LPF signs Asset Owner Diversity Charter

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We’re delighted to be part of a group of UK asset owners who are inviting others to sign a new Diversity Charter to tackle a lack of diversity across the fund management industry.

The Charter has been devised by some of the largest pension schemes in the UK, forming a group called the Asset Owner Diversity Working Group, Co-chaired by our Portfolio David Hickey and Helen Price from Brunel Pension Partnership. This includes representatives from Brunel, Lothian Pension Fund, Nest, RPMI Railpen, West Midlands Pension Fund and London CIV. Together they represent more than £125 billion assets under management. 

Fund management suffers from a severe lack of diversity. The Diversity Charter offers a toolkit for analysing how asset managers are performing on diversity and inclusion, and where they can improve.

By signing up to the Asset Owner Diversity Charter, signatories are committing to take account of diversity and inclusion records from fund managers when choosing new partners. Diversity questions will form part of the overall assessment scores for each bidder, meaning fund managers wanting to work with these clients will have to disclose information and demonstrate real devotion on how they are tackling diversity and inclusion within their workforce. 

Signatories also commit to including diversity as part of ongoing manager monitoring, and a questionnaire will be provided to managers annually for completion. A key aim of the group was to create standardisation to improve disclosure. The charter questionnaire has been developed to be progressive and equip signatories to hold firms to account for ongoing progress. It goes beyond asking about the strategic approach, to identify how managers look at diversity and inclusion across five key areas: industry perception; recruitment; culture; promotion and leadership.

Our Portfolio Manager David Hickey explains:
“It is reasonable for pension scheme members to expect the money in the scheme to be run by a cross section of investment managers that reflect the diversity in the scheme. At the moment this is not the case across Pension schemes in the UK. Fund management front offices are currently dominated by white men, and we are not benefitting from the talent pools available in the populations of white women, Asian men, black women – the dominance of a single group suggests a problem with hiring and with culture.

“We are hoping that the diversity charter will allow us to look under the bonnet of firms’ policies and practices and find out what is causing the kinks in the hosepipe, which are particularly extreme with regards to black talent.”

Other signatories outside of the initial steering group, have already pre-declared their support and have signed the Diversity Charter. The group representing £1.08 trillion AUM includes: Avon Pension Fund, Barnett-Waddingham, Church of England Pension Board, Coal Pension Trustees Investment, Cornwall Pension Fund, Environment Agency Pension Fund, LCP, LGPS Central Limited, Local Pensions Partnership Investments Ltd, Redington and Willis Towers Watson.

The charter is a multi-year project and the questionnaire will be refined over time to build in findings from leading initiatives such as the Socio-Economic Taskforce. A progress report will be produced a year from launch to highlight developing best practice and to equip signatories with ongoing engagement. The charter, supporting documents and details on how to sign up are available on the diversity project website, www.diversityproject.com/assetownerdiversitycharter.

Published: 2nd August 2021