Asset managers have been under scrutiny in recent years to improve diversity, equity and inclusion (DEI) within their organisations. However, a new study by Willis Towers Watson has found that many asset managers are failing to measure gender and ethnicity pay gaps and implement targeted DEI policies. This lack of progress could lead to negative consequences, both for the asset management industry and for the companies and individuals it serves.
The study analysed 407 asset management firms and over 1,500 investment strategies. While 80% of managers have a formal DEI policy and 77% have policies to support carers, parents and caretakers, the report found that many other areas were lacking. Only 42% of managers had measurable objectives in DEI policy, and only 40% are measuring the gender or ethnicity pay gap, while 38% measure the bonus gap.
Furthermore, only 25% of firms link leadership remuneration to diversity and inclusion initiative key performance indicators, while a third have not provided any inclusion and diversity training to staff. These figures indicate that many asset managers are not taking the necessary steps to address DEI issues within their organisations.
Targeted DEI policies are essential for creating a diverse and inclusive workforce. Only half of managers have targeted initiatives to attract more senior diverse talent, while 43% of managers do not undertake staff engagement surveys. These actions can help asset managers to identify and address barriers to entry and retention of diverse talent.
Investment into gender diversity pays off, with investment teams in the top quartile of gender diversity outperforming those in the bottom quartile by 45bps annually. This held across asset classes, as equity and credit showed a gender diversity premium of 46bps and 14bps a year respectively. Credit likely had a lower diversity premium due to the lower volatility and smaller absolute return-potential of the asset class.
The study also analysed whether asset classes are lagging behind in the industry. It found little variation between asset classes, with gender diversity between them sitting at about +/-5% of the universe mean, and ethnic diversity reaching about +/-7.5% of the universe mean. These figures suggest that asset managers should not use the argument of a smaller or more focused talent pool in their asset class as an excuse for a lack of diversity.
Asset managers have a responsibility to create a more diverse and inclusive workforce, both for the benefit of their clients and for the future of the industry. The lack of progress in measuring gender and ethnicity pay gaps and implementing targeted DEI policies is concerning. It is imperative that asset managers take action to address these issues and create a more equitable workplace. This could include setting measurable DEI objectives, measuring pay gaps, and linking leadership remuneration to diversity and inclusion initiatives.
In conclusion, asset managers must take responsibility for their lack of progress in improving DEI within their organisations. The study by Willis Towers Watson highlights that many asset managers are not taking the necessary steps to address these issues. Targeted DEI policies and actions are essential for creating a diverse and inclusive workforce. Investing in gender diversity can pay off, and asset managers should not use the argument of a smaller talent pool as an excuse for a lack of diversity. It is time for asset managers to take action and create a more equitable workplace for all.
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