AODC Ramps up DEI Efforts
Institutional investors double down on desire for diversity, with an increase of more than 60% in charter participation.
The Asset Owner Diversity Charter (AODC) has looked to accelerate its work on promote diversity, equity and inclusion (DEI) among fund managers, having recently introduced an advisory board.
The board was launched on 9 April, with members’ organisations including HSBC Asset Management, Newton Investment Management and Redington.
Arun Kelshiker, Vice Chair of CFA UK’s DEI Committee, confirmed that he was joining the board, saying he was “honoured and tremendously excited”. The AODC is actively seeking to fill a number of positions on the board – specifically, for individuals with a HR background, an academic, and an early career professional.
The AODC launched in 2021 with a five-year goal of increasing gender, ethnic and socio-economic diversity across the fund management industry. Alongside the 30% Club, a Chair and CEO-led global campaign that looks to increase gender diversity to a minimum of 30% female representation at the board and executive committee levels, asset owners have previously flagged the charter as being instrumental in focusing attention on better gender representation at companies in which their fund managers are invested.
“We hope this will help accelerate our progress,” Emma Douglas, Senior Stewardship Analyst at Brightwell, told ESG Investor. “The newly formed AODC advisory board will help the team drive strategy and take the initiative to the next level – pushing for greater disclosure, standardisation and growth in global signatories, with the ultimate aim of improving diversity within the investment industry.”
Douglas co-chairs the AODC alongside Helen Price, Director of Governance at the Church of England Pensions Board (CoEPB).
Investor impact
The AODC has two key components: the asset manager diversity and inclusion questionnaire, and the asset owner charter toolkit. The questionnaire aims to standardise diversity metrics beyond gender to improve disclosures, with results informing a progress report to support engagement and improve DEI. Meanwhile, the toolkit aids the charter’s implementation and includes critical topics such as manager monitoring and selection.
WTW’s ‘Diversity in the asset management industry’ report previously found that just 42% of asset managers had measurable objectives in their DEI policies, and only a quarter linked executive leadership to associated key performance indicators.
“We’ve seen data disclosure on DEI improve by 61% over the past two years, helping to highlight issues and target action,” CoEPB’s Price explained. “Investors are now embedding DEI disclosures as part of capital allocation decisions, and it’s having an impact.”
The 61% represented a jump in respondents from 79 in 2022 to 127 in 2023. Of those, 56 had more than £50 billion (US$62.2 billion) in assets under management (AUM), while 36 had between £5 and £50 billion.
“Much more needs to be done on implementing processes and tracking the outcomes from firms’ DEI policies,” said Douglas. “Right now, only 27% of firms have senior sponsors accountable for DEI policies. Organisations have published their ethnicity pay gap data, [helping] build up trust – but we want to see more firms publishing this and taking action.”
The AODC currently has 27 signatories representing £1.8 trillion in AUM, as well as an engaged working group of 10 asset owner organisations including CoEPB, London CIV, Nest and Railpen.
According to Douglas and Price, success for the AODC would include global adoption of its questionnaire to improve standardisation. alongside the investment industry becoming more diverse and inclusive to reflect today’s society.
Asset owner attention
A report from Reboot – a campaign group of senior financial services professionals working to advance dialogue and action on race and ethnicity in the workplace – released this week found that nearly 40% of institutional investors would decline to work with a fund manager on the basis of a lack of ethnic diversity. In 2020, the number of UK companies voluntarily disclosing their ethnicity pay gap was around 10%.
Reboot collected data from 201 senior executives in fund management across the UK, US, and various countries in Europe who totalled US$1.58 trillion in AUM, as well as 201 investors across Europe including pension funds, wealth managers, and insurance asset managers.
Douglas described the report’s findings as a “clear message on the direction of travel”, underlying that asset owners are taking DEI “very seriously now”.
“DEI is an important input into decision making for asset owners,” Price added. “It’s no longer just a nice-to-have – it’s a business imperative.”
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