Asset Owner Diversity Charter gains signatories with promise to change fund industry
As its goals become more mainstream, the Asset Owner Diversity Charter (AODC) continues to add new members. This shift means that those lagging could suffer financial consequences. The Charter's latest addition is Just Group, the UK-based specialty insurer and pension services provider.
Maya Sibul POSTED ON 10/4/2022 1:23:24 PM
The charter, designed to provide data and tools to improve diversity in the industry, attracts new members promising to measure progress and improve performance.
As its goals become more mainstream, the Asset Owner Diversity Charter (AODC) continues to add new members. Industry research reveals that, increasingly, customers are basing their investment decisions on fund manager and asset owners’ credentials, which was in part highlighted by the March 2022 Parker report. This shift means laggards could suffer financial consequences.
The latest addition to the Charter is Just Group, the UK-based specialty insurer and pension services provider signed onto the Charter, joining 21 other signatories with combined AUM of over £1trn.
The AODC states that its mission is to hold asset managers accountable for improving D&I metrics. Increasingly, they say, asset managers view diversity as a “critical tipping point.” Not only is added diversity the conscientious choice, but it also improves investment decisions, strengthens workplace culture and profitability, and benefits consumers.
“A diverse workforce brings different perspectives to an organisation – this can encourage creativity, innovation, and productivity, which can benefit an organisation’s performance.”
For Nimisha Sodha, Responsible Investment Lead at Just Group, who helped spearhead the company’s acceptance into the Charter, it is imperative that asset owners reflect industry diversity. “A diverse workforce brings different perspectives to an organisation – this can encourage creativity, innovation, and productivity, all of which can benefit an organisation’s performance,” she said.
The AODC was created in 2020 to “formalise a set of actions that asset owners can commit to improve diversity, in all forms, across the investment industry.” Other signatories include The Church of England Pension Board, Nest, Railpen, Scottish Widows, Phoenix, Redington, and Local Pensions Partnership Investments.
The AODC’s mission statement highlights cooperation among industry professionals and enduring change. They emphasise the necessity of collaboration “to build an investment industry that embodies a more balanced representation of diverse societies.” A 2020 McKinsey report found that the “likelihood of outperformance continues to be higher for diversity in ethnicity than for gender”. They approximated that when it came to ethnic diversity, “top-quartile companies outperformed” their competitors “by 36% in profitability” in 2019, “up from 33% in 2017 and 35% in 2014.”
The AODC’s charter has two main parts:
- A Diversity and Inclusion Questionnaire for asset managers that standardises complex diversity metrics beyond gender to increase industrywide transparency.
The questionnaire results feed into a composite progress report that tracks user engagement with D&I topics.
- The Asset Owner Charter Toolkit, an instructional document that supports the Charter with briefs on topics like manager monitoring and selection.
New members means new expertise
AODC emphasised Just Group’s addition to the working group, whose central task is “identifying the priorities and targets that will drive the Charter towards meeting its strategic objectives.”
Just Group has previously publicised its stances on ESG and D&I: in 2020, the company launched its ESG framework, increasing protections against potential risk and pitfalls. In October 2020, the company was the first UK insurer to issue a Green Bond, resulting in gross issuance proceeds of £250m. In September 2021, they became the first European insurer to issue a Sustainability RT1 bond, raising £325m.
As signatories to the AODC, the retirement specialist Just Group commits to holding its investment managers accountable for D&I initiatives and metrics. The Charter’s standards will form part of their manager selection and monitoring process.
“A balanced workforce is good for consumers, for profitability, for workplace culture and leads to better investment decisions.”
Helen Price, Co-Chair of the Asset Owners Diversity Working Group at Brunel Pension Partnership Limited, said that equitable workforces boost business. A “balanced workforce” is “good for consumers, for profitability, for workplace culture and leads to better investment decisions.”
Sodha believed that the collective nature of the Charter would enable real change internally and market-wide. “From [our] point of view, if we’re asking other firms to improve on diversity then we also need to hold ourselves to account – we gain the benefits of a diverse workforce, of course, but it’s also simply the right thing to do,” she said.
Sodha added that the AODC’s unique guidelines and resources would allow companies to identify which asset managers are lagging behind others and start conversations that lead to improvement. “We’re all familiar with the saying ‘what gets measured gets managed’ – and the charter is a big step forward in encouraging greater disclosure on diversity from asset managers,” she continued.
AODC’s importance to Just Group
“Diversity and inclusion is a core part of our own sustainability strategy, so it was a natural next step for us to consider this even more closely in our manager selection and monitoring process.”
Signing onto the Charter was, in Sodha’s opinion, a significant step for Just Group. Further action is forthcoming, she said, adding that “diversity and inclusion is a core part of our own sustainability strategy, so it was a natural next step for us to consider this even more closely in our manager selection and monitoring process.” These steps include fully incorporating the charter’s principles into Just Group’s manager selection process for the long-term.
While some companies are indeed putting their money where their mouths are, there is still much work to be done. Sodha and the AODC see many opportunities for improvement ahead. “There are good initiatives that have created consistent disclosure standards around the issue of gender, but it would be good to see this transparency extended to ethnicity and race for example,” Sodha explained. “As a sector we need not only to attract diverse talent but also retain it, so developing support frameworks and structured opportunities will be important in achieving this.”
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