Feature – Diversity
Exploring diversity of thought Payn has also been an advocate of cognitive diversity. “Talking about cognitive diversity was trying to set the picture for what we were talking about,” she said. “A lot of people used to have different ideas about diversity. It quite quickly became synonymous with gender as it was with women where we started as an investment industry on this journey. It came from ‘the not enough women on boards’ approach, but we know it is a lot broader than that. And the conversation has picked up in recent years.” Diversity, as she indicated earlier, means difference. “But it is how we measure that difference,” Payn added, “which is what we are trying to do, but it is quite hard. To do that you are using proxies essentially: using gender as a proxy, or socio-economic background, or ethnicity – and that is the only way we can get a measure for a difference in thinking.” Expanding on this, Payn said: “It is a non-tangible thing we are trying to do. And that is quite hard. It is about the different lived experiences. If you have people around the table that look the same then you are going to be sitting in an echo chamber agreeing with each other. “And that is not what we are after. They should be harnessing the right opportunities, assessing the right risks. So that is where we are trying to get to with the phrase ‘cognitive diversity’.” It is then crucially “about the diversity of thought”. And Payn added: “You cannot do that unless you use the lenses and streams we are using and ensuring there is a cross-section of people in leadership teams and on boards of companies. We are then challenging ourselves, and each other, so we can get to a position that the companies we invest in on behalf of our cli- ents are diverse.”
The importance of data Within the diversity debate a crucial component is often over- looked, but one already alluded to, that of useful and effective data. “Data is absolutely crucial,” Payn said. “It is still not great. It is patchy. You cannot develop engagement strategies, voting policies and investment decisions without data. “And the knowledge that investors are placing so much impor- tance on diversity, it is crucial that companies understand they are being assessed on these different elements. In the ESG schools we developed a number of years ago, we had 28 met- rics [of measurement]. There are four clear metrics at the moment on gender diversity, but we want to broaden it out. Again, the data is not great. “Here we have taken gender diversity at four different points: gender representation at board level, at executive level, at man- agement level and in the broader workforce. We are assessing companies on the cross-section of representation. This is then developed into an overall ESG score.
44 | portfolio institutional | July–August 2022 | issue 115
We need to have more role models, so women and other groups can see the possibilities and opportunities.
Candice Bocle, Carmignac
“That score is tilting some of our portfolios in or out of some of those companies depending on that higher or lower score. These steps will help us to get better data over time.” Bocle said the disclosure of data could already be emerging through other influences. “Companies have come to under- stand it is in their interest to disclose more data. As social funds are emerging, more capital will be allocated to the forms that are best in class and instigate the right initiatives. And with the rise of social media there cannot be black boxes any- more. The reputation of a company is at stake. So releasing more information on diversity is key.”
Good proposals: asset owners take the initiative There have been some good initiatives within the investment world to address diversity. There is the commendable Asset Owners Diversity Charter and the working group that sits behind it. “That is a great initiative,” Bhatia said, noting there is a con- nection with the issue of data in which the group can contrib- ute to changing. “There is an onus on asset owners and asset managers to not only collect data but also make it easier to sup- ply, creating some uniformity in terms of format or how it is digested and used,” he said. “So everyone targeting the same type of outcome is important.” Payn said the Asset Owners Diversity Charter initiative helps investors look inwards, at their own processes and approaches, as well as outwards. “Looking internally is important. We are
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