Private equity GPs, LPs alike working on diversity and inclusion

Private equity general partners and limited partners are doing more to increase diversity in private markets, according to a report released Tuesday by the Institutional Limited Partners Association.

The progress report is part of ILPA's Diversity in Action initiative offering actionable recommendations to improve diversity, equity and inclusion in private markets. So far, there are 180 signatories to the initiative.

This latest report focuses on how signatories integrate DEI into investment strategies, including manager selection, due diligence and ongoing evaluation and monitoring.

ILPA found that 54% of GPs annually collect DEI information from portfolio companies, while 59% of LPs or their allocators do the same with managers.

Board diversity is a priority, with 72% of GP signatories promoting it within portfolio company boards, and 28% setting board diversity targets, while 26% of GPs engage on diversity even where they are not able to influence board appointments, ILPA found.

Among the 180 signatories, there are 127 GPs, 25 LPs, 11 consultants and 17 funds of funds. Geographically, the bulk come from the U.S. (130) and U.K. (27).

LPs are also doing more to gather and assess DEI info at private firms, and 22% of the LP signatories indicated that progress on DEI will be a factor in their decision to invest in a successor fund, ILPA found.

Some of the signatories are also helping ILPA update a diversity metrics template first released in 2018. Public comments will be taken until Sept. 24.

"We're hopeful that those who are just beginning their journey on DEI can take some actionable advice from the signatory insights in this report," said Jennifer Choi, managing director of industry affairs and lead on the Diversity in Action initiative, in the news release.