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Diversity challenges put into perspective

28 Oct 2021

Industry-wide efforts to promote a more diverse investment industry are gaining momentum but defining what needs to be achieved is still to be decided, finds Andrew Holt.

New Data offers further insight into the challenges facing asset managers when it comes to diversity, with a new white paper offering some solutions.

Most key professional positions at asset managers globally are largely held by white men (54%), according to eVestment. The second largest group of key professionals are Asian men, at around 12%, followed by white women at 9.1%. Black males make up less than 2% of key asset management professionals while black women hold just 0.55% of positions.

A new Nasdaq white paper: Diversity, Equity & Inclusion: The Path to Transparency, looks at these numbers and other diversity trends in asset management. “The ongoing conversations and industry-wide efforts to promote a more diverse, equitable and inclusive investment industry are gaining momentum, and industry participants are making more commitments to advocate for change,” said the reports author, Nasdaq’s Erica Jack.

“With this paper we look at quantitative data to provide a benchmark of where we are and highlight industry thought leaders on where the industry could go and how we can get there,” she added.

The paper highlights the challenges ahead. “There is a need for a clearer definition of diversity and alignment between asset owners, consultants, and asset managers on the data used to measure diversity, equity, and inclusion.”

In the McKinsey report, Diversity Wins: How Inclusion Matters, it was found that companies with 30% of their executives being woman were more likely to outperform. Those where this percentage ranged from 10% to 30% were more likely to outperform those with fewer women executives, or none at all.

A substantial different likelihood of outperformance – 48% – separates the most from the least gender-diverse companies. Nasdaq, therefore, did not just stick to writing papers, but instead used its influence to propose changes be made to boardroom diversity and representation.

In December 2020, Nasdaq led a proposal with the US Securities and Exchange Commission (SEC) to adopt new listing rules related to board diversity and disclosure.

In August, the SEC approved Nasdaq’s proposal to enhance board diversity disclosures. This, says Nasdaq, further encourages the creation of diverse boards. Beginning in 2022, new listing rules will require companies listed on Nasdaq’s US exchange to publicly disclose consistent, transparent diversity statistics regarding their board members on an annual basis.

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