A Wide Range of Reasons to Focus on I&D
We’ve been making the case for years that pursuing policies that increase diversity and inclusion are valuable strategies to improve a company’s bottom line. Diverse companies are more creative and they are better at understanding increasingly diverse markets. But even companies that don’t fully appreciate the organizational benefits of diversity and inclusion often pursue those goals because they think – often correctly – that those outside their organization value diversity and inclusion. Typically they’re thinking of consumers.
These companies feel diversity and inclusion efforts fit into a broader branding and marketing effort. And they do! But others are paying attention too.
Investors Value I&D
While companies focused on I&D from a branding perspective may be overlooking the very real value that a diverse and inclusive workplace has for company performance, they aren’t wrong that many consumers want to see those values exhibited by the companies they spend their money with.
But it’s not just consumers companies need to think about in this respect. Increasingly, institutional investors are looking for companies to embrace diversity and inclusion as well, and that potentially represents a lot of money.
“As protests broke out across the country this summer, many companies issued statements committing to address racial equality. Now, major institutional investors are looking for companies to put their words into action on race and other key social issues,” says a press release from The Conference Board, which heard from institutional investors representing over $12 trillion – yes, with a “t” – in assets under management, along with corporate leaders from the S&P 500.
Looking for Action: Now!
According to its recent report, Insights for Investors and Companies in Addressing Today's Social Issues, investors view boards as being in the driver’s seat when it comes to developing strategies to address racial, health, and economic inequality. But investors also expect action now. Specifically, they expect companies to increase diversity in their boardrooms, provide more disclosure on workforce equality, and address social issues in a way that aligns with their business strategies. Companies that fall short may face shareholder votes against directors sooner rather than later.
“Unlike the Dot-com collapse, Enron, and the 2008 financial crisis, which pitted investors and companies against each other, the current crises provide an opportunity for a new playbook to be written,” said Paul Washington, Executive Director of the Conference Board ESG Center, in a news release. “Institutional investors and corporations alike recognize that more is expected of them, and there is strong agreement on the key social issues that need to be addressed and ways in which companies can have an impact. Even in our polarized environment, this provides a unique opportunity for the broader business community to work in concert to address some of society’s biggest challenges.”
Companies pursue diversity and inclusion efforts for a number of reasons. Those that truly understand the benefits do so to improve business performance. Others may do so to portray a certain image to consumers. But increasingly, large investors are expecting companies they invest in to embrace those values, and they’re speaking with their considerable dollars.
For a wide range of reasons, there has never been a better time to be inclusive!
Inclusion: The New Competitive Business Advantage
Are you tired of workplace diversity training that does not link to business? Are you tired of tactics that don’t drive business results? InclusionINC has inclusion training solutions and strategic consulting that link inclusion to employee engagement, productivity, innovation and retention, moving inclusion beyond tactics to a critical business strategy.