Improving diversity in financial services can increase creativity and improve results. Sara Trett from our friends Curation Corp provides a look into why.
by Sara Trett, Curation Corp
Historically, because of how the business world has been shaped by unequal social systems through time, inequality and exclusion have featured heavily in workplaces, which to this day are still overwhelmingly run and populated by white men. This has to change.
While improving corporate diversity and inclusion (D&I) can seem like just another burdensome regulatory tick-box exercise, research has overwhelmingly shown that being more inclusive is a huge strategic asset to businesses, particularly in the current climate.
At an executive and board level, increasing D&I improves companies’ high-level expertise and diversity of thought. This is particularly true when talking about candidates who have diverse technical expertise rather than those from similar career backgrounds.
In the workplace, more diversity and a more inclusive environment has led to more creativity as a result of combining workers’ different perspectives. It can also be used to improve talent retention. If employers are making it obvious that they are investing in their workers, employees will be more motivated to work for them.
Beyond internal structures, embracing diversity also opens up businesses to a larger pool of consumers and investors, both new customers who now feel represented by a company’s social values and those conscious stakeholders who hold brands up to higher moral standards.
Beyond business, more inclusive social systems have the power to add trillions to the global economy.
Businesses can adopt inclusive strategies in several ways: addressing internal practices and policies to ensure the workplace is an inclusive environment for employees, setting standards for business to ensure that supply chains, partners and processes are all ethical and inclusive, and incorporating social objectives into business strategy to try and foster more inclusivity and equality in the wider world.
The first step is understanding how inclusive a business is to begin with. For Goldman Sachs, its recent D&I reforms were made after junior employees flagged a hostile working environment and severe burnout. This year, Netflix published its first annual diversity report, flagging its own shortcomings and signalling to customers that it was holding itself accountable.
Outside of strategic initiatives, work is being done to promote greater engagement and innovations across countless social issues. In 2021 Amazon developed a $2bn fund for affordable housing. Throughout the pandemic Microsoft and Dell focused some efforts on addressing the digital divide emerging as a result of students and families’ limited access to remote learning tools. And as part of a racial equality initiative, Cisco has invested $150m into historically Black universities in the US, partnering to improve their cybersecurity infrastructure and fund students’ education.
Whoever holds the purse strings has the power — and when it comes to diversity, more and more investment funds and asset managers are incorporating a social focus into their work. The Carlyle Group, for example, has mandated that companies in their portfolio need to meet a minimum 30% diversity quota at board level. At the end of last year, the Financial Times also reported that business and management schools were showing growing demand for student-led socially-conscious impact investment funds.
More recently, a coalition of asset managers have taken a stand against facial recognition — technology that has repeatedly been shown to be racially biased and can be used to unfairly police and incarcerate people of colour — by creating standards for ethical technological development for investments.
Given the added value being socially conscious and inclusive can have for a business, asset managers willing to hold companies to account in this area can be hugely valuable for everyday investors putting faith in them.
Sara Trett, Curation Corp
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