Global head of diversity says new principles-based code will help investment firms break cycle of 'glacially slow' progress
Last week, the CFA Institute issued a fresh challenge for investment firms in North America to step up their efforts at diversity, equity, and inclusion (DEI) by publishing its voluntary DEI Code for the USA and Canada.
More than two years in the making, the code is a rallying cry for the industry to take active steps towards broader representation of talent in the industry, which promises to drive better investment outcomes, create better working environments, and spur a virtuous cycle of change that will continue into the future.
“What we really want is to accelerate change, because we believe that it's been glacially slow,” says Sarah Maynard, Global Head, External Diversity, Equity, & Inclusion at CFA Institute. “We think we’re at a moment in time, and there’s really momentum behind it. So we really want to harness that energy and drive change.”
True to the spirit of inclusiveness, the code is open to different types of stakeholder firms within the investment industry – small and large firms, including both asset owners and asset managers. The working group behind the code, Maynard notes, includes representatives from a wide variety of industry sub-sectors, which was key to making sure there was consideration of how it would be received by all cohorts.
The institute intends to release different versions of the code based on specific regional nuances; the code for the U.S. and Canada, for example, includes a requirement for Canadian signatories to commit to implement the Truth and Reconciliation of Canada Call to Action #92 and to embracing Indigenous reconciliation. But in each case, those who join the commitment are expected to accelerate and amplify their commitment by making the economic, business, and moral case for DEI.
“Much of the implementation guidance is based on industry-wide research that we conducted over two years with 41 firms, which we lay out in our Accelerating Change report,” Maynard says. “All told, data from over 230,000 employees was captured in that research.”
The research found that there have been some pockets of great practice, but efforts have been largely fragmented. While DEI initiatives might have traditionally been contained within the silo of HR, Maynard emphasized that change has to happen from small, intersectional steps that happen throughout the organization. And even though there’s been some structural change from leaders with increasingly rich DEI expertise taking on more senior positions, the challenge for many has been around fostering change at the operational level.
Another point of emphasis in the code, based on the same CFA Institute research, is the need to recognize individuals who are already within organizations. Historically, industry leadership has tended to be very homogeneous as people from the same group are promoted. By being more intentional and alert with respect to who are given leadership opportunities, Maynard argues that organizations can manage their talent more efficiently.
“Instead of it always being about fixing the individual who's not part of the majority group, it’s much more about fixing the system and the culture,” she says.
Making an honest and demonstrable effort to promote change, she adds, will be crucial to improving the industry’s reputation. Based on data from research such as the Edelman Trust Survey, she says public trust in the financial industry has been very slow to recover after the financial crisis in the late 2000s, which could be weighing on younger people’s willingness to consider a career in finance. Ensuring the future of the industry, therefore, requires highlighting the industry’s social utility among aspiring professionals with a purpose-driven view.
Even as the institute wants to encourage participation in the DEI Code, Maynard emphasizes that signatories will also be held to account. The code includes six metric-based principles, and those who join must meet specific criteria of progress. By sitting at that “nexus of support and challenge,” she says participants should be able to show what can be done.
“We’ll be reporting aggregated data, but we are also very much encouraging signatories to report their progress externally,” Maynard says. “There are an awful lot of very smart, highly motivated folks in this industry. And when you get them onto a topic, get them engaged, and make sure they understand the drivers, we know that change can happen quite fast.”
