Imagine feeling shut out from important decisions in your community. Imagine feeling you were always the last choice when it came to hiring for the good jobs. If social studies showed this was always due to systemic bias, wouldn’t you want to work for change—if not for yourself, at least for the generation to come? This is the motivation behind the movement for diversity, equity, and inclusion (DEI).
What are the fundamental principles to accelerate change around DEI? Can financial institutions adapt to DEI—and can their regulatory body, CFA Institute, lead the way?
To showcase thriving financial institutions that have adopted DEI, on December 6, 2023, CFA Institute presented the webinar, “Californian Perspectives – How CalPERS and CalSTRS Integrate Inclusion in Investment.” A panel of two representatives from major pension funds was moderated by Sarah Maynard, Global Senior Head of DEI, at CFA Institute.
Maynard began by asking about bringing DEI to the wider industry.
“We publish an annual progress report,” said LaShae Badelita, Investment Diversity Officer at CalsTrs. California State Teachers’ Retirement System (CalSTRS) provides retirement, disability and survivor benefits for California’s 965,000 educators and their families. As of October 2020, CalSTRS managed a portfolio worth $255 billion.
Badelita said organizations might ask, “How do we benchmark ourselves? Quantitatively, what impact are we having?” She noted that having that reporting process helps to monitor implementation.
“The first thing you should do is listen more than you talk. That’s why culture and talent are so important,” said Marlene Timberlake-D’Adamo, Chief Compliance Officer (CCO) at CalPERS. The California Public Employees’ Retirement System (CalPERS) manages pension and health benefits for more than 1.5 million California public employees, and their families. As of June 2021, CalPERS managed a portfolio worth $469 billion.
“We lay it out in a structural way so we can measure it,” Timberlake said. “Some folks feel there’s analysis paralysis. We won’t be seen as authentic.” She said the CFA’s inclusion code was created with six principles. Organizations could start with one, for example, the principle of ensuring strong representation in the pipeline. “Then, methodically and systematically go about implementing it.”
“Is the work of ensuring that DEI occurs always falling on women and BIPOC persons?” Maynard asked.
“No, our committee is diverse,” Timberlake said. “Inclusion means everybody.”
Badelita emphasized that the DEI committees collaborate and share data with portfolio managers who will “come and engage with us.”
“Progress is not a straight line,” Timberlake said. “We can learn from experiences others have had. There’s an extended buffet of options.”
How to Measure Inclusion?
Timberlake referred to employee resource groups (ERGs), which are internal communities of employees with shared identities and interests. “Look at all-team surveys,” she said. “Measuring can be done, but quantification is not the whole picture. Be careful of the interpretations you give.”
It is the role of ERG leaders and members to ask whether the groups provide what employees want. They look for ways to offer the support employees are looking for. “We’re trying to build relationships,” she said, “and that takes more effort.” However, effect can be greater when you go “one to one, not a thousand people at a time.”
“One to one avoids the group think, or the loudest-person-in-the-room effect,” Badelita said. “When facilitating a meeting, we go around the room and ask each person.”
“It’s important to know your organization,” Timberlake emphasized. Her group has been active for over a decade and take their responsibilities very seriously. Both pension fund representatives referred to the Catalyst project.
Badelita said, “We utilize our proxy voting to get women on the board, and we look for companies with at least thirty percent women on the board. For over thirty years, we look for this in the public companies we invest in.” Moreover, “we have a dialog with them about why we support DEI.”
“We are constantly trying new things,” Timberlake said. “We have a MOSAIC program starting up.” We are continuing to influence partnerships. We are constantly learning, too. We organize data to see metrics and patterns.”
SIDE NOTE: In February 2022, the CFA Institute announced the launch of a Diversity, Equity, and Inclusion (DEI) Code for the investment profession and a year later, more than 100 finance industry organizations in North America had signed on. In October 2023, the CFA Institute expanded this move to include the UK. ♠️
Click here to read the DEI code posted at CFA Institute.
The group photo is from the Catalyst website and its use is permission pending.
The graphic picture of DEI is from Bentley University, which offers a DEI program of study.