A Lens on Diversity & Inclusion

While issues surrounding racial justice continue to dominate headlines, the benefits of diversity and inclusion within a company are becoming more clear. There is increasing evidence that workplace diversity and inclusion leads to better decision making, increased productivity, and higher revenue. In fact, according to the Boston Consulting Group’s 2019 report, companies that have more diverse management teams have 19% higher revenue and 10% higher EBIT.

The amplification of diversity and inclusion in the workplace continues to be a priority for many Outsourced Chief Investment Officers (OCIOs). In a recent interview, Commonfund Institute told North Pier that recent events, including the death of George Floyd and the raise in racial justice awareness, have accelerated the need for diversity efforts for both clients and their firm internally. “We started to do a lot of this work pre-COVID, but recent events have an added urgency and importance that we recognize and are acting on.”

Commonfund is one of several OCIOs who have built diversity and inclusion initiatives into their overall firm strategy. “Commonfund’s Diversity & Inclusion Office aims to foster an environment that values different perspectives, challenges conventional thinking and maximizes the potential of all employees,” they said. “By formalizing our efforts, we intend to better incorporate diversity and inclusion strategies across all operating areas, from promoting minority investment mandates for clients to driving best practices in board governance and expanding our own recruiting efforts.”

“[Diversity is] a driving factor in portfolio management decisions and especially when choosing an OCIO firm. It’s a trend that is not really a trend, rather a new way of looking at business.” -Clearbrook

To carry out their corporate diversity mission, Clearbrook created an ESG division three years ago to ensure they support their clients with education, knowledge, and transparent due-diligence procedures to maintain integrity with their commitment to diversity. “As part of this focus, we have had diversity as a point of discussion with our investment managers for several years and require full disclosure from each one,” they stated in a recent interview with North Pier.

Initiatives like this are not only an important part of a company’s culture, but a vital aspect for clients. Commonfund notes that, “The mission-driven nature of our private and community foundation clients seems to influence and engender strong demand for diverse manager investments, with clients specifically asking about the diverse manager representation in their portfolios and the diverse representation within our investment teams.” For endowment and foundation clients, especially colleges and universities, diversity is a mainstream focus from an academic and operational standpoint. “Our Historically Black College and University (HBCU) clients are especially keen on focusing on diversity in every facet of their work, from enrollment, operations, and investments, sometimes even mandating target ranges of exposure to diverse managers,” says Commonfund.

More and more, diversity and inclusion are motivating factors for clients when hiring an OCIO. This is evidenced by the rise in diversity questions within Request for Proposals, especially for endowments & foundations. Clearbrook noted that with 60% of their clientele in the endowment & foundation space, they’ve seen an increase in dialogue and demand for diversity over the past several years. “It’s a driving factor in portfolio management decisions and especially when choosing an OCIO firm. It’s a trend that is not really a trend, rather a new way of looking at business.” At North Pier Search Consulting, although ESG and diversity has long been a discussion point with clients when establishing search criteria, the depth and detail of this focus has clearly increased in recent endowment & foundation searches.

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