Amidst an industry-wide push for transparency on diversity figures, the CFA Institute has developed a new code to help organizations track their progress on diversity, equity, and inclusion.
The initiative is backed by investment professionals including leaders from the Columbia Investment Management Company and the California Public Employees’ Retirement System, who helped design the code as part of the CFA Institute’s DEI Code Working Group.
Expected to launch Thursday, the Diversity, Equity, and Inclusion Code for the Investment Profession in the United States and Canada will ask institutional investors to commit to reporting DEI metrics and progress related to their talent pipelines, talent acquisition process, promotion and retention, leadership, scope of influence, and measure.
The CFA Institute will be the code’s first signatory.
The drafting process for the initiative began in 2020, spearheaded by the DEI Code Working Group, which consists of members of the CFA Institute DEI Steering Committee, DEI practitioners, and investment professionals, including Marlene Timberlake D’Adamo, chief diversity, equity, and inclusion officer at CalPERS, the largest public pension plan in the country, and Kim Lew, chief executive officer at Columbia IMC.
When an organization signs onto the DEI Code, it will be required to complete a reporting framework to measure its progress on diversity, equity, and inclusion over time. The framework includes a questionnaire that asks about the firm’s DEI policies, leadership, talent acquisition and pipeline initiatives. It also includes a diversity data requirement, with signatories held responsible for reporting the numbers and percentages of diverse employees in their organizations.
“We’re going to be asking firms to self-report, and then we’re going to be giving them a reflection of how we see that work progressing,” Sarah Maynard, global head of external diversity, equity and inclusion at CFA Institute, said in a Tuesday press briefing.
Specifically, the framework asks signatories to list numbers and percentages pertaining to employee gender, race, neurodiversity, veteran status, and disability status. The DEI Code’s definition of diversity also factors in age, ethnicity, socioeconomic status, first-generation college students, mental well-being, citizenship status, religion, and intersectionality, which refers to individuals who identify with more than one marginalized group.
The firm-specific information collected by the CFA Institute will remain confidential, but once enough signatories submit their diversity stats, the CFA Institute will release the aggregate data as a snapshot of the overall industry.
“I refer to data in this space as the new gold,” said Timberlake D’Adamo of CalPERS. “It’s really hard to come by but it’s super valuable if you know how to interpret and read it.”
Signatories will then receive a two-year grace period during which they’ll be required to adopt a DEI policy and statement, develop an established senior leadership and oversight governance process, and produce an implementation plan to integrate DEI into their organizations’ processes and policies. While there’s no established quota or improvement metric that organizations have to meet to remain a signatory, the CFA Institute will provide “resources” to organizations that don’t show much DEI improvement over time.
“We don’t expect anyone is going to get a gold star on day one,” Columbia’s Lew said. “It really is about progress.”