According to a 2015 McKinsey report, of the largest publicly traded companies in the world, those with a diverse workforce are 35% more likely to earn higher profits than the average corporation. In addition, a Morningstar Inc. study published last year revealed that mixed-gender investment teams “consistently outperform male-only managers.”
With so much data in support of workplace diversity, activist investors are now pushing corporations to release employment data to make better decisions in investing. According to a recent Bloomberg article, Arjuna Capital, Trillium Asset Management and Pax World Management will target banking organizations including “Goldman Sachs Group Inc., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co.” in 2017 and propose the release of their diversity employment data.
“Given the financial benefits of diverse leadership teams, the female talent gap is simply bad for business,” Natasha Lamb, Arjuna’s director of equity research and shareholder engagement, said in an email. “Moving women up the ladder is critical, and companies can start by addressing structural barriers, including the gender pay gap.
All three investment organizations are familiar with the process of proposals promoting diversity within large corporations:
- Arjuna Capital, based in Boston, MA has filed proposals with Bank of America, Wells Fargo, American Express Co. and Citigroup. The company plans to file a similar proposal at JPMorgan Chase & Co soon. In addition Arjuna "filed proposals at nine technology companies, including Apple and Intel, asking them to disclose their gender pay gaps. Seven agreed to make their gaps public and take steps to close them.”
- Pax World Management, based in Portsmouth, NH oversees about $4 billion in investments. The company “filed five resolutions on gender pay equity this fall, including one at Goldman Sachs and one at Bank of New York Mellon Corp., which was co-filed with Arjuna. Pax said it’s in talks with both companies.”
- Trillium Capital is a $2 billion fund and “has filed resolutions seeking disclosure of data about race and gender at more than half a dozen financial companies, including T. Rowe Price, First Republic Bank, Travelers Cos., Jones Lang LaSalle Inc., PNC Financial Services Group Inc., Aflac Inc. and Fifth Third Bancorp.”
Although a new administration may not promote diversity as much as the Obama Administration, too many reports positively promoting the concept have created an environment where investors are willing to push organizations towards a more profitable model.