most recent United Nations Principles for Responsible Investment (UN PRI) conference, the Global Impact Investing Network (GIIN) forum, and the annual gathering of the World Economic Forum. The United Nations Sustainable Development Goals (SDGs) also spotlight the issue, particularly through the objectives involving poverty, decent work and economic growth, and inequality. Investors are increasingly aware that economic inequality is a systemic risk that destabilizes markets. Even Ray Dalio, who leads the prominent hedge fund, Bridgewater, has declared income inequality as a national emergency in the United States.

While there is growing concern, particularly among ESG investors, that executive-to-average-worker compensation ratios are contributing to income inequality, there is little attention on fund manager compensation. As an example of the scope of the problem within the private equity industry, take a hypothetical multibillion-dollar impact or ESG fund similar to the aforementioned TPG Rise. It may invest in products and services for the underserved. It might work with the companies in its portfolio to get them to pay a living wage. It could help employees grow their wealth by distributing some equity to them, as the firm KKR has been doing with several companies in its industrials portfolio. Or maybe it establishes profit-sharing programs.

Read the rest of the article at Stanford Social Innovation Review