In honor of International Women’s Day, we’re looking at a recent report from the UN-sponsored Principles for Responsible Investment (PRI) calling on investors to improve diversity, equity, and inclusion (DEI) in their organizations and portfolios. Specifically, the report outlines the importance of going beyond merely tracking diverse representation in an organization, to embracing equity and inclusion in order to make a more meaningful impact on society.i This means organizations should not only aim for representation of individuals from diverse backgrounds (diversity), but they should also support equal access to opportunities (equity), as well as engagement across groups throughout the workforce and company culture (inclusion).ii
The report asks investors to act on DEI initiatives in three primary areas:
- Inclusive corporate cultures: ensuring a workforce that represents the society in which the company operates
- Inclusive business models: ensuring DEI is addressed in products and services, supply chains, and local communities
- Inclusive societies: addressing issues that disproportionately affect disadvantaged groups in societyiii
Leading by Example: Companies Need to Step Up and Demonstrate Action
This call to investors is a strong indicator for organizations that they will need to show progress on DEI performance within their operations, value chain, and local communities. As a start, companies can uncover how they are doing on these issues by actively identifying where they currently stand on relevant areas needing improvement, measuring changes, and reporting on their progress across their operational footprints.
Many companies supporting the principles of DEI, and gender diversity specifically, are communicating their progress on how they are applying those principles within their organizations, across their offerings, and throughout their communities.
For example, Mastercard shares in its sustainability reporting that it has embedded diversity in its overarching business strategy and engages in initiatives across the three pillars outlined by PRI. The organization focuses on improving diverse recruitment, career advancement, and pay equity.iv Additionally, Mastercard provides employee representation data in its corporate sustainability reports and uses that data to inform decision making and further areas of improvement.v At the community level, the company supports programs for women’s financial inclusion and STEM education.vi
Another example is The Coca-Cola Company, which aims to achieve 50% women leadership by 2030.vii To support its commitment to its goals, the company details the degree of female involvement across job levels and engages in training to support equity and inclusion in its corporate culture.viii Further, the company supports DEI in its supply chain by tracking procurement from diverse-owned businesses.ix
In the bond market over the last few years, we’ve also seen issuers prioritize lending to organizations that support women in leadership positions, as well as women-owned and women-led businesses. A few examples are the CIBC Women in Leadership Bond in Canada, the Fondo Especial para Financiamientos Agropecuarios Social Bond with a Gender Focus in Mexico, and, most recently, the US$32 million Asian Development Bank gender bond in Kazakhstan. The proposed reporting metrics for these bonds include year-over-year percentage change in leadership,x number of women benefitting, number of credits to women-led projects, and jobs sustained by women-led projects.xi
Communicating Progress on DEI: What Companies Should Know
With the goals of advancing women’s socio-economic status and their access to essential services, it is critical for companies and issuers to report on the impact of these investments on society and track progress over time. Many companies report on their efforts in terms of representation, number of beneficiaries, or dollars provided to an initiative.
Although this practice serves as a starting point, it provides limited insight into the impacts that those activities are generating. As such, companies need to use standardized approaches to measure impacts and contextualize their efforts to understand their progress and contribution to global goals.
For companies working to achieve these goals, there are ESG services that measure the impacts from their activities (including DEI efforts) and report on the results. Our own process supports a four-pillar approach which may help organizations to improve gender diversity and impacts from their initiatives.
- Identifying areas of impact across their organization, value chain, and community. Identification involves gathering data from within your organization, its suppliers and distributors, and across its initiatives to better understand the current picture.
- Measuring the impact of an activity and comparing it to local benchmarks to contextualize the impacts. Measurement allows organizations to understand success stories and areas of improvement.
- Reporting on the results, allowing organizations to communicate with stakeholders their success stories, progress, and commitment to improve on metrics over time.
- Engaging with employees, suppliers, and community members to develop policies, seek feedback, and improve results.
In line with PRI’s call to investors to meaningfully influence progress, organizations should look beyond diverse representation to create further positive impacts and communicate those results by quantifying them across their footprint.
The corporate world has made strides in diversity, equity, and inclusion in recent years. As investors take up this new push to act from the PRI, and other stakeholders raise their voices, we can look forward to further progress on the path to an equitable and inclusive society. On International Women’s Day, let’s all remember that while the goal may seem distant, every step takes us closer.
Photo credit: #WOCinTechChat
i Principles for Responsible Investment (PRI), “Diversity, Equity and Inclusion: Key Action Areas for Investors” (2022), at https://www.unpri.org/human-rights/diversity-equity-and-inclusion-key-action-areas-for-investors/9393.article
iv Mastercard, “Our Commitment”, at https://www.mastercard.ca/en-ca/vision/who-we-are/diversity-inclusion.html
v Mastercard, “Corporate Sustainability Report 2020”, (2020), at https://www.mastercard.us/content/dam/public/mastercardcom/na/global-site/documents/mastercard-sustainability-report-2020.pdf
vi Mastercard, “Give me 5 Drives Gender Diversity Around the World” at https://www.mastercard.us/en-us/vision/who-we-are/careers/women-empowerment-at-mastercard.html
vii Coca-Cola, “2020 Business, Environment, Social and Governance Report, (2020), at https://www.coca-colacompany.com/content/dam/journey/us/en/reports/coca-cola-business-environmental-social-governance-report-2020.pdf#page=50
x Sustainalytics, “CIBC Women in Leadership Bond” (2018), at https://www.sustainalytics.com/corporate-solutions/sustainable-finance-and-lending/published-projects/project/cibc/cibc-women-in-leadership-bond-second-party-opinion/cibc-wil-bond-spo-revisedfinal091718-pdf
xi Sustainalytics, “FEFA Social Bond with a Gender Focus” (2020) at https://www.sustainalytics.com/corporate-solutions/sustainable-finance-and-lending/published-projects/project/fondo-especial-para-financiamientos-agropecuarios/fefa-social-bond-with-a-gender-focus-framework-second-party-opinion-english/fefa-social-bond-with-a-gender-focus-framework-second-party-opinion-pdf
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