Representatives Waters and Beatty Release Report on Diversity and Inclusion in Investment Firms

U.S. Representatives Maxine Waters (D-CA), chair of the House Financial Services Committee, and Joyce Beatty (D-OH), chair of the Diversity and Inclusion Subcommittee, released a report on diversity and inclusion in America’s largest investment companies.

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The report — titled Diversity and Inclusion: Holding America’s Largest Investment Firms Accountable — was generated by committee staffers, who collected data from investment firms with more than $400 billion in assets on their diversity and inclusion data and practices.

One of the areas they looked at was workforce diversity. The report found that people of color, black and Latinx employees were strongly represented in administrative support roles or other non-professional level roles, but were less represented in executive/senior or mid-level roles. . It also found that Asian Americans were most represented in entry-level/middle-level technician, professional, and manager roles, compared to support and senior-level roles.

In terms of board diversity, only one of the companies that made racial justice commitments in 2020 following the murder of George Floyd increased board diversity. Overall, he found that 17.5% of boards are made up of people of color.

Additionally, while nearly two-thirds of companies said they have policies to support diverse vendors, all responding companies said they spend 4% or less of asset manager spend with women-owned or women-owned businesses. minorities.

Additionally, only nine of the 28 companies provided information on the women-owned asset managers they do business with. They spent an average of 0.57% of total asset management services with women-owned businesses. The same number, nine out of 28,
provided information about the minority-owned asset managers they do business with. Among these firms, an average of 3.96% of total asset management services was spent with minority asset managers.

Further, only six of the 28 companies provided information on the women and minority underwriters with whom they do business. Among these firms, they spent an average of 0.30% of total underwriting service spend with women-owned businesses and 9.47% with minority-owned asset managers.

The report recommended several legislative measures to improve diversity and inclusion at America’s largest investment firms. Among them, they said investment firms should regularly collect disaggregated data on workforce, executive and board diversity, as well as conduct regular pay equity audits. and racial. They should also partner with historically black colleges and universities, minority-serving institutions, and community colleges to build talent pools in those organizations.

With respect to board and management diversity, companies should consider at least one diverse candidate for all leadership positions and board positions when there are vacancies.

Additionally, they recommend that all investment firms consider diverse vendors whenever sourcing takes place, especially when engaging asset managers. Companies should also develop pipeline programs to manage increasingly large portfolios for various asset managers.