RI Video Series [8]: Diversity, Equity, and Inclusion

Diversity, Equity, and Inclusion (DEI) has become a mainstream topic, with industries across the board seeking to leverage their resources to improve DEI metrics within their organizations and across their communities. But DEI can look very different for one organization compared to the next. FEG Senior Vice President of Institutional Services, Quincy Brown, explains the process of implementing DEI within the investment portfolio to improve both impact and outcomes.

Over the past year, Diversity, Equity, and Inclusion or DEI has become a headline topic for nearly every industry, with organizations considering DEI implementation in everything from internal practices to investment processes. Asset owners are looking specifically for ways to make an impact, and improve racial and gender equity through their investment portfolios. For example, investing in minority asset managers or impact strategies targeting economic growth through job creation.

The process of aligning your mission and values with DEI is a journey that can look different for each organization. The process we follow at FEG is fairly straightforward. First, we start with setting objectives, essentially, your investment objectives should reflect the mission of your organization. In our experience, finding common ground among the investment committee, staff, and board around DEI criteria is paramount to ensuring buy-in. Having a trusted partner like FEG through this leg of journey can be invaluable for additional support, guidance, and best practices on how to navigate these sometimes difficult conversations.

There's no standard definition, so we at FEG set a starting threshold at 40% or more composition of at least: firm ownership, firm leadership, or strategy management. This is across diverse dimensions such as women, BIPOC, which is an acronym for black indigenous people of color, LGBTQ+ individuals, veterans, and people with disabilities. Your criteria may differ, so we survey key stakeholders and conduct a debriefing to help organizations identify areas of shared interest.

The second step is develop a plan that includes a timeline for implementation and a clear strategy of goals. FEG can help assess DEI key performance indicators or KPIs. Next, we help you execute the plan which may include full or partial reconstruction, seeking out impact solution investment opportunities, taking an ad hoc approach and investing in new opportunities as they arise, or implementing a Rooney Rule, which at least one strategy in any investment search includes a DEI component.

After the plan has been implemented, we can help you monitor the portfolio's progress, sending detailed reports on progress and working with you to tweak the plan as needed. In our experience, making incremental changes over time can substantially increase the overall level of diversity in the portfolio.

Crafting a portfolio that reflects your organization's values will not only help further investment goals but can also help accelerate gender and racial parity in your community, as well as the world.

Like any journey, having the right tools and guidance will make this process easier, and FEG is here to help. If you're interested in learning more about our practices for including DEI in your organization's investment approach, check out our website where we've made a number of resources available.