U.S. Reps. Maxine Waters (D-CA), chairwoman of the House Financial Services Committee, and Joyce Beatty (D-OH), chair of the Subcommittee on Diversity and Inclusion, released a report on diversity and inclusion at America’s largest investment firms.
The report – called Diversity and Inclusion: Holding America’s Largest Investment Firms Accountable – was generated by committee staffers, who gathered data from investment firms with assets over $400 billion on their diversity and inclusion data and practices.
One of the areas they looked at was workforce diversity. The report found that people of color, Black and Latinx employees were highly represented in administrative support roles or other non-professional level roles but were less represented in executive/senior-level or mid-level manager roles. It also found that Asian Americans were most represented in technician, professional, and first/mid-level manager roles, compared to support roles and senior-level roles.
In terms of board diversity, only one of the firms that made racial justice commitments in 2020 following the murder of George Floyd increased board diversity. Overall, it found that 17.5 percent of boards are made up of people of color.
In addition, while almost two-thirds of firms reported having policies to support diverse suppliers, all companies that responded reported spending 4 percent or less of asset manager spending with women-owned or minority-owned firms.
Further, only nine of the 28 firms provided information on women-owned asset managers with which they are doing business. They spent on average 0.57 percent of total asset management services with women-owned businesses. The same number, nine of 28,
provided information on minority-owned asset managers with which they are doing business. Of these firms, an average of 3.96 percent of total asset management services was spent with minority asset managers.
In addition, only six of the 28 firms provided information on women-owned and minority-owned underwriters with which they are doing business. Of these firms, they spent on average 0.30 percent of total underwriting services spend with women-owned businesses and 9.47 percent with minority asset managers.
The report recommended several legislative actions to improve diversity and inclusion at America’s largest investment firms. Among them, they said investment firms should collect disaggregated data regularly on workforce, executive, and board diversity, as well as to conduct regular audits on pay and racial equity. They should also partner with historically Black colleges and universities, minority serving institutions, and community colleges to build talent pipelines into these organizations.
Regarding board and executive leadership diversity, firms should consider at least one diverse candidate for all executive positions and board positions when there are openings.
In addition, they recommend that all investment firms consider diverse suppliers whenever a procurement takes place, especially when contracting for asset managers. Firms should also develop pipeline programs to manage increasingly larger portfolios for diverse asset managers.