Message from Europe: Asset managers called on diversity

Campaign for Better Governance seeks to boost D&I in the investment management industry.

Last week, the core European titles at Last Word Media, part of Bonhill the parent of InvestmentNews and ESG Clarity, launched a Campaign for Better Governance in the investment industry.  

This calls for groups to look inward and question their own values and processes, as they do with the companies they invest in.   

At a time of unprecedented interest in ESG-oriented investing and following a period when companies’ treatment of all their stakeholders  amid the global pandemic has been under intense scrutiny, we believe the investment sector should be practicing what it preaches and ensuring that, alongside the businesses to which it allocates capital, its own governance is at the highest possible level.  

Numerous reports and news articles here in the UK have made us have a good think about where groups should be shining a spotlight back on themselves and question whether they really are practising what they preach.   


Recently, ESG Clarity in Europe covered the final Hampton-Alexander Review – a five year government initiative looking at the number of women included on boards listed in the FTSE All-Share. The conclusion was that while significant progress had been made, with the number of women on FTSE boards increasing by 50% over the past five years, there are still “a few serious laggards” where diversity is limited.  It was emphasized there is still “much work to be done” in terms of ensuring more women have positions on executive committees within the FTSE.   

For example, two FTSE 250 constituents, and part of the investment management space in the UK, Liontrust and AJ Bell, were flagged for having all-male executive committees.   

Commenting on the FTSE 250 as a whole, the report said: “The all-male executive committees — which surprisingly are not that rare — have reduced this year to 24, from 38 in 2019. However, too many of these are either taking a very long time to find or decide upon the merits of women in their senior-most roles, or seemingly unprepared to change the status quo.”  

A reader got in touch with ESG Clarity Europe to highlight their surprise with the lack of gender equality at the senior level at Liontrust, when the asset manager has one of the largest sustainable fund ranges, with almost $13 billion in assets under management, run by an all-male lead portfolio management team. We should note the team employs the insights of a five-person external advisory committee, which includes two women.   

Liontrust responded to ESG Clarity‘s request for comment: “Liontrust is committed to diversity across the company as we believe this enhances the performance of businesses and leads to better decision making. We are active members of the 30% Club investor group and ensure there is a good gender mix of candidates in all recruitment, removing all-male recruitment processes, providing training to staff on diversity, reviewing our policies to remove unconscious bias and encourage diversity, and offering flexible maternity, paternity and shared parental leave, and flexible working policies to help support staff with children.” 

However, the group also noted its current gender balance is broadly 70:30 male:female with men predominating in more senior positions and was “actively seeking to address this” with explicit gender diversity and development of talented and diverse employees through internship programmes and mentoring.  

Meanwhile, a spokesperson for AJ Bell said the average tenure on its executive team is more than 10 years and added: “We recognize the importance of diversity and that is a priority as the leadership of the business grows.”   

They also said the investment team consider a fund manager’s approach to diversity as “part of our overall evaluation of their processes and philosophy”. 


Inciting further cause for concern, the UK investment industry’s trade body has also faced criticism; the Investment Association recently announced it is planning to issue for the first time an ‘amber-top’ warning to FTSE 350 companies that do not disclose either the ethnic diversity of their board, or a credible action plan to achieve having at least one director from an ethnic minority background by 2021. This comes at a time when the IA itself has no ethnic diversity on its 17-member board, as highlighted by an article in The Times.  

The IA acknowledged it needed to address its own board composition but highlighted board members are chosen from existing CEOs in the industry so efforts are focused on improving diversity within the industry as a whole. The trade body has launched a mentoring programme for senior black industry leaders, and has committed to appointing at least one racially and ethnically diverse board member by 2024. 

As we wrote in the editors’ statement for the Campaign for Better Governance, the ‘G’ in ‘ESG’ is often overlooked but as companies with strong might and influence over big global brands, firms within the asset management space really do need to ensure they are walking the walk, not just talking the talk.   

Companies are being called out for their lack of diversity, there is no longer anywhere to hide – particularly with gender pay gap reporting potentially looming this April. If action isn’t taken by all groups in this sector then they risk losing employees, customers and investors, and not just because they will lose out to competition due to lack of innovation, but because stakeholders will vote with their feet.   

Natalie Kenway is editor of ESG Clarity in Europe.


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...