We know that talent is spread across all people, and doesn’t care much about gender, sexuality or race. If a boardroom is diverse then it’s a sign that the company has an open door for the talented people who should be in there, leading it to success and delivering returns for investors.
The world is making gains on Diversity, Equality and Inclusivity (DEI) — a five-year McKinsey study found boardrooms in the US & UK grew 1.3% more diverse every year between 2014 and 2019. But action needs money, and letting companies know you care about DEI by the way you invest, is one of the best ways you can accelerate the changes we need to see.
Diversity at the workplace
A more inclusive leadership team is important — but the modern investor’s commitment to diversity can’t end there. We believe that companywide actions to promote inclusivity across the whole workforce aren’t only the right thing to do, but will also result in potentially the best performance.
Indeed, a company’s performance on DEI is increasingly a redline for younger investors who are less tolerant of companies who don’t practice the values they hold. In other words, money is the catalyst of change.
Investing in diversity
Investing in a value like inclusion simply wasn’t possible until very recently. In the last few years, the millennial-driven shift in what investors are looking for has led to a new kind of fund appearing.
These DEI funds are weighted towards companies which perform well when assessed on inclusivity and diversity. By creating a more meritocratic environment, investors bet that they will outperform their traditional rivals. These funds combine value and values, and potentially make a sensible bet for the passionate investor.
There has been considerable attention on these investments in recent years, fueled by regular assessments of large companies’ workplace practices. When the Spencer Stuart Board Index found for the first time that every S&P 500 company had at least one woman on its board in 2020, it was widely reported. This indicates DEI is rising as an issue.
Even better, as more and more company shares are held explicitly on the grounds of the company’s inclusivity policies, boardrooms will be increasingly incentivised to take these values into account. If their progress begins to slip, they risk falling out of the fund, which could trigger a share price tumble.
Remember: this isn’t charity. More diverse companies have been shown to perform better. The Harvard Business Review found that companies with higher-than-average diversity had 19% higher innovation revenues. And the better companies perform, the more likely they are to win gains for investors like you.
Gather is passionate about diversity
Clearly, the growing support for diversity at work shows that investors have the power to change the world for the better by being discerning about who gets their money.
Because of this, Gather is proud to offer our own DEI fund, which we call our LGBTQ+ Album and will be launching soon. It contains companies with an excellent track record on LGBTQ+. Featuring BlackRock, it has strict selection criteria that we believe will allow it to outperform traditional funds while staying true to its diversity roots.
Gather is passionate about investing your money, and that means we only want to invest in the most promising businesses. We’re convinced that diversity means better performance in the long term.
Capital at risk.
The information provided by the blog are the opinions of the writer. As such, it should not be construed as investment advice.