Diversity – Feature Diversity – News
DIVERSITY RECEIVES BIG-HITTING SUPPORT WITH PRI PUBLISHING INCLUSION GUIDANCE
Inclusion push by UN agency targets investors. Andrew Holt reports.
The United Nations Principles for Responsible Investment (UN PRI) has thrown its considerable weight behind diversity in investment by setting out in a report the key areas where investors can tackle the issue. In a far-reaching rallying call, Diversity, equity & inclusion: Key action areas for investors, states: “Investors need to expand their focus beyond gender and diversity and address issues such as inclusion, equity and other characteristics to reap the benefits of diversity, equity and inclusion (DEI).” By acting on DEI, the report says investors can ultimately drive positive, sustainable outcomes for people in line with, among other frameworks, the Sustainable Development Goals (SDGs) and the Universal Declaration of Human Rights. One of the key obstacles is social bias, says the report. “Efforts focused solely on diversity – defined as a difference of identities or characteristics, such as gender, race and sexual orientation, among others – assume a level playing field based on meritocracy: that as long any person works hard, they will be able to reap the benefits. Consideration of equity and inclusion, alongside diversity, is needed to ensure not just equal opportunity but also equal out- comes for people.”
Investor role
Investors have an important role in advancing DEI efforts for all groups in society, including indigenous communities, women, people of colour or religious minorities, notes the report. “To act on DEI, investors need to seek to shape inclusive corporate cul- tures, business models and societies.” For investors, diversity could be considered one of the clearest ways to measure and evidence progress. “This has been a good starting point for DEI; however, investors need to look beyond diversity and address equity and inclusion as well. Inclusion is key to ensure different groups in society can access positions with decision-making power. This work also needs to be coupled with efforts aimed at equity, by ensuring everyone in society enjoys fair- ness of treatment and outcomes.” Here inclusion drives diversity at all levels of the workforce. An inclusive company will likely find it easier to hire and retain employees, especially from underrepresented groups. Focusing solely on quotas at board level may have an effect in generating a larger pipeline of potential female executives, notes the report.
Different diversity
And gender diversity does not necessarily lead to other types of diversity, suggests the PRI. “Even though we have seen an increase
Three levers
Institutional investors can act across three areas: inclusive corpo- rate cultures, inclusive business models, and inclusive societies, noting that these can overlap. And investors have three important levers for action: investment decisions, stewardship of investees, and dialogue with policymakers and key stakeholders. “Diversity is certainly a starting point for any investment organisa- tion,” said Aon’s head of ESG Meredith Jones. “Understanding how many women, people of colour and other under-represented groups your organisation includes at the entry, mid, senior and C- Suite level is necessary to drive and understand the rate of change, but it is not sufficient. “Without inclusion, an organisation cannot hope to benefit from differentiated thinking and behaviour. As a result, it’s imperative that organisations also understand how well – or how poorly – diverse individuals are included in brain storming, meetings, pro- motions, decision-making, etc. “For that reason, I like to look at inclusion metrics as well, such as voluntary turnover, which show whether you are keeping the diverse talent you bring in. If you are losing those individuals at a faster pace, it could be that you have invited them to the Prom, but you are not actually asking them to dance,” she added.
Issue 112 | April 2022 | portfolio institutional | 37
of women in senior positions – for example, a study from McKin- sey shows that women made up 21% of C-suite positions in the US in 2020, an increase of 3.7% from 2015 – the number of women of colour remains low, representing only 3% of those positions.”
These facts highlight the importance of intersectionality, suggests the report, where the effects of multiple forms of discrimination – such as racism, sexism, and classism – combine, overlap or inter- sect, especially in the experiences of marginalised individuals or groups. For example, notes the paper, it would be beneficial to seek information on the turnover of black women at an organisa- tion, rather than looking at women and black employees separately. This information could provide greater insight into how groups are treated in the workforce and the barriers that groups face when they have more than one identity, which typically experiences inequity or a lack of inclusion. Here, the most recent Stonewall Top 100 Employers benchmark shows a decrease in levels of engagement for LGBTIQ+ employ- ees with disabilities and non-binary respondents compared to those who identify as gay and lesbian. To achieve progress on DEI, PRI says investors should take meaningful action. “Change will not be bought about by minimal adjustments to existing policies and processes or making commitments and statements. It will require a unified, holistic approach, pulling together a variety of voices — individuals, community groups, policymakers, corpora- tions and investors — and putting those most impacted at the heart of the conversation,” the report says.
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