A group of 17 institutional investors with combined assets under management (AUM) of $1.3 trillion have signed on to the UK’s Asset Owner Diversity Charter in an effort to improve diversity in the country’s investment industry.
The investors include the Church of England Pensions Board, Willis Towers Watson, and Nest, among other UK asset managers and pension funds.
By signing the charter, the investors are committing to take account of diversity and inclusion records from fund managers when choosing new partners. Fund managers wanting to work with the investors will have to disclose information and demonstrate how they are supporting diversity and inclusion in their workforce.
Signatories also commit to including diversity as part of ongoing manager monitoring, and managers will be required to complete annual questionnaires to create standardization to improve disclosure. The questionnaire is intended to go beyond asking about the strategic approach, to identify how managers look at diversity and inclusion across five key areas: industry perception, recruitment, culture, promotion, and leadership.
The charter has two key components: the diversity and inclusion questionnaire and an Asset Owner Charter Toolkit. The questionnaire results will feed into a progress report to inform engagement on improving diversity and inclusion. And the Asset Owner Charter Toolkit is a supporting document to help implement the charter that includes topics such as manager monitoring and selection.
The charter’s Asset Owner Diversity Working Group, which was formed less than a year ago, sets out to formalize a set of actions that asset owners can commit to in order to improve diversity. The group is co-chaired by Lothian Pension Fund Portfolio Manager David Hickey, and Helen Price from Brunel Pension Partnership.
“It is reasonable for pension scheme members to expect the money in the scheme to be run by a cross section of investment managers that reflect the diversity in the scheme,” Hickey said in a statement. “At the moment, this is not the case across pension schemes in the UK.”
Hickey said fund management front offices are currently dominated by white men, and plan participants are not benefiting from the talent pools available in the populations of white women, Asian men, and Black women. He added that “the dominance of a single group suggests a problem with hiring and with culture.”