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Two new reports prove the finance sector needs greater gender diversity

Two new reports prove the finance sector needs greater gender diversity

Tina.Freed / 07 Jun 2016

As the go-to place for women to manage their financial services careers and for financial institutions wishing to claim the Gender Dividend, we’ve always recognised and promoted the value of women in the finance industry.

So we’re delighted to see the subject of gender diversity being taken increasingly seriously this year. First we had HM Treasury’s much-needed Women in Finance Charter. And now, two recently published independent reports further help support the case that diverse and inclusive environments produce better outcomes.

On 31 March this year, Morgan Stanley Research published Sustainable & Responsible, a framework for gender diversity in the workplace. The report measures the degree of gender diversity for global companies and proposes a quantitative framework to assess their progress.

Citywire Smart Alpha’s report, Alpha Female, a special report on how far women have got in fund management and how they are performing, meanwhile, looks at the representation and performance of women in fund management.

Diversity impacts company valuations

There are excellent reasons why the finance industry should pay attention to both pieces of research.

Katherine Nixon, Head of Fund Manager Research at Citywire, says, “The shortage of female fund managers means investors are missing out on the skills and expertise that women can bring.” And Morgan Stanley believe that, “gender diversity in the corporate workforce can impact company valuation through increased employee productivity, greater innovation, more customers, higher talent retention, and better risk management”.

Indeed, Morgan Stanley state that evidence and incentives are building for investors to consider a company’s gender diversity in their investment decisions. The reasons they cite include:

  • Gender diversity/equality is a growing social issue that continues to gain global attention.
  • There can be negative social and macro economic implications for companies that neglect gender diversity issues, including regulatory consequences.
  • According to academic research, gender diversity is associated with better business outcomes.
  • Companies view gender diversity as a competitive advantage, and those with greater gender diversity can outperform in terms of employee productivity, customers, talent retention, and risk management.
  • Recent improvements in the amount and quality of ESG disclosures empower quantitative analysis on gender diversity.

“Only 7% of funds managed by women”

Any doubts that the industry still has a long way to go to even the gender balance have been quashed by the Citywire research.

Of Citywire’s total global database of 15,229 active fund managers, just 1,562 are female. And between them, their entire database manages 23,810 funds, of which only 1,713 (a meagre 7%) are run exclusively by women.

But while the statistics paint a less than positive picture, some fund management groups appear to be making considerably more progress in their efforts to even out the gender balance. According to Citywire, the groups with the highest percentage of female fund managers are:

  • Natixis Global Asset Management (22%)
  • HSBC Global Asset Management (21%)
  • Amundi Asset Management (18%)
  • JP Morgan Asset Management (18%)
  • BMO Asset Management (17%)

Female fund managers are top performers

When it comes to performance, there’s little to separate male and female fund managers. Of the fund managers on the Citywire database, 2.4% of male and 1.9% of female fund managers have achieved a top Citywire AAA rating. (If there were seven more women with the rating, they would be equal.)

And of the fund managers beating the average in the top five sectors, women are ahead in two, men ahead in two, and they are equal in the fifth.

What can be done to improve the gender balance?

So how can financial sector companies improve their gender diversity and position themselves to benefit from it?

In their report, Morgan Stanley propose a quantitative framework for scoring companies on gender diversity on the basis of three elements:

  • Gender equality in the workplace
  • Existence of company policies conducive to gender diversity
  • Installment of programs accommodating the needs of female employees

They suggest that management can:

  • Establish company policies and procedures that ensure only job qualifications such as skills and experience are used for HR decisions and eliminate discrimination based on gender.
  • Establish company policies and benefits that provide support for the particular health and childcare needs of women and working parents
  • Make sure employees, especially managers and supervisors, are trained on identifying gender discrimination and how it can affect the workplace and business outcomes.
  • Design programs that promote access to development opportunities for all, including women.
  • Make senior management, and ultimately the board of directors, responsible for setting and maintaining appropriate policies as well as monitoring of their implementation; create incentives, up to and including compensation, for senior management to do so.
  • Maintain clear metrics, records, and targets/objectives on diversity with respect to recruitment, training, pay, and advancement.
  • Consider the cultural context of different locations of operations in local policies.
  • Support external opportunities to influence the diversity that impacts the company, such as promoting education and training of the skill set needed for the sector from an early age, inclusive of women.

Sign the Women in Finance Charter

Financial services firms who are genuinely committed to seeing change can also join other companies, including E2W, in signing the Women in Finance Charter – and formally commit to implement four key recommendations. To sign the charter, visit www.womeninfinance.org.uk

 


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