Last week we noted that diversity is now quickly becoming an investment metric. This week we continue along that trend, this time covering recent comments from Morgan Stanley by way of Market Watch. Apparently the company is considering using a company’s workplace diversity numbers when it is analyzing a corporations potential financial returns.
The reason behind the possible push is the considerable data suggesting that the more diversity a corporation has the better their revenue will be. “According to a study from the Peterson Institute for International Economics, a profitable company where 30% of its top management positions are held by women could see a boost of 15% to its earnings compared with a company with no women in executive roles.” In addition, “MSCI Research..has data showing that companies with strong female leadership generate a return on equity of 10.1% a year, compared with 7.4% returns for those without, though it added that “we couldn’t establish causality.””
Still a new concept for investors, the idea that the gender and ethnicity of a company could effect its equity is taking hold. For those looking for more research on the idea, definitely check out the article below. Also, if you’re looking to invest your own money in the top diverse businesses, according to Morgan Stanley, the financial sector has “the greatest amount of gender diversity, with an equal 50-50 breakdown between men and women.”
As the diversity investment world grows, we will stay right here to keep you informed.