The Analyst’s theme this issue is Diversity & Inclusion (D&I), and to do so, we took stock on the progress of initiatives designed to push this mandate forward in the investment industry. In September 2018, CFA Institute released our Driving Change: Diversity & Inclusion in Investment Management report. This report lays out where the industry currently stands in regards to the D&I initiative, and includes 20 recommended actions for organizations to move forward. The report was released at CFA Institute’s Diversity & Inclusion 2018: Strategies for Success conference in San Francisco.

The report is based on the results of a series of workshops held between October 2017 and May 2018 by host CFA Societies in Toronto, Boston, San Francisco, Chicago, Philadelphia, and New York City. Ninety-nine member companies, representing approximately $38 trillion in assets under management, were represented in these workshops. The methodology was partially based on the Harvard Business Review article “Why Diversity Programs Fail,” by sociology professors Frank Dobbin and Alexandra Kalev, who recommended engaging managers in the D&I process, among other solutions. Industry progress was measured against the 2017 Global Diversity & Inclusion Benchmarks (GDIB) developed by the Centre for Global Inclusion. Workshops in locations outside of North America are planned for this year.

Participants were asked to self-assess their organizations’ progress in six categories out of 14. The average composite rating showed that firms are still at Level 2, the Reactive phase. This phase is the second in a series of five progressive levels toward exemplary best practices by an organization in the GDIB framework. The Reactive phase is defined as a compliance mindset; actions are taken primarily to comply with relevant laws and social pressures. Clearly, members from participating companies in the workshop feel there’s still much their own firms and the industry at large need to do to make their D&I programs successful.

Toronto results

Participating Toronto firms initially rated their D&I programs as average (3.1 out of 5) relative to industry peers. (This result dropped slightly after collaborating with partner societies in this workshop.) Toronto participants also rated the industry’s progress on diversity initiatives as less than fair (1.7 out of 5), an assessment shared by all participants. When asked about their firms’ motivation for efforts around D&I, participants rated reputation as a more important factor in Toronto than elsewhere. Toronto participants also ranked business-based outcomes of higher importance than values as the motivating influence for D&I programs in their organizations. While diversity is a topic that varies significantly by location, all but one city named gender as their primary focus. In Toronto, race was less of a focus than in other cities, while gender identity/sexual orientation and ability both ranked higher in Toronto than elsewhere.

Moving the needle

According to the Centre for Global Inclusion, for an organization’s work on D&I to be effective, it will need to be at Level 3, the Proactive phase, on the GDIB Foundation benchmark categories: vision, leadership, and structure. Organizations will also need to be at Level 3 on the Bridging benchmark categories: assessment, communications, and sustainability. More detail on these definable levels of achievement can be found in the GDIB itself. The CFA Institute workshops and report present participants’ 20 best ideas for moving D&I initiatives forward in our own industry. These ideas are expected to evolve over time.

As a next step, CFA Institute invited member firms to become experimental partners in the next phase of this project. Participating firms that expressed interest by Dec. 31, 2018, will move forward with implementation of the ideas in last September’s report and provide confidential feedback on the success of their initiatives. Quarterly updates will be submitted from March 2019 through December 2020, and will be shared by CFA Institute at the end of the two-year trial period.

CFA Society Toronto’s efforts

Diversity has been an important agenda item at CFA Society Toronto’s Spring Pension Conference for several years now, and this year will be no different. “At our 11th annual conference on March 28, we will feature an expert panel talking about the Diversity Project,” says Heather Cooke, chair of the Institutional Asset Management Committee and past recipient of the Volunteer Spotlight Award. “The panel will discuss ways to improve diversity in the asset management industry and provide practical tips on how to improve diversity on corporate boards.”

But CFA Toronto members shouldn’t wait until the conference to discuss D&I. Keep the D&I conversation going with your colleagues now, read the report, and act on its recommended actions in your own organizations.