“The actions that are taken by a private equity firm or a general partner can have a ripple effect across the industry,” Jeffrey Siminoff, senior vice president of RFK Human Rights, said during a virtual panel focused on private equity firms’ role in creating inclusive workplaces. “It’s a whole ecosystem that, if it’s operating well and with intention around these issues, can have a dramatic impact.”
The top advice shared by Siminoff and other panelists was for investors to ask private equity firms for metrics related to diversity and inclusion across their portfolio companies. Pensions and other limited partners (LPs) who back private equity fund managers should request the information directly from the firms they work with, the speakers said.
“I would really encourage the large LPs, the foundations, the endowments to ask these questions of their fund managers: what do your portfolio companies look like, and what do your c-suites look like, and what are you doing about that?” said Gabrielle Sulzberger, strategic advisor at Two Sigma Impact.
As a network of over 300 institutional investors, asset managers, and investment consultants controlling close to $7 trillion in assets under management, RFK Compass Investor Program participants could have a meaningful impact if they sought diversity and inclusion data from the fund managers they work with. They might also generate better returns for their portfolios, Sulzberger said.
Another benefit of providing the data is that it can spur more accountability. Siminoff pointed to the example of the legal industry, which has been tracking racial and gender diversity in the ranks of partners, associates, and other lawyers since 1993. The National Association for Law Placement, which publishes the data, reported in February that less than 4 percent of all law firm partners are women of color—a figure which it called “abysmally low.”
Still, by making such metrics public, companies within industries can benchmark their own performance and make it easier for employees to see if their workplaces are living up to diversity pledges they made in the wake of last year’s protests. The disclosures can also help with recruiting, said Nikki Lewis Simon, shareholder and chief diversity, equity, and inclusion officer at law firm Greenberg Traurig.
“The talent wants to understand, ‘am I going to a place where I am going to be valued? And how do I know that? I know that by the data. I know that by understanding that I am not just one, or the only [person] in a particular area,’” Simon said.
Then there’s the need to put sustained pressure on companies to keep their word and honor the diversity pledges they’ve made over the past year.
“We have to keep pressure on so this moment becomes a movement,” said Ursula Burns, senior advisor at Teneo and former chair and CEO of the Xerox Corporation.
Burns added that the moral imperative to act is, by itself, not enough to spur change: “The moral imperative has done absolutely nothing … We’ve been living the moral imperative since slavery.”