BackPrivate-equity investor group aims to improve industry’s diversity
The Institutional Limited Partners Association released a ‘road map’ to help private-equity firms and investors find a path to a more diverse and inclusive industry
PremiumA private-equity investor group on Monday introduced new guidelines to improve the industry’s longstanding lack of diversity.
The Institutional Limited Partners Association, a trade group representing over 500 institutions that invest in private equity, released a “road map" of best-practices that both private-equity firms and their investors can use to improve diversity and inclusion, the group said. ILPA is also asking people to submit suggestions on ways to achieve those goals.
The new guidelines are divided into five broad categories: establishing organizational support for diversity efforts, attracting diverse workers, building an inclusive culture, applying diversity to investment strategy and measuring progress on diversity. Each category is accompanied by lists of relevant resources.
The road map is meant to create a “clearinghouse" for ideas that can be used by general partners and LPs across very different levels of development, said Emily Mendell, managing director at ILPA. The group wanted the industry to have access to information about successful practices that can help firms and investors improve their own development.
“What we have found is there are some organizations that are doing really good things in the area of [diversity and inclusion], but not a lot of folks are talking about what they’re doing in great specifics," Ms. Mendell said.
Private equity has long been noted for its relative lack of diversity, even compared with the broader financial-services industry. While many firms and institutional investors have taken steps to address the issue, progress across private equity as a whole has been slow.
For instance, last year a study found that women hold 18 percent of jobs in private equity, the same percentage as they did in 2017. Another study found that, while nearly half of firms have set targets for hiring women and people of color, about 40% miss these targets.
More scrutiny from investors could move the needle, however, as more large institutions take diversity into account in making investment decisions.
Alison Nankivell, vice president of fund investments and global scaling at BDC Capital in Toronto, said it has long been a challenge to find resources like reference documents and templates relating to diversity and inclusion practices in private equity. She hopes that the ILPA road map will make it easier to offer suggestions and to track improvements made by both GPs and LPs.
“The impetus for this ILPA initiative is to create one place to find reference documents, suggestions and tools to make it easier for everybody to up their game," said Ms. Nankivell, who also sits on ILPA’s board of directors and helped develop the road map.
ILPA has previously helped organize investor efforts on such issues as fee transparency, due diligence and fund restructurings, providing advice and templates for LPs to use in negotiations with fund sponsors. The group has focused on diversity and inclusion since 2017, and the next year included measurements of a GP’s ethnic and gender diversity in its model due-diligence questionnaire, Ms. Mendell said.
Among dozens of suggestions, ILPA recommends that firms develop diversity strategies and establish harassment and discrimination policies, overseen by a chief diversity officer. It also offers advice for recruiting job candidates from nontraditional sources and removing bias from the hiring process. It offers advice for establishing family-leave policies and creating groups for diverse employees.
On the investment side, ILPA offers suggestions for establishing investment strategies that encourage diversity and inclusion, and supporting diversity on boards of directors.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
