NEPC, an independent, research-driven investment consulting firms, has launched an Investment Diversity Advisory Council (IDAC) which will convene institutional investors to discuss measurable ways to promote diversity in their own organisations and in their investment decisions.The IDAC will create a forum for the nation’s largest institutional investors to discuss the academic, empirical and business cases that support diverse decision-making; best practices to promote diversity in finance; and data-driven strategies to track progress over time.
“There’s an abundance of evidence to show that investment programs benefit from the different perspectives and ideas that come from a diverse and inclusive workforce,” says Sam Austin, Partner, Chair of NEPC’s Diversity and Inclusion Board, and Co-Chair of the firm’s Diverse Manager Committee. “At NEPC, our goal is to be a clearinghouse for information and ideas on how to improve investment outcomes for our clients and we believe diversity is an important element in improving the sustainability of those outcomes. This open forum will allow us to engage with our clients directly in conversations that help all stakeholders – including our firm – expand our definitions of diversity and continually improve the measurement benchmarks we use to track our collective progress.”
This initiative is a continuation of NEPC’s challenge to the investment industry to embrace and prepare for the ever-changing landscape of investing. The research-driven investment consultant identified diversity and inclusion as one of the three new future fundamentals of investing that will be the largest drivers of future success.
“I was pleased to see NEPC, our investment consultant, create yet another program to sharpen their focus on diversity in the investment industry,” says Sean Bill, Chief Investment Officer at Santa Clara Valley Transportation Authority. “We have a very diverse workforce and Board of Pensions, so the Investment Diversity Advisory Council was something that immediately resonated with our leadership team. We’re looking forward to working with NEPC as we continue to make progress on diversity within our organisation and industry.”
The formation of IDAC is also one of the ways that NEPC is meeting its goals outlined in their Diverse Managers Policy, which was formally announced in 2019. The key goal of this data-driven policy is to ensure that diverse managers represent 10 per cent of managers on NEPC’s focused placement list by 2021. To achieve this goal, NEPC has committed to increasing the number of meetings with diverse firms by 10 percent in 2020 and to providing preliminary feedback within three months of initial contact. Acting as an educational resource to the institutional investor community is an essential component of increasing exposure for diverse managers.
NEPC’s Diverse Manager Committee will lead the sessions and act as an educational resource for investors at various stages of incorporating diversity and inclusion into their investment plans. Outside of the IDAC, the Committee’s primary purpose is to identify highly qualified diverse investment firms – those with significant1 ownership by women and/or underrepresented groups2 – that can best fulfil the unique goals, risk parameters and financial objectives of NEPC’s clients.
The first IDAC forum was held on 5 February, 2020, in Tempe, Arizona as a pilot for the broader initiative. Ten self-selected public fund clients joined NEPC facilitators for a workshop on how to best achieve short- and long-term goals for increasing diversity in boardrooms, vendor lists, workforces and investment manager selection processes. The next forum will be held at NEPC’s annual client conference on 20 and 21 May, 2020 in Boston, Massachusetts.
“Diversity is a key focus area for our organisation, which is why we were thrilled to join the Investment Diversity Advisory Council’s initial workshop,” says Tom Tull, CIO of Employees Retirement System of Texas. “We look forward to working with NEPC in their development of initiatives, education and a roadmap for increasing diversity in the workplace.”
NEPC has over USD32 billion of client assets invested with diverse firms and nearly 40 percent of the firm’s clients are currently utilising diverse managers across public and private equities, hedge funds, private debt and private real estate.
