Voices of RPIA
16
In Our Work
more than ever, there is a strong correlation between a company’s level of diversity and its likelihood of financially outperforming its industry peers. According to this report, “companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile—up from 21% in 2017 and 15% in 2014.” These reports and others highlight how a corporation’s willingness and ability to increase diversity & inclusion indicate how its overall business affairs are managed and how it can have a meaningful impact on profitability. 2. As corporate investors, how can RPIA address this issue? Aaron Young: As corporate investors, we recognize that there is a strong business case for workplace diversity. As a firm, we understand that promoting a more diverse, equitable, and inclusive workplace will make us a better organization. Ultimately, we also believe we should apply this thinking to the companies in which we invest. With this issue in mind, we aligned ourselves with the UN SDG 5 (Gender Equality), and our goal is to formulate a model that assesses how well companies are addressing this issue through both an internal scoring system and engagement with issuers. Our scoring system aims to quantify the material aspects of gender diversity in the workplace and goes beyond just considering board and workforce composition. By isolating material disclosures, we selected four key pillars as our focus: Labor Force Participation, Upwards Mobility, Leadership, and Equal Pay. 3. Why these pillars? What do they tell us? ON: We selected these pillars because we believed they were quantifiable, impactful, and would facilitate meaningful engagement with our issuers.
Ozioma Nwankwo
invaluable and straightforward because the natural first step to understanding and closing the inequality gap between men and women in the workplace is knowing the current rate of workforce engagement women receive. Scoring a company here will tell us how much of a participation gap exists within their workforce. The second pillar is Upwards Mobility. This metric depicts the change in the percentage of women in roles at the different levels of the corporate structure. A company’s score here will indicate the rate at which women are being promoted within the workplace, which demonstrates whether women are given the same opportunities for career advancement as their male peers. Third, we have Women in Leadership. Our initial research on this pillar focused on board composition (i.e., the number of women vs. men holding board seats). Because we have seen a great deal of social change, these senior roles, which have arguably more visibility, are increasingly occupied by women. Though this is noteworthy progress, it is unfortunately not realized across all levels of the corporate structure. This pillar takes into account the percentage of women at each level of the corporate structure. The data shows that women are still over-represented in entry- level roles, and as we move up the corporate structure, the number of women holding positions of authority and influence dwindles.
First, Labor Force Participation. This pillar is
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