Investment firms link CEO pay to D&I metrics

CFA Institute report reveals investment firms are elevating their D&I practices


Natasha Turner

An increasing number of investment firms are linking CEO pay to diversity and inclusion (D&I) metrics, according to research from the CFA.

The institute report, Accelerating Change: Diversity, Equity and Inclusion in Investment Management, compiled results from the CFA’s Experimental Partners Program, which collected quantitative and qualitative D&I data from 41 investments firms representing $26trn in assets under management and more than 230,000 employees.

Some 73% are investment managers, 15% are asset owners, and 12% are data or service providers to the industry, and firms include Franklin Templeton, Vanguard, Invesco and Lazard Asset Management.

It found more than a third of participating organisations link CEO pay to progress on culture and diversity metrics.

Investment firms are also recognising the need for D&I work to be professionalised, by taking on or consulting experts and compensating culture-related work undertaken internally; 73% of the firms surveyed have at least one full-time D&I employee.

The research also found responsibility for D&I is moving from human resource staff to business leaderships, and formalised governance structures were in place at firms that were further along their D&I journeys. 88% of the firms have employee resource groups (voluntary, employee-led groups that look to foster a diverse, inclusive workplaces) and 93% of those believe such initiatives improve business outcomes.

“Creating a comprehensive DEI plan that builds in changes in people policies, and that clearly communicates and implements policies, is more likely to succeed in changing organisational culture than policy changes without reference to the wider strategy,” the report said, adding the best firms were integrating D&I across the whole business.


In March this year, ESG Clarity explored some of the report’s findings around data collection and spoke to CFA Institute’s Sarah Maynard ahead of the report’s release. This included that more than 90% of the companies now collect employee demographic and engagement data, and 80% collect and analyse promotion and advancement by demographic.

“Gender diversity data is starting to be employed in a more sophisticated, ‘triangulated’ way by some asset management firms,” Maynard said at the time. “Those that are communicating their research with staff and using it to inform business strategy are leading the way.” it said.

See also: – The dos and don’ts of diversity data

The full report said the “stage is set” for D&I data to become part of the manager selection process, particularly when assessing sustainability factors, and said in some cases D&I is a “major factor” in whether to work with an investment manager.

Margaret Franklin, president and CEO of the CFA Institute said: “The investment industry has both a real opportunity and a clear imperative to apply its deep capacity for analytical rigor to this work. The candid conversations shared with us by these leading firms through this program will contribute significantly to the progress needed in tackling the industry’s ongoing DEI challenge.”

The full report also contains more well-trodden examples of good D&I practices, such as using diverse panels and shortlists for recruitment, developing internal networks, mentoring and sponsorship, and improving communication.

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