Diversity trends in leadership and ESG investing

Tuesday 22 June 2021

Diversity in leadership

Diversity and leadership is at the heart of the agenda to influence positive change and drive progress.

Diversity, social impact and long-term sustainable growth creation, are increasing at the heart of our largest companies. The release of the new Parker Review in February 2020 provided some additional data, which speaks to the progress and challenges in diversity in board leadership. 

  • 81 FTSE 100 companies had ethnic representation on their boards, compared to 52 in January 2020
  • For the first time in six years, there are no black chairs, chief executive officers or chief financial officers at the UK’s 100 largest companies.

On 20 May 2021 our webinar Diversity Trends in leadership and ESG Investing – organised by the CFA UK Black Professionals Working Group - an expert panel explored how these issues are impacting firms and consequently the investable universe.

 

 

Watch full discussion

 

What factors are influencing equality change?

There is a long way to go to, however progress is occurring Anna Anthony, EY explained the significant progress which has been made in board diversity driven by the initial publication of the Parker Review. Justin Onekwusi, LGIM – highlighted the important role asset managers can and are playing in leveraging stewardship to drive diversity change. Marisa Hall, Wills Towers Watson, talked through the “4 3 2 1 pin code” which breaks down the power of influence in terms of: 

4 - Public Policy

3 - Influence of Corporations 

2 - Investment Industry influencing power 

1 - Individual actions

Simon Langley, Royal London talked to the broader context of diversity, as he explained his contribution to ending the ban on LGBT personnel in the Military. Sachin Bhatia, Invesco - gave an industry wide perspective on diversity and Loubna Moudanib, Vanguard – discussed Diversity and ESG considerations from the prospective of a Credit Investor.  

If the industry can focus on progress, we will start to see the change we aspire to achieve. We recognise that following the targets and plans to improve inclusion is a good pathway, however, we need to go beyond that. 

Removing the barriers to achieving a more inclusive world – is not a simple process. The pace of change has accelerated, and it takes a combination of commitment and focus and action to provide long-term value to everyone to unlock the full potential for both the workforce and clients. We need to be working towards long term sustainable change. 

 

A synopsis of the key takeaways and recommendations

Creating change in the industry requires several elements to be put in place, our panel highlighted these points as key takeaways:

  • Establish transparency to build trust
  • Publicly publish data at regular intervals
  • Provide a framework for progression that is measured 
  • Understand the lived experiences of racial and minority groups
  • Improve the quality of inclusion data
  • Recognise that it takes time for real change to take place
  • Follow the principles of providing a sense of community to build understanding and allyship
  • Ensure there is strong governance as this influences the corporate culture
  • Share intelligence – change can’t be action in silos
  • Ensure everyone can access the knowledge and training needed to ensure a more balanced and inclusion educated workforce
  • Follow the 4321 pin code method to represent the areas of influencing power
  • Recognise that effective stewardship leads to a better societal footprint
  • Tie inclusion incentives to performance and make it expensive if companies don’t meet their targets
  • Be authentic 
  • Look at your diversity pipeline and internal statistics and progression rates
  • Consider the external forces such as regulation and codes of conduct
  • Address the ethnic pay gap alongside the gender pay gap
  • Recognise the positive impact of the commercial angle of diversity
  • Not just to focus on visible diversity, but invisible diversity

Watch full discussion

 

Speakers

Will Goodhart – Chief Executive, CFA Society UK, Board Member, Impact Investing Institute
Anna Anthony – EY UK Managing Partner, The Parker Review was published by Sir John Parker, EY and the Department of Business
Justin Onuekwusi – Lead Fund Manager Multi-Asset, Legal and General Asset Management, Diversity Project /#talkaboutblack
Simon Langley – D&I Lead, Royal London Group
Sachin Bhatia – Head of UK Consultants and Core Clients, Invesco Ltd. Co-Chair Race and Ethnicity Workstream, Diversity project
Loubna Moudanib – Corporate Credit, Vanguard Asset Management
Marisa Hall – Co - Head Thinking Ahead institute, Wills Towers Watson, Steering Committee Member Ethnicity workstream, Diversity Project, Standing Committee Member Investment 2020, Board Member, London Women’s forum 

The event was moderated by:
Natalie Gregoire-Skeete – CFA Senior Manager, EY
Lindsey Stewart, CFA – Senior Investor Engagement Manager, KPMG
Caroline Vincent, ASIP – Fund Manager, Wesleyan

 

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