Meanwhile, some investment managers are posing similar questions before they make significant allocations, scrutinizing public filings and asking for additional information and explanation.
It is easy to regard these questions as tick-box exercises, and as a problem to be solved. But is diversity and inclusion (D&I) just a matter of form filling? Is it a problem or is it the solution? “D&I is about creating a happier, more cohesive, better represented workforce,” says Tracey Flaherty, Global Head of Diversity & Inclusion at Natixis Investment Managers. And the improvement in governance and employee wellbeing should, all else being equal, lead to better experiences for investors.
So much for the theory. What happens when we take D&I off the written page and put it into practice in the real world?
The D&I Journey So Far
The investment industry is on a D&I journey. It is probably fair to say D&I is roughly where ESG was a few years ago. That is, entering the consciousness of investment firms, but not yet embedded in the DNA of all of them.
And look at where ESG is now. It has become a critical cog in the asset management industry, with many investment strategies now incorporating ESG factors alongside financial factors. Investor demand for ESG investments has even spawned a sizable subset of the industry, with whole investment firms devoted to creating sustainable portfolios. ESG is arguably a very prominent issue today.
D&I is heading in the same direction and consultants, the gatekeepers to the institutional industry, are keenly aware of the direction of travel. “Change can be tough, but it will be worthwhile in the end – D&I is the smart thing to do,” says Mercer. Meanwhile, Willis Towers Watson (WTW) says D&I needs to be “woven into the fabric of culture, benefits, pay and workplace practices.”1 Ultimately the general perception when it comes to D&I today is that there is often a gap between effort, understanding, and outcome.
Case Study: “Effective Cultures in Investment Organizations”
Effective Cultures in Investment Organizations. July 2019 by Thinking Ahead Institute, Willis Towers Watson (available at https://www.thinkingaheadinstitute.org/en/Library/Public/Research-and-Ideas/2019/09/Culture_leadership_study).
D&I can drive growth at investment firms through:
Before we look at how the investment industry is incorporating D&I into its practices, let’s take a moment to consider what the important elements of D&I are.
First, diversity. This is commonly viewed as a gender and race issue. In fact, it is much broader and extends to respecting the variation in backgrounds, attitudes, values, beliefs, and lifestyle preferences of all employees.
These variations may exist because of gender, race, ethnicity, nationality and first language. They may also stem from age, mental and physical abilities, sexual orientation, education, religion and socioeconomic situation.
Case Study: “Women in Finance”
Women in Finance, Fifteenth Report of Session 2017-9. June 2018 by House of Commons Treasury Committee (available at https://publications.parliament.uk/pa/cm201719/cmselect/cmtreasy/477/477.pdf).
“In essence, inclusion is about creating a safe and inclusive organization, which is capable of identifying and eliminating poor behaviors and embracing positive behaviors,” Flaherty adds.
Inclusion may also mean harnessing the strengths of a new generation of workers. The upcoming generation has only known the digital age, and has grown up in a world where values and economics have changed considerably from the preceding generation. The new generation is no less talented than its predecessors, and firms must establish structures which facilitate its successful integration.
New Mindsets, New Skillsets, New Tools
Implementing D&I requires actual change. The structures that worked in the past are probably not up to the task of culture change.
Changing the culture of the investment firm starts with leaders and team heads, who must be vocal and visible about D&I issues. Implementation must be done locally, not simply announced at regional or global level. Implementation must be supported by HR policies, transparent data, and new metrics, which are created from employee surveys and employee experience interviews and by engaging the workforce and stakeholders regularly. Firms should ask themselves: If the current executive team were to leave tomorrow, would the corporate culture remain intact? If not, the implementation process probably needs revisiting.
Case Study: "Making Diversity a Reality"
- Create a leadership team that sets a positive influence.
- The recruitment process should identify strong candidates irrespective of factors such as age, gender, or ethnicity.
- Ensure employees have equal opportunities to participate in development programs.
- Recognize where talent lies on an ongoing basis.
- Opportunities to progress should be communicated to all employees regularly.
- Flexible working policies are crucial to employee wellbeing.
Last, and not least, all these efforts must be communicated to staff. If staff cannot locate D&I policies and join activities, then the effort may be wasted.
How to Do D&I Well in the Real World
The ultimate aim of good D&I mirrors other governance initiatives: to improve experiences for clients. Resources to achieve D&I include:
Measurement and Accountability
Better Employee Benefits and Wellbeing
Case Study: “Bringing Our Whole Selves to Work”
Bringing Our Whole Selves to Work: The LGBT+ Experience in Asset Management. July 2018 by The Investment Association (available at https://www.theia.org/sites/default/files/2019-05/20180701-bringingourwholeselvestowork.pdf).
Natixis Investment Managers D&I Programs
In 2015, Natixis Investment Managers established a Diversity & Inclusion Advisory Council, and employees are encouraged to initiate new groups of interest. Examples established by affiliates include Multicultural and Diversity Engagement Group (MADE), Adults Building Leadership Experience (ABLE), Women’s Leadership Initiative (WLI) and Latino and Friends (LaF).
Other programs include the Women in Natixis Network (WINN), a global network that supports career success and the personal growth of women at Natixis. More than 800 members are engaged in WINN groups across Natixis Investment Managers’ operations in the US, Paris and London.
of the Natixis Managers workforce (across the holding company, distribution operations and affiliates) is female
of Natixis Investment Managers investment professionals are women
of the trainee and work-study positions available are taken up by women
Case Study: “When Women Thrive, Businesses Thrive”
When Women Thrive, Businesses Thrive: Turning Disruption into Opportunity for Women and Business. January 2017 by Mercer (available at https://www.mercer.com/content/dam/mercer/attachments/global/glb-2017-davos-wwt-wef-summary.pdf).
Natixis Believes in D&I Practices
Natixis Investment Managers encourages its affiliates to consider D&I workplace practices. Natixis affiliates are independently managed and have their own policies and programs in place; however, all entities share a common philosophy on the importance of an inclusive workplace.
As an “active” asset management firm, we espouse long-term investing, patient capital, and strong ethics in our investment operation.
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