Institutional and Pension Fund Diversity Initiatives

In recent years, institutional and pension funds have increased their focus on the diversity and inclusion performance of asset managers and corporations. Those efforts extend to diversity within the firms’ workforce, executive leadership team and board of directors. California Public Employees' Retirement System (CalPERS), the New York City Retirement Systems, Chicago Policemen's Annuity & Benefit Fund and the Minnesota State Board of Investment are actively engaged in these efforts.

The California Public Employees' Retirement System has sent letters to 504 companies in the Russell 3000 Index regarding diversity on their board of directors. The letters outline the growing evidence that board diversity has a positive economic impact on business performance. CalPERS requested that each company develop and disclose its corporate board diversity policy and implementation plan to address the lack of diversity.

The New York City Retirement System currently allocates $12 billion of its $175 billion assets to investment firms and businesses owned by women and people of ethnic minority backgrounds. This allocation has risen by 25% in just four years, in line with its strongly held belief that diversity is a fiduciary duty.

The Congress itself is undergoing a radical change from a diversity perspective.  Fifty years ago, white men made up more than 97 percent of the House. Both parties were equally male and equally monochromatic. In the 50 years since, the palette has changed, dramatically. White men now represent a minority share of the House Democratic Caucus. In the current Congress, racial and ethnic minorities represent 40 percent of the Caucus and women comprise a third of all House Democrats.

Both numbers have been on the rise for years and are expected to expand after the November elections. What’s more, these minority Democrats are expected to assume some of the party’s most powerful jobs. For example, minority Members are in line to assume as many as half of the 21 committee chairmanships.

At this critical juncture, its vital the financial services sector amplify its voice to engage, educate and collaborate with federal and state policymakers.  The sector must proactively define its emerging commitment in some cases, and longstanding commitment in others, to greater diversity in the workforce, the industry’s retail client base and among its suppliers.