House Subcommittee on Diversity and Inclusion Releases Investment Firm Diversity Report

Earlier this month, the U.S. House Financial Services Subcommittee on Diversity and Inclusion released a report detailing diversity statistics among the 31 largest investment funds in the United States. The report titled, “Diversity and Inclusion: Holding America’s Largest Investment Firms Accountable” touches on diversity issues in the general workforce at each investment firm, the company’s board of directors, procurement and services providers, asset management, and underwriting procurement. The report also puts forth recommendations on potential legislative proposals to address diversity issues. This is the second report produced by Subcommittee staff; the first, released in February 2020, outlined diversity statistics at the largest banks in the United States.  Regarding board diversity, the report notes that women (28%) and people of color (17.5%) are underrepresented on investment firm boards. The report notes that while after George Floyd’s death some firms “committed to workforce diversity and senior level workforce diversity, very few made commitments to increasing board diversity.” The report recommends that investment firms consider “at least one diverse candidate for all executive positions and board positions when there are openings.” The Subcommittee also held a hearing in conjunction with the release of the report which focused on roadblocks to hiring diverse employees, lack of diversity in the upper management of firms, and the importance of data to assess and correct the current disparities. The Subcommittee discussed several bills as well as draft legislation (not yet introduced by a Member of Congress) including the ‘‘Diverse Investment Advisers Act.” This draft would require SEC-registered companies to consider at least one diverse asset manager when pursuing new asset management services and detail the firm’s data when considering and working with diverse providers.