Asset management has a diversity problem that is not going away. Just consider the numbers.
Diversity matters for two fundamental reasons. Firstly, of course, it is an ethical issue – major diversity problems can often reflect structural prejudices.
But it is a talent issue too. Meritocratic societies tend to perform better – and meritocratic companies and investors are no different. Research published by McKinsey & Co in 2019 found that companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile.5 When it came to ethnic diversity, the equivalent figure was 36%.
The Asset Owner Diversity Charter commits its signatories to holding asset managers to account on diversity and inclusion. The charter is already backed by 17 signatories representing £1.08 trillion in assets under management/consultancy.
The Charter commits signatories to three principal actions:
Signatories will use a new annual questionnaire for ongoing manager monitoring to deliver standardisation and greater transparency. The charter questionnaire equips signatories to hold firms to account and goes beyond asking about the strategic approach, by identifying how managers look at diversity and inclusion across five key areas:
Brunel has led the development of the Charter. In coordination with my role as Stewardship Manager at Brunel, I am also co-Chair of the Asset Owner Diversity Working Group. The group also includes representatives from Nest, RPMI Railpen, West Midlands Pension Fund, Lothian Pension Fund, and London CIV.
The Charter offers an opportunity not only to identify fund managers with a lot of work to do in this area, but to celebrate those that have already made significant progress.
The standardisation delivered through the charter questionnaire will provide a better understanding of each firm’s approach and strategy to progressing diversity and inclusion and equip signatories to hold firms to account for ongoing progress.
The world’s top ten fund managers are responsible for an estimated £40 trillion. If they change their approach, the impact globally could be enormous
The Charter also has strong support from the UK government, notably Guy Opperman, pensions & financial inclusion minister, and from major UK and global investment consultants, such as Aon and Mercer.
Further support has been provided by CAMRADATA, , who will be offering free access to asset managers for the purposes of completing the D&I questionnaire, ensuring there are no barriers to the collection of data or access by investors.
To learn more about the charter and become a signatory, go to: www.diversityproject.com/assetownerdiversitycharter
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