Asset owners with combined assets of more than $8 trillion are considering diversity to improve decision-making, according to a study of 100 global investors by think tank New Financial in collaboration with the U.K. Pensions and Lifetime Savings Association and law firm Pinsent Masons.
The study found investors consider diversity to attract and retain talent, innovate and compete, and reflect on views from participants and their communities. But diversity can also help to enhance financial performance, according to the interviewed asset owners.
However, a growing number of asset owners are also asking questions around diversity of their potential and existing managers during manager selection.
"We have a responsibility to allocate our funds wisely — and bringing, growing, talented and diverse investors including minority- and women-owned firms to manage our portfolio is the right strategy for the future," Scott Stringer, New York City comptroller and the fiduciary of the $197 billion New York City Retirement Systems, said in the study.
New Financial also found that even though diversity and culture criteria are being integrated into manager assessment, investors' approaches appear inconsistent across different consultants, asset classes and regions.
"Where two managers are deemed to have equal investment capabilities, being more progressive around inclusion and diversity can help the selection decision," Juliet Bullick, global head of consultant relations at Fidelity International, noted in the study.
Shareholder engagement activity is focused on board diversity, with some extending their discussions to the wider workforce and diversity strands other than gender, the study also found.
"Diversity can't just be a diktat from the board and senior management ... it is about getting every voice in the room involved and requires an organizational culture," David Rix, CEO of BP Pension Trustees, London, said in the study.
