Findings on sustainability

The survey found that firms are continuing with the hybrid work model, with 96 percent of firms reporting that staff is hybrid, of which 81 percent stated that employees will continue to work hybrid on an open-ended basis.

As the hybrid work model remains in place it is apparent that firms continue to reduce office space, which has led to a decrease in managers that report working in LEED-certified buildings. A total of 22 firms reported that a majority of their office buildings are LEED-certified, which is down from 29 firms in 2022.

Firms are continuing to increase their focus on climate through different commitments; 60 percent reported that they track their greenhouse-gas emissions, which is up from 50 percent in 2022. Of the firms that track emissions, 32 percent reported that they also track emissions for clients generally and an additional 38 percent track emissions for specific clients. More firms have also made the commitment to achieve net-zero, with 39 percent indicating that they have made such commitments, an increase of 9 points from 2022.

Findings on demographics

From 2022 to 2023, there was an overall increase in workforce personnel by approximately 15,000, a 24 percent increase, compared to a 2 percent decrease in new hires in 2022.

One more firm reported investment professional turnover rates greater than 15 percent between 2022 and 2023 (11, up from 10), but total employee turnover rates greater than 15 percent were lower (17, down from 24).

On racial diversity, among all employees and within the C-suite, similar trends were identified. The only two racial categories that increased were Asian and White. Asian representation increased by 3 points among all employees and less than half a percentage point within C-suite positions. Black representation decreased the most for both categories, by 4 percentage points among all employees and by half among C-suite positions. All other racial categories, including Hispanic, Native American or Alaska Native and two or more races, slightly decreased within both job categories.

Ten firms reported that a majority of new hires were from underrepresented communities, which is an increase from four firms in 2022.

The survey revealed a modest decrease in gender diversity. The percentage of women among all employees and among those in the C-suite declined by 2 points. Only nine firms reported that a majority of new hires were female, a decrease from 12 firms in 2022.

Of the 68 percent of firms that conduct gender pay equity assessments, eight firms reported a pay gap between 1 and 30 percent; 32 firms did not disclose the pay gap and 11 firms found that there was no imbalance in pay between genders.

In regard to composition of the firms’ boards of directors, 14 firms reported that they do not have any racial minorities and five reported that they have no female representation. One firm had a board with majority of non-white members and two had a board with majority female members.

Findings on governance

All managers reported that they have the following:

• A code of ethics
• Cybersecurity training
• A disaster recovery plan in place
• A policy on sexual harassment

However, while all firms have a policy on sexual harassment, 17 percent still require private arbitration of harassment claims, which may create barriers to claimants who are intimidated by handling a claim in house.

Most firms (93 percent) stated that they have a leadership succession plan in place.

Only three firms reported material code-of-ethics violations between June 2022 and June 2023, while an additional 20 firms reported non-material violations. Thirteen firms declined to disclose whether they had any material violations.

Looking ahead

Firms were asked to estimate how long it will take them to achieve strong internal ESG business practices. Most (78 percent) reported that they believe they already have strong practices in place. For firms that are working on achieving strong practices, 10 percent indicated that it would take less than a year and 12 indicated that it would take between three and five years. The majority of managers also reported that they believe it will take between three and five years for the entire investment management industry to achieve strong internal ESG practices.

About the survey

In July 2023, we invited 100 investment firms to participate in a survey of their internal ESG policies and practices. The response rate was 74 percent.