Accelerating Change Report: CFA Institute Convenes Investment Firms to Test Efficacy of Diversity, Equity, and Inclusion Practices

NEW YORK, Sept. 7, 2021 /PRNewswire/ -- CFA Institute, the global association of investment professionals, today released the findings of its Experimental Partners Program, an international project that convened 41 investment organizations to test the efficacy of diversity, equity, and inclusion (DEI) practices in the investment industry. Participating firms represent about USD 26 trillion in assets under management and more than 230,000 employees.

The program asked participating organizations to select, action, and report upon up to three DEI ideas to determine what works best in practice at investment organizations. The findings appear in Accelerating Change: Diversity, Equity and Inclusion in Investment Management. This report outlines practical and actionable key takeaways from the program to advance diversity, equity, and inclusion, and explores strategies to achieve behavioral and organizational change for firms at all stages in their DEI work.

Results from the program reveal a seismic shift across the industry regarding responsibility for DEI within organizations, with responsibility now sitting with business owners and DEI goals increasingly embedded in overall business plans.

Margaret Franklin, CFA, President & Chief Executive Officer, CFA Institute comments:

"In what has become a highly dynamic period of global change, the Experimental Partners Program brings forth a wealth of new data, both qualitative and quantitative, that firms of all sizes can draw upon to help shape and sustain their DEI strategies. Strong signals emerge that DEI strategies bring real cultural change to firms, but how that culture shift impacts the early career choices of young women and underrepresented groups—and the opportunity gap for those who are already in the industry—is still being determined. The investment industry has both a real opportunity and a clear imperative to apply its deep capacity for analytical rigor to this work. The candid conversations shared with us by these leading firms through this program will contribute significantly to the progress needed in tackling the industry's ongoing DEI challenge."

Key Findings:

• Successful diversity, equity, and inclusion strategies require distinct components:
• A leadership that is committed, trained, accountable and with aligned governance structures in place:
• Responsibility for DEI is moving from human resources to business leaders, with increasingly expert DEI practitioners advising on strategy;
• More than one third of participating organizations link CEO pay to progress on culture and diversity metrics;
• Many participating organizations hired a DEI director or chief diversity office (CDO) during the program—a CDO reporting to the Chief Executive Officer is seen as an indication of an organization's DEI maturity;
• Successful governance typically includes a global inclusive leadership council which includes
• Business leaders and visible CEO support,
• DEI councils,
• Employee resource groups (ERGs), with their own governance structures and assigned executive sponsor;
• Firms without DEI governance structures struggled to make continued progress once the Experimental Partners Program ended;
• Frequent, informative two-way employee communication:
• Ongoing communication to bring staff along on the DEI process is critical. Participating firms found they could not wait for all employees to be at ease with the issues; having courageous conversations and using storytelling to help unpack and explore new topics enables sometimes uncomfortable conversations to take place inclusively; and
• A DEI plan that is embedded in the overall business strategy:
• Successful participants showed that plans are essential at all stages. Creating a comprehensive DEI plan that builds in changes in people policies, and that clearly communicates and implements policies, is more likely to succeed in changing organisational culture than policy changes without reference to the wider strategy. The most DEI mature firms are integrating DEI into the overall business.
• While measurement is not everything, employee survey data needs to allow for different types of data to be connected, and triangulated, for deeper employee insight. As well as census data, examples can include pay and promotion data.
• The stage is set for DEI data to become part of the manager selection process: firms are increasingly recognizing the need to be consistent with the sustainability evaluation processes they are using with their investee companies; in some cases, DEI is a major factor in whether to work with a new investment manager.

Sarah Maynard, ASIP, Global Head, External I&D Strategies and Programs, CFA Institute comments:

"The investment industry continues to seek to improve DEI outcomes, but it is never easy for business leaders to look critically at their organization and to commit to making sustained change. Data from our Experimental Partners Program delivers feedback directly from the industry that senior leaders can be very effective in delivering on their firm's DEI strategy when they visibly engage and regularly communicate with staff. Building fluency around DEI can bring us into contact with difficult and sometimes taboo conversations. Firms considered mature on their DEI path show us that with an emphasis on communication, and with governance and resource groups in place, leaders and employees can build their fluency and work together to bring about change and make important progress on their DEI goals, from which the whole organization benefits."

For further information, or to speak to the report's author, please contact [email protected].

Notes to Editors

The Experimental Partners Program ran from July 2019 to December 2020. Participating organizations provided quarterly updates to CFA Institute about actions that worked and actions that did not. Participating organizations range from small, one office firms, to global companies with multiple locations and thousands of employees. Most are asset managers.

Recognizing the complexities of DEI globally, the Experimental Partners Program was designed for organizations in North America. Overall, 83 percent of participating organizations are in the United States, 10 percent in Canada, and 7 percent in Australia. Each organization selected up to three ideas for action—from a menu of 20—drawn from Driving Change: Diversity & Inclusion in Investment Management. Ideas selected are within the categories of: DEI Foundational Concepts, Communication, Talent Acquisition, Talent Development, Measurement and Accountability, and Networks.

The findings of the Experimental Partners Program are reflected in the draft Voluntary Diversity, Equity, & Inclusion Code for the Investment Profession in the United States and Canada, published by CFA Institute in July 2021. The draft DEI code is a collaboration between CFA Institute and a working group of investment industry leaders and outlines six principles to drive greater diversity, equity, and inclusion within the investment industry. The consultation period for feedback from the industry on the draft DEI Code ran from 7 July - 4 September.  The DEI Code will initially be launched in North America in November 2021.

About CFA Institute

CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion of ethical behavior in investment markets and a respected source of knowledge in the global financial community. Our aim is to create an environment where investors' interests come first, markets function at their best, and economics grow. There are more than 170,000 CFA charterholders worldwide in 164 markets. CFA Institute has nine offices worldwide and there are 161 local societies.

Visit www.cfainstitute.org or follow us on Twitter at @CFAInstitute and on Facebook.com/CFAInstitute.

SOURCE CFA Institute