Accelerating the Diversity Flywheel in 2022 and Beyond

by Emily Chew and Jade Huang, Calvert Research and Management 

Every year, the message becomes clearer. Diversity is just good for businesses that embrace it – and bad for those that don’t.

By now, many companies understand that a diverse workforce can enhance innovation and in turn profitability. Many are also realizing the reverse is also true. As research indicates, companies with less diversity tends to correlate with those that may underperform. One recent study from McKinsey & Co. found companies with executive teams in the top quartile for gender diversity were 25% more likely to have above-average profitability than companies in the bottom quartile.

Moreover, the same McKinsey study found companies in the bottom quartile for both gender and ethnic diversity to be 27% less likely to achieve above-average profitability. This may be because such firms face a number of business risks, including acquiring and retaining the best talent, and creating an environment where that talent can achieve optimal productivity.

Women Move Markets - Calvert’s own research, available on our website (www.calvert.com), shows that the number of women in named executive officer (NEO) positions has meaningful correlation with equity performance, as does the number of women on corporate boards. We found that U.S. large-cap companies with at least four women on the board outperformed the most when compared to those with less than four women board members. For the U.S. small-cap equity market and non-U.S. equity markets, we found the current tipping point for a positive performance correlation to be at least two women on corporate boards.

In short, companies with a more diverse workforce, including more women in executive roles and in the board room, stand to benefit from a range of financial, social and reputational advantages. 

Read Emily and Jade's full article here - https://greenmoney.com/accelerating-the-diversity-flywheel-in-2022-and-beyond/

Emily Chew is the executive VP and chief responsible investment officer of Calvert Research and Management, And Jade Huang is a VP and director of applied responsible investment solutions for Calvert Research and Management 

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