As any change management aficionado will tell you, the ability to define a problem is critical to solving it. In order to truly embrace diversity and inclusion, an investment firm must first decide what a diverse and inclusive workplace means to them and – crucially – why it is important.

As Wol Kolade, managing partner of Livingbridge and co-founder of the 10,000 Black Interns initiative, says: “If you don’t understand why this matters you may as well not bother. To make any kind of difference, D&I has to be genuinely and deeply entrenched in your organisation and in your culture.”

For Esther Peiner, co-head of infrastructure in Europe at Partners Group, the answer is simple: “The assets we invest in have an essential and lasting role to play in society. If our investment decisions are taken by a small subset of that society, we run the risk of blind spots. Having diverse voices around the table is vital to ensuring our infrastructure remains profitable and valuable.”

There is a growing understanding that retaining a diverse workforce leads to better performance. “There is a mountain of research that shows that diverse organisations perform better,” says Nuveen CEO Jose Minaya. “We are also a people business, which means there is a continual battle for talent, and if you are not doing this well, you are not going to be able to attract the very best to your firm.”

Pete Stavros, co-head of Americas private equity at KKR and co-chair of the firm’s inclusion and diversity council, agrees. “We are deeply committed to ensuring we are a firm that develops and retains the best possible talent. Therefore, we have made becoming more diverse and inclusive a strategic priority as we believe that different perspectives will enhance performance.”

Diversity is a sweeping term that covers an array of differences. Firms must also define and prioritise what forms of diversity their programmes will address. Gender has typically been the go-to starting place. “With gender you were in effect promoting your sister, cousin or aunt, and that is relatively easy for people to embrace and that helped build momentum behind the issue,” says Kolade. “Ethnicity was harder for people, but by then, the train had already left the station.”

Harder still are the less visible and measurable forms of diversity, including those relating to sexual orientation, socio-economic and educational background, disability and neurodiversity. “It is also important not to inadvertently leave out the majority – the cisgendered, straight, white male – when you talk about diversity,” says Johnathan Medina, who was appointed head of inclusion and diversity at Apax Partners earlier this year. “Diversity is all the visible and less visible things that make us unique.”

Firms must also consider how far reaching their diversity and inclusion ambitions are. Some are prioritising getting their own houses in order before extending the mandate to incorporate underlying assets; others believe the greatest impact they can have involves broader promulgation within the portfolio.

Nuveen has extended its reach to include its wider supply chain. The firm has established an international Supplier Diversity programme to support the growth of women- and diverse-owned businesses.

Meanwhile, although ‘diversity and inclusion’ has become a well-worn phrase, it is important to note that one does not necessarily lead to the other. If diversity means being invited to the party, so the analogy goes, then inclusion means being asked to dance.

“It is not enough to have diversity,” says Sarah Borg-Olivier, chief operating officer at InstarAGF. “You need to have the inclusion piece to actualise it. Creating that inclusive culture is challenging but is crucial to the success of any diversity and inclusion programme.”

Medina agrees: “The truth is that you can bring diversity to a firm all day long, but if people constantly feel ‘othered’, they will ultimately leave. Focusing on an inclusive environment leads to diversity, but it doesn’t always work the other way around.”

For this reason, Apax and KKR are among the firms that favour the term ‘inclusion and diversity’. Emerging markets investor Actis is another. “The two very much go hand in hand,” says head of Actis Energy Fund 5, Lucy Heintz. “But we lead with inclusion because we believe the best way to attract and retain people is to ensure that everyone feels included.”