Investing in Inclusion and Diversity
Inclusion and Diversity (I&D) is an essential consideration in any investment decision. We, like many clients and end-savers, want to see greater inclusion, equity and diversity in our own teams, in portfolios, and across the Investment industry.
Greater diversity typically begets diversity of thought (cognitive diversity) and wider perspectives. Crucially, greater diversity also makes teams more representative of the people on whose behalf they are taking decisions.
Leading research supports our belief that teams with more diversity typically make better decisions and produce better long-term outcomes. Our recent paper, "Diversity in the asset management industry: on the right track, but at the wrong pace”, also found that diverse investment teams generated higher excess returns than less-diverse peers.
Source: WTW Diversity in the asset management industry, 2019, McKinsey, Diversity Wins 2019, McKinsey, Diversity Matters 2015
WTW is continuously evolving its approach to I&D to enable our clients to better understand its impact on portfolios, using I&D frameworks and comprehensive reporting tools. We are also reflecting internally and regularly engaging with asset managers and investors on the topic. WTW is pushing for more data transparency and robust policies, both directly and via industry initiatives.
We believe diversity cannot be measured by any single metric and prefer to build a richer picture of diversity across multiple traits and intersections, and across all levels of the firm. Comprehensive data and regular engagement enable us to build a forward-looking view of inclusion, equity and diversity across firms and portfolios more broadly.
Inclusion and Diversity has historically sat under the umbrella of Sustainability, and like climate change, often impacts the success or failure of other ESG initiatives. We believe I&D is a critical societal issue directly impacting our clients and end-savers. This is why we choose to separate out these distinct topics to ensure they are prioritised in our engagements with clients, managers and the wider industry.
Our core I&D beliefs
Challenges for investors and end-savers
The Investment industry has historically lacked diversity and progress to date has been slow; investors and end-savers are demanding change. Over just one year, the top 200 US DB Plans have increased their allocation to diverse-owned asset managers by 76%1. Many investors are looking to integrate I&D into their decision-making and across all of their portfolio, but challenges remain: