We believe diversity allows companies to perform better. As part of expanding our campaign on this topic into emerging markets, we’ve written a paper that summarises our new research.
The LGIM Investment Stewardship team has long promoted diversity across investee companies as we believe, and studies show,1 that a suitably diverse mix of skills, experience and perspectives, as well as inclusivity, is essential for the cognitive diversity of teams and for companies to perform optimally.
Our conversations and policies on this topic have so far primarily focused on developed markets such as the UK, US, Europe and Japan. In 2022, we decided to expand our diversity strategy into select emerging markets for the following reasons:
- We recognise that this topic has not yet been widely explored or advocated by the asset management industry in emerging markets
- The standard data providers that we use have less coverage in emerging markets. There are, therefore, data gaps in diversity data
- We would argue that diversity challenges and priorities differ in emerging markets from developed markets, and we seek to better understand market specific nuances to enable us to be better stewards of our clients’ capital
- We believe diverse corporate governance and executive leadership should create a strategic foundation for emerging-market companies to succeed globally
To provide a more global perspective on the conversation around diversity, we have written a paper that explains how we have expanded our diversity campaign and details some of our key research findings.
Our key takeaways:
- While the diversity topics and concerns vary market by market, the challenges many companies face in improving diversity are systemic in nature
- Attraction, retention and inclusion of diverse talent is, we believe, one of the biggest and most referenced challenges
- It is crucial for an organisation to collect, understand and review workforce diversity data
- Oversight and accountability of diversity, equity and inclusion (DEI) initiatives and strategy must sit at the top of an organisation
- Large companies should be actively engaged in the public policy debate to drive adoption of diversity-related targets and ESG disclosure requirements, covering DEI metrics
Read our paper to learn more about the data and research underpinning our findings, and the actions we’re taking to diversity our engagement.
[1] Source: https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/why-diversity-matters