Publicly traded companies that don’t prioritize diversity and inclusion (D&I) risk incurring the wrath of socially conscious investors, according to a presentation at the Responsible Investment Association’s (RIA) inaugural D&I Week.
During a virtual session on Friday, Mary Robinson, the RIA’s director of research, policy and collaboration, discussed the results of the RIA’s latest Investor Opinion Survey, which found that 89% of investors believe publicly traded companies should create workplaces that are free of discrimination.
Eighty-five per cent of respondents to the RIA survey said women and people of diverse backgrounds should have leadership opportunities at public companies, and 76% said companies should set specific diversity targets for their senior leadership.
These findings are consistent with other recent surveys on D&I. For example, in September, proxy advisory firm Institutional Shareholder Services Inc. (ISS) reported that 73% of investors believe public companies should disclose the demographics of their board members, including board members’ self-identified ethnicity.
The RIA survey found that women and men have different attitudes about D&I, however.
Women (82%) were more inclined to believe that companies should have diversity targets than men (70%). And 90% of women said companies should give leadership opportunities to people of diverse backgrounds, compared to 80% of men.
During her presentation, Robinson noted that the police killing of George Floyd in May “sparked public outrage” around the world.
“We appear to have reached a turning point in confronting racial injustice in our society,” Robinson said. “The dialogue has extended to important discussions about the need for equity, diversity and inclusion within our workplaces.”
Since May, many public companies have promised to appoint more Black people, Indigenous people and people of colour to senior leadership roles.
Hundreds of Canadian companies have signed the BlackNorth Initiative’s CEO Pledge, a commitment to appoint more Black employees to board and executive roles. Big banks, asset managers and insurers have committed to other specific diversity targets.
Investors are taking these pledges seriously. Earlier this month, institutional investors managing $2.3 trillion in assets signed the RIA’s Canadian Investor Statement on Diversity and Inclusion.
Approximately two-thirds (66%) of investors polled by the RIA said they would want their fund managers to “take action” if a company held by a fund was known to have a “culture of discrimination.”
Thirty per cent of respondents said they would want their fund manager to sell its holdings of a discriminatory company, while 36% said they would want their manager to keep the company but engage with it in an effort to improve its business practices.
The RIA found that women are more inclined to sell discriminatory companies, while men are more inclined to engage.
Thirty-six per cent of women said they would favour selling a discriminatory company, 30% said they would favour engagement, 7% said they would take no action and 27% said they weren’t sure. For men, only 24% said they would sell, 42% said they would engage, 17% said they would take no action and 16% weren’t sure.
The RIA commissioned Ipsos to conduct an online poll of 1,000 investors in Canada from Sept. 3–7. Online polls cannot be assigned a margin of error because they do not randomly sample the population.
Editor’s note: Advisor’s Edge and sister publication Investment Executive were media sponsors of D&I Week. This story was written independently of the sponsorship.