Unless you’ve been living under a rock (or trying your best to), you won’t have missed the game-changing discussion about gender equality – and, to a lesser extent, diversity – in the workplace that has been thrust under the spotlight by the #MeToo movement.
In case you were wondering, that discussion is alive and well in the asset management world, too.
Yesterday, we reported that workplace diversity was a factor in determining Chicago Teachers’ Pension Fund’s recent $50 million infrastructure allocation, which saw $35 million invested with IFM Investors and $15 million with Ullico Investment Advisors. Those two managers beat heavyweight competition from the Blackstone Group and Brookfield Asset Management.
Now, as Chicago Teachers’ chief investment officer Angela Miller-May made clear, workplace diversity wasn’t the determining factor in the selection process. But it played a role that Miller-May presumably felt strongly enough about to mention to us in conversation.
“Blackstone and Brookfield are still challenged with some diversity issues. And while they’re working on it, they’re just not there yet,” she said.
On the face of it, Miller-May’s statement might appear counterintuitive. After all, the Chicago pension is already invested with both firms through Brookfield’s flagship $14 billion third infrastructure fund and a real estate debt offering from Blackstone. With that in mind, what stopped them now?
“Not to say Blackstone and Brookfield aren’t great firms, as we already partner with them,” she acknowledged. “It was more of just a preference this time.”
That’s a subtle way of saying one of two things: one, that all things being equal on track record, fees, performance, quality of offering and the like, diversity could end up being the clincher; or, if there are already other factors weighing against a certain manager, and they have a perceived diversity deficit on top of those, that could be the final nail in the coffin for a ‘woke’ LP.
For the record, we are not in position (nor is it our intention) to cast judgment on the diversity – or lack thereof – of Blackstone’s and Brookfield’s teams, though we tried our best to bring you information about the team composition of the four managers Chicago Teachers’ evaluated. We’d also encourage you to read the statements Blackstone and Brookfield issued to us, included in our original story, where both managers underline their commitment to bolstering workplace diversity.
The lesson from the Chicago Teachers’ story is that workplace diversity is no fad; no politically correct ESG issue to pay lip-service to and then do nothing about; but an increasingly important factor for investors.
And so it should be. As one reader, MW Resources principal and founder Michael Whitehouse, commented, there’s “ample evidence [that] shows [diversity] makes economic sense”. London-based think tank New Finance highlighted in a November survey of 100 investors representing some $8 trillion that two-thirds of respondents mention diversity in their annual reports with the goal to improve “decision-making”.
There are myriad reasons why workplace diversity is important, but the latter is worth dwelling on. As QIC global infrastructure co-founder Matina Papathanasiou told us in February, “in the current environment, with technology disruption and all that’s going on politically and economically – it’s a much more complex environment and you want to have diversity of views”.
And if you need a reminder of how harmful lack of diversity can be, here’s how Martin Stanley, Macquarie Infrastructure and Real Assets’ global head, ended our March keynote interview: “If you look at the GFC – and this is a simplistic view – it was a crisis concocted by white, Anglo-Saxon males of the same age sitting around the same tables, talking about the same data and coming up with the same conclusions. You want diverse teams with alternative backgrounds and different perspectives. If you miss one of those items, you run into trouble.”
Ignore that at your own peril.