Diversity is one of the most familiar words in the investing world. No matter where investors are located, who they invest for or why, they know that diversifying their holdings helps them minimize risks and optimize their portfolios for the long term.
The inherent logic of portfolio diversification also makes it easy for investors to see the wisdom of owning companies with diverse boards and talent pools — or hiring money managers from different racial and ethnic backgrounds. But how do you effectively implement such strategies once you've realized their benefits?
If you're an investor struggling with that question, don't worry — you're not alone. As the events of the past year have shown us, corporate America as a whole has woken up to the fact that businesses need to do more to increase diversity and racial equity.
As the leader of Robert F. Kennedy Human Rights' Compass Investors program, I've had the chance to convene a series of conversations on the topic of diversity and racial equity with our network of more than 300 asset owners, asset managers and consultants who collectively control close to $7 trillion in assets under management. We've realized that the answer isn't as daunting as it seems. We've distilled it into a simple action plan that investors can implement, regardless of whether they've already started down the path of increasing diversity and racial equity or are just getting started. Here's how you can help do your part.