Consulting firm NEPC is opening up about the work it still needs to do on diversity and inclusion.
The Boston-based investment consultant on Tuesday published its first annual Diversity, Equity, and Inclusion Progress Report, grading its progress on publicly-stated DEI goals such as increasing staff diversity and working with more women- and minority-led asset managers.
While gender diversity has advanced in the firm’s upper-level positions, NEPC revealed it still struggles with low rates of career advancement and high turnover numbers for minority employees.
“We’re going to tell you the good, the bad, and the ugly,” Sam Austin, chair of NEPC’s diversity and inclusion board, said in a phone interview. “We’re going to be honest about holding a mirror up to ourselves and putting in place policies that will help us to improve that.”
In 2020, over half of the new hires at NEPC were diverse based on gender, race, and ethnicity, according to the report. And over the past 10 years, the firm has more than doubled its diverse ownership. NEPC has also increased meetings with diverse managers by 70 percent since last year as part of a 2019 initiative focused on increasing firm exposure to diverse managers.
But certain DEI initiatives have proven more successful than others. At NEPC, career advancement rates for women are higher than those for racial and ethnic minorities. According to the report, 30 percent of partners and principals were women in 2020, not far off the 36 percent gender diversity rate of the overall employee population. But racial and ethnic diversity at senior levels fell at 10.8 percent, well beneath the employee population level of 24 percent.
While NEPC employees that identify as Black/African American and Asian-American Pacific Islander are represented at higher levels compared to the overall asset management industry, people of Hispanic/Latinx heritage are under-represented within in the firm, making up 5 percent of employees, according to the report. NEPC employees who identify as female are also slightly underrepresented when compared to the overall industry, a disparity that NEPC attributed to “higher turnovers in 2019 and few hires in 2020.”
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The report also details policies to improve diversity and inclusion, including a DEI network, inclusion training, and a women’s forum. NEPC makes it clear that these initiatives are works in progress: The diverse manager policy, for example, has yet to achieve NEPC’s stated goal of 10 percent diverse firms on its recommendation list for public market managers. Meanwhile a new program aimed at recruiting diverse MBA candidates for internships has not yet seen results.
Austin told II that the firm hopes the study will set an industry standard for DEI initiatives akin to ESG standards, which have gained in popularity in recent years.
“The lack of diversity and equitable practices in the finance industry is the result of decades of persistent actions — or lack thereof — by leaders, board members, and companies,” Chenae Edwards, partner and co-chair of NEPC’s diversity, equity and inclusion network, said in a press release on the report. “The moment requires similarly persistent actions from all stakeholders to reset our industry’s foundation to reflect the rich diversity of the global marketplace.”