CFA’s DEI code could be revolutionary

The CFA Institute’s Diversity Equity and Inclusion Code could result in a fundamental review of practices in some asset owners and managers according to Sarah Maynard, global head of external inclusion and diversity strategies and programs at the institute.

“There are just so many repeat mistakes we see that can be resolved,” Maynard. “They require considerable attention to detail and a change in practice. This is not about an overlay but a fundamental review. For some firms that won’t be major change and for others it will.”

The DEI code, which launched for consultation in the US and Canada last month and will close in September, is a principle-based code seeking to accelerate a change in behaviour.

“You don’t achieve change without disruption and discomfort and we are asking managers to embrace that,” she says.

The code is rooted in six principles: pipeline, talent acquisition, promotion and retention, leadership, influence, and measurement.

It is the culmination of a collaboration between CFA Institute and a working group of industry leaders, including the experimental partners program which included asset owners such as Texas Teachers, BCIMCo, and Australia’s VFMC. The partners have chosen up to three of the 20 action points from the CFA guide Driving change: Diversity and inclusion in investment management and have been implementing those in their organisations for the past two years. The full report of the experimental partners findings is due to come out later this year.

The DEI code is designed to foster a metrics-based commitment from signatories with the principles underpinned by the implementation guidance and reporting framework which requires annual reporting. The CFA Institute plans to publicly report on industry-level statistics.

While the code includes high level principles, Maynard says the differentiator is the level of detailed guidance that supports the principles. For example it outlines for firms at the beginning of the process what their first steps should be; and outlines how to be more inclusive even if a firm is not yet diverse.

“What is interesting to me is trying to take this out of its silo,” Maynard says. “A lot of this is good management, good practice and everybody benefits.”

She also points out that the code was written by a working group made up of investment professionals.

“We had a lot of great support from DEI experts within those firms and others, it’s been a huge collaborative effort. But owning it in the business is a critical piece. Part of the way the industry is moving is the real leaders see it as a business priority and the right thing to do as they increasingly talk about purpose and values.”