An industry association and regulators are separately consulting on new efforts to improve diversity across financial services firms in the U.S., Canada and the U.K.
The CFA Institute on Wednesday published the first draft of a new voluntary diversity, equity and inclusion code for the investment industry in the U.S. and Canada.
The code — a collaboration between the institute and a working group of industry leaders — aims to achieve greater inclusion of viewpoints from diverse talent. The goal is to gain better investment outcomes and create better working environments.
The draft code covers six key principles: talent pipeline, talent acquisition, promotion and retention, leadership, influence and measurement.
Signatories to the code will commit to working on these six principles and to collaborating with peers. They must also report annually, using a CFA-designed reporting framework. The CFA Institute will also report overall fundings on industry progress on an annual basis.
"As the first female president and CEO of CFA Institute, I may be evidence of the progress the investment industry is making on gender diversity, but I am also profoundly disappointed by its inability to grapple with the broader issues of diversity, equity and inclusion," said Margaret Franklin, president and CEO, in a news release. "It is my sincere hope that this first draft of our diversity, equity and inclusion code will be an accelerant to igniting the change we need across the investment profession."
Ms. Franklin said the CFA Institute will be the first signatory to the code once a final version is released.
The institute wants feedback from industry players, including regulators, on its draft code by Sept. 4.
Also Wednesday, the Financial Conduct Authority, Prudential Regulation Authority and the Bank of England published a discussion paper seeking views on regulatory plans to improve diversity and inclusion in the U.K.
The regulators set out a number of policy options, including the use of targets for representation, measures to make senior leaders directly accountable for diversity and inclusion at their firms and the linking of remuneration to diversity and inclusion metrics. The FCA, PRA and BOE also highlighted the importance of data and disclosure so firms, regulators and other stakeholders can monitor progress.
While there has been progress on gender diversity in particular in the U.K., "the rate of change has been slow, and direction of travel polarised across organisations," the discussion paper said.
However, regulators said the trends are promising for gender, "the situation for ethnic minorities shows signs of going into reverse."
Citing early findings from the Green Park Business Leaders index this year, the paper said there was a decline in the number of Black leaders and the "Black pipeline" to senior management for FTSE 100 firms. It also said fewer than 1 in 10 management roles in financial services are held by Black, Asian or other ethnic minority executives.
Diversity in terms of socioeconomic backgrounds — or social mobility — also remains a problem. An analysis of eight financial firms and regulators found that 89% of senior roles are held by people from higher socioeconomic backgrounds.
However, the paper also noted that data on many aspects of diversity are poor in the financial services sector, "making it challenging to assess the full extent of the problem." One of the regulators' proposals is to collect data from firms about their workforce, starting with a one-off survey later this year to test how data can be provided with a view to regular reporting in the future.
"We are concerned that lack of diversity and inclusion within firms can weaken the quality of decision-making," said Nikhil Rathi, CEO of the FCA, in a news release accompanying the discussion paper. "We look forward to an open discussion on how we should use our powers to further diversity and inclusion within financial services, to the mutual benefit of firms and their customers."