CalPERS has a well-developed plan to encourage diversity on public company boards on its own and as part of industry organizations, but when it comes to private companies, officials at the largest pension plan in the country are choosing to work as part of an industry group rather than go it alone.
Asset owners haven't tackled the issue of diversity at private companies until relatively recently. But as the number of private companies choosing to stay private longer increases, more investors are asking their managers about it.
In October, California Controller Betty T. Yee, who also is a CalPERS and CalSTRS board member, sent letters to the two public pension funds on Oct. 29 urging greater diversity on private company boards and asking them to put the matter on a future meeting agenda. So far, the investment committee chairmen have not decided whether they will do so, spokeswomen at both pension funds said.
Ms. Yee noted in the letters that just one-third of private companies have a goal to diversify their boards, citing data from the 2019 National Association of Corporate Directors Private Company Governance Survey. According to Preqin, women make up 19.7% of the alternative investment firms' workforce, an increase of 0.9 percentage points compared with 2017, and less than 12% of senior roles in alternative investment firms. Ms. Yee, citing Preqin, noted that only 5.7% of private equity board members are female.
And in September, private equity investor industry group Institutional Limited Partners Association expanded its due diligence questionnaire, template and codes of conduct for managers, limited partners and portfolio companies aimed at supporting greater diversity and inclusion in the private equity industry.
ILPA is in the process of creating a road map to advance diversity across the alternative investment money management industry that will include research links and other resources. Organization executives expect to release it in the first quarter of 2020.