Principles for Responsible Investment Calls on Investors to Expand, Broaden Focus on DEI
UN-supported leading responsible investing organization Principles for Responsible Investment (PRI) announced today the release of a report encouraging investors to improve performance on diversity, equity and inclusion (DEI) issues, and outlining a series of actions for investors to follow on addressing DEI in their own organizations, and in their portfolios and more widely across society.
The Principles for Responsible Investment were established by a group of investor signatories in 2006, supported by the United Nations, to aid investors in integrating ESG factors into the investment process, and establishing a set of specific, voluntary and aspirational principles for investors to follow. The initiative has grown to more than 4,300 signatories, representing over $121 trillion assets under management.
The new report, “Diversity, Equity & Inclusion: Key Action Areas for Investors” highlights some of the key drivers and benefits for investors in addressing DEI issues, along with a series of action areas and recommendations for investors to pursue.
The PRI lists growing regulatory pressure as a key driver of increased focus on DEI, noting evolving legal and regulatory requirements in multiple jurisdictions aimed at ensuring that businesses are delivering social value. Beyond regulatory requirements, the report also highlights numerous business and investment benefits, including improved decision-making, recruiting capability, employee engagement, reputation and productivity.
While the PRI report notes the progress that has been made by investors and businesses towards enhancing gender diversity, such as improving female representation on company boards, the report calls on investors to expand the focus of DEI efforts beyond gender diversity to encompass inclusion, ensuring that different groups in society can access positions with decision-making power, and equity, ensuring that everyone in society enjoys fairness of treatment and outcomes. The report also notes the work still to be done on the diversity front, with more progress needed on gender diversity, and other areas to be considered, such as race and sexual orientation.
Key action areas detailed in the report include Inclusive Corporate Cultures, focused on embedding DEI within a firm and ensuring diverse representation from the board level to the workforce; Inclusive Business Models, incorporating DEI into the design of products and services and across the value chain; and Inclusive Societies, entailing working to influence relevant policy levels and to realize progress on DEI across industries. Specific actions recommended under these categories include incorporating factors such as workforce and value chain DEI performance into the investment and stewardship processes, along with engagement with policy-makers and stakeholders.
Noting that DEI issues are human rights issues, the PRI urges investors to view human rights with the same urgency as they give to climate issues. Elena Espinoza, Senior Specialist, Human Rights and Social Issues, at the Principles for Responsible Investment said:
“DEI has a clear basis in human rights and is a core tenet of the United Nations Sustainable Development Goals. As such, responsible investors have a duty to embed the Goals in their investment activity, and we’re calling on them to do more on the issue of DEI specifically. With this report, we’re encouraging investors to closely consider the issues at hand – namely, that addressing diversity must also entail addressing equity and inclusion too – in order to affect long-term systemic change. We’ve shown clearly the benefits of addressing systemic DEI issues, including to individuals, firms themselves, the communities most affected and the wider economy and society. Now, we’re asking investors to consider steps they can take to enact meaningful change.”
Click here to view the DEI report.