When considering large companies across the world, diversity of both race and gender is generally low, especially when it comes to senior staff and board members. For example, Women account for only an average of 12 percent of executive teams in the United Kingdom and 16 percent in the United States.
Though this is a complex issue and there are several structural reasons why diversity of race and gender is low, it is argued that companies can perpetuate this problem by maintaining the status quo. For example, hiring managers are more likely to hire employees who remind them of themselves.
In addition to this, it has also be proven that companies with greater racial or gender diversity are more likely to have financial returns above their national industry medians.
It is possible to negatively screen for organisations with low race, gender or other types of diversity; or those that do not have any initiatives in place to increase diversity.
The PRI (Principles for Responsible Investment) has produced useful guidance for investors relating to Diversity, Equality and Inclusion, highlighting 3 particular ‘Action Areas for Investors’; inclusive corporate cultures; inclusive business models; and inclusive societies.