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Considerations to improve diversity and inclusion in the investment portfolio

There is an expectation that boards consider diversity and inclusion in almost all decisions they make, including those around the investment of their organization’s endowment assets.  This can be challenging, as their ultimate responsibility as trustees is to invest the endowment in a way that it continues to grow in perpetuity. As a result, performance – not always diversity – tends to be the driving factor in decisions.

However, there is not necessarily a need to choose one or the other.  A survey published in 2014 by Harvard Business Review found that companies across industries whose leaders exhibited at least three “identity diversity” traits and three “experiential diversity” traits out-innovated and out-performed others.

Diversity within a group has shown over the past several decades to be a key component of effective decision-making, which is crucial to successful investment management. In this session, we will walk through a variety of best practices and considerations that can help Boards and Investment Committees integrate diversity related factors into their ongoing decision making when it comes to investments and monitoring their outside providers.

SEI, in conjunction with AGB, The Association for Governing Boards, presented a webinar on this topic on December 7, 2021.  The links to the webinar recording and the associated paper are below.

Key takeaways:

  1. Institutions have a variety of “levers” through which they can mobilize their resources to support DEI including boards and investment committees, grant making, vendor selection, as well as through the investment lens. With an investment lens, consider where you want to focus your efforts – firm ownership, investment teams, and investment selection are all opportunities to put your assets to work.
  2. Take time to internally discuss and educate decision makers and stakeholders on how and where the DEI lens should be applied. Most institutions are in the early stages of determining how DEI value should be reflected.
  3. Include in the definition of DEI not just demographic identity, but also experiential and cognitive. Consider how your investment partner assesses diversity in the research process, as well as what types of data and reporting are available.

Upcoming: AGB survey results release 

AGB will release its latest survey results at the conference on January 31st. Request a copy of the survey results to be sent to you directly. 

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Mary Jane Bobyock, CFA

Managing Director, Nonprofit Advisory Team, Institutional Group