Reports | January 26, 2023

Survey of Investment Managers Finds Large Gains in Diversity

Investment managers have made great strides in diversity, according to our 2022 Survey of Investment Managers on Internal ESG Policies. The increase in Black members of the C-suite is particularly noteworthy. In the surveyed firms’ entire workforces, there were greater percentages in 2022 than 2021 of Black, Hispanic, Native American or Alaska Native employees and employees with two or more races.

This is our third annual survey of our top 100 managers by client assets.

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Findings on diversity

On racial diversity, survey results show that among executives, senior officials and managers, Black representation increased the most among racial categories between 2021 and 2022: from 2.7 percent to 6.6 percent. Representation among Asian C-suite members increased from 11.3 percent to 13.0 percent. Hispanic representation in the same job categories grew from 2.8 percent to 3.2 percent.

Executives, Senior Officials and Managers

This graph illustrates the survey results mentioned above, as well as the following results: 74.6 percent of executives, senior officials and managers are white and 2.0 percent are of two or more races.

Source: 2022 Survey of Investment Managers on Internal ESG Policies

The growth is remarkable compared to the 2020 report, when C-suite representation showed 9.9 percent Asian and 2.4 percent Black. The long-term trend for Hispanic representation was less clear, with the C-suite reporting 3.5 percent in 2020, 2.8 percent in 2021 and 3.2 percent in 2022. As efforts to diversify the workforce continue, special attention should be paid to whether non-white populations are making gains only on a collective basis or if increases in representation are occurring within individual racial categories.

Among the full workforce, gains were seen for Black (up 6 percentage points), Hispanic (up nearly 2 percentage points), Native American or Alaska Native (up 0.5 of a percentage point) and employees with two or more races (up 0.7 of a percentage point). Asian employees were the only demographic category to show losses.

 

All Employees

This graph illustrates the survey results mentioned above, as well as the following results: 60.4 percent of all employees are white and 15.7 percent are Asian.

Source: 2022 Survey of Investment Managers on Internal ESG Policies

 

Gender diversity also showed some modest gains for women. Among all employees, women represented 45.4 percent of jobs in 2022, up from 42.9 percent in 2021. However, among executives, senior officials and managers, female representation slightly slipped to 27.2 percent in 2022 from 27.4 percent in 2021. These numbers are still an overall gain from 2020, when women represented 23.9 percent of C-suite jobs.

 

Executives, Senior Officials and Managers

This set of two pie charts illustrates the survey results mentioned above, as well as the following results: 0.3 percent of executives, senior officials and managers are non-binary and 0.5 percent of all employees are non-binary.

Source: 2022 Survey of Investment Managers on Internal ESG Policies

All Employees
 

This set of two pie charts illustrates the survey results mentioned above, as well as the following results: 0.3 percent of executives, senior officials and managers are non-binary and 0.5 percent of all employees are non-binary.

 

 

 

The lack of progress for female representation in the executive ranks is concerning. Only 12 firms reported that a majority of new hires were female. Even fewer firms, four, reported a majority of new hires from underrepresented communities.

Of the 64 percent of firms that have conducted studies on gender pay parity, 11 firms reported a pay gap between 1 percent and 33 percent. (Twenty-two firms chose not to disclose the gender pay gap, while an additional 11 firms reported they found no imbalance in pay between genders.) Twenty-two percent of firms still require private arbitration to settle harassment claims.

Twelve firms reported they have no racial minorities on their boards of directors and five firms reported that have no female board members. Just one firm had a majority-female board while none had a board with a majority of non-white directors.

Managers are also reporting few employees and C-suite executives in the non-binary category (less than 1 percent among both categories).

Findings on sustainability

The survey found remote work is here to stay. The survey results show 92.3 percent of firms have a hybrid model in place and 74.4 percent intend to maintain the hybrid structure going forward. Managers reported fewer offices in LEED-certified buildings compared to 2021, which may be more of an indication of reduced office space.

Increasingly, climate is a greater focus, with 50 percent of managers reporting that they track their firm’s greenhouse-gas emissions, up from 43.9 percent the previous year. One-third of firms have committed to achieve net-zero emissions in the future, an increase from 25 percent of firms reporting the same in 2021. Net-zero is the concept that a firm will count and then reduce emissions as close to zero as possible and pay for carbon offset to net out at zero. The time horizon for many of these commitments is by 2050. A growing number of firms are also tracking emissions for their clients. Nearly half of managers surveyed reported they track client emissions.

Other noteworthy findings

All surveyed managers responded that they have a code of ethics and disaster recovery plan in place, as well as providing training on cybersecurity. Succession planning, however, was not in place at approximately 4 percent of firms and 1 percent of firms had no workplace sexual harassment policy.

Additional findings show firms had higher turnover rates in 2022. Eight firms had material code of ethics violations, while a greater number saw non-material ethics violations. Finally, 65 percent of firms provide employees opportunity to gain ownership stakes in the firm.

All in all, investment managers provided similar responses to the previous year with large variations in diversity, climate and office life.

About the survey

In July 2022, we invited 100 investment management firms to participate in a survey of their internal ESG policies and practices. The survey consisted of a select number of questions that were identical to the questions we asked the firms in 2021, along with some new additions. The response rate for the survey is 81 percent.

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The information and opinions herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This article and the data and analysis herein is intended for general education only and not as investment advice. It is not intended for use as a basis for investment decisions, nor should it be construed as advice designed to meet the needs of any particular investor. On all matters involving legal interpretations and regulatory issues, investors should consult legal counsel.

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