Washington Councilmember Robert White introduced legislation Monday requiring the District of Columbia Retirement Board to have diverse asset managers and investment consultants.
DCRB manages $10 billion in the District of Columbia Teachers' Retirement Fund and the District of Columbia Police Officers and Fire Fighters' Retirement Fund.
The legislation directs DCRB to ensure diversity by setting strict standards for the share of women, minority groups and people with disabilities. A diverse fund manager would mean at least 51% of senior management or ownership is diverse, or at least 60% of employees.
It would also require all investment consultants and fund managers to submit yearly reports with comprehensive diversity data.
The proposed Fund Management Diversification Amendment Act of 2021 requires that at least 20% of fund managers and at least 20% of investment consultants be diverse.
A statement on Mr. White's website said the proposal is in response to concerns that the city's lack of diverse fund managers has led to weaker financial returns.
"Diverse investment manager teams generate better returns on investments," Mr. White said in the statement. "Lack of diversity is costing all of us money, especially District workers, like teachers and first responders, and we need to fix that."
According to Robert Raben, founder of the Diverse Asset Managers Initiative, Illinois is the only state with a law requiring public employee pension systems to meet concrete diversity goals. The Washington legislation "is precisely what we need to move the industry forward," Mr. Raben said in a separate statement. "If Washington DC passes this legislation, it will be a national leader in the fight for racial equity."
DCRB is conducting a national search to replace Executive Director Sheila Morgan-Johnson, who retired March 26.