Investment managers need to increase the diversity of their workforces and address long-standing issues such as equal pay if they want to avoid being accused of ‘box-ticking’ and ‘greenwashing’ with their inclusion objectives, according to City Hive founder and chief executive officer (CEO) Bev Shah.
In an open letter addressed to chief executives across the asset management industry, Ms Shah said not enough business leaders “walk the walk” and commit to actions that match their progressive rhetoric on representation.
Stating that “awareness does not equal action”, Ms Shah argued that diversity was about more than purchasing tables at awards dinners, posting well-meaning messages on company websites, and sponsoring events.
She said: “To create impactful changes, firms must make significant cultural changes, and that starts at the top. The lack of tangible, measurable results, demonstrates where diversity and inclusion sit in terms of priorities”
Commenting on how this could be expressed on a practical level, Ms Shah added: “Firms need to do more to demonstrate that they are making systematic changes, inclusive of business objectives, culture, infrastructure, governance, recruitment processes and remuneration policies to ensure genuine outcomes.”
In particular, the CEO focused on discrepancies in pay between men and women across the industry. Citing figures from a report by The Diversity Project, she noted that the gender pay gap for the investment management industry between men and women was 31 percent in 2019.
Despite the suspension of reporting regulations following the outbreak of a global pandemic, she felt that the failure of companies to disclose figures this year exposed a lack of commitment to the issue.
She also believed that ESG has become a newer form of greenwashing, with firms failing to utilise environmental, social and governance factors to create a more inclusive and equitable industry.
Ms Shah said: “While sustainability and ESG are the phrase du jour with many firms stating that it is ingrained in their DNA as investors and employers, we do not see firms meeting their own sustainability responsibilities by prioritising diversity to create a more inclusive and equitable industry. It is simply another form of greenwashing.”
According to the letter, Ms Shah considers the lack of emphasis on diversity to be a particular problem in the asset management industry, because it is an idea driven industry. Consequently, by failing to address the issue – business leaders are depriving themselves of new opportunities for innovation.
She said: “Studies have proven that diversity of thought, experience and background create greater, positive, long-term outcomes. For an industry which is reliant on idea generation and innovation it is shocking that companies continually overlook these advantages."
In order to resolve the current disparities between intention and action, she believed that a more collective approach was required.
Ms Shah concluded: “We need to work collectively as an industry, to establish and create measurable results, catalyse the cultural change that is needed and start to embed diversity, inclusion and equality into business objectives.”
City Hive is an independent organisation that aims to promote sustainability and improve the culture of the investment management industry. Currently, it has £1.7 billion assets under advice (AUA) across eight clients.