CFA Bids for “More Representative” UK Investment Industry

Signatories to new code must commit to core principles, as association calls for “far more” action on DEI. 

The CFA Institute has launched the Diversity, Equity, and Inclusion Code for the Investment Profession (DEI Code) for the UK with the goal of accelerating change, improving representation and bolstering industry resilience.  

The global association of investment professionals said the code would define the current state of DEI in investment management, establish key principles for firms to implement to “drive improvement from a realistic foundation”, and offer a metrics-based reporting framework to “produce meaningful results”.  

The centrepiece of the code is six metrics-based principles, covering pipeline, talent acquisition, promotion and retention, leadership, influence, and measurement. 

The CFA Institute said the principles are intended to “enable the greater inclusion of wider viewpoints from the best talent”, which will lead to better investment outcomes, better working environments, and a “cycle of positive change for future generations”. 

Speaking at a launch event, Sarah Maynard, Global Senior Head of DEI at the CFA Institute, said the launch the code in the UK reflected some “quite extensive requests, particularly from asset owners”. 

The code is voluntary, but the Institute stressed it is keen to ensure its signatories “demonstrate accountability for their commitment”. An “inclusive investment industry will better serve our diverse society”, it added.  

Ambition and realism 

Launched in February 2022, the CFA’s DEI Code for the US and Canada has increased its number of signatories from 56 organisations to 164. 

Margaret Franklin, President and CEO of the CFA Institute, said the organisation is aiming to build a “more representative and resilient industry” and recognises that “far more needs to be done across all aspects of DEI”. 

She added that the UK initiative recognises that “DEI means different things to different people in different markets”. 

Lindsey Stewart, Director of Investment Stewardship Research at Morningstar Europe, stressed the importance of building frameworks that are “scalable” and “can apply to small and large businesses”. 

Stewart – chair of the seven-person working group which developed the code – said the philosophy behind its development was to be “both ambitious and realistic at the same time”.  

Within two years of signing the DEI Code, organisations must have an established senior leader ownership and oversight governance process, as well as formal and publicly available communications that outlines their DEI strategy, policy, commitments, and high-level objectives. 

Signatories will also require an implementation plan to integrate DEI within the signatory organisation’s people, processes, and policies. 

Stewart said that the group wanted to ensure that the code was “flexible enough to allow for companies to start on a journey and progress”, while also demonstrating and embedding accountability. 

Signatories are “not expected to implement everything all at once”, with adherence to the code being a “long term process”, he added.  

Versions are planned for Australia and New Zealand and in discussion for Singapore. 

While the CFA Institute’s DEI code is voluntary, regulators have been mulling a mandatory framework could see larger firms subject to disclosure rules from 2024.  

Alongside the Prudential Regulation Authority, the FCA is currently consulting on the need to introduce a new regulatory framework to improve D&I in the UK’s financial sector, a move which both regulators argue will deliver better internal governance, decision-making and risk management. 

According to the latest Parker Review, more than 100 of FTSE 250 companies either have no ethnic minority representation on their boards or are unable or unwilling to disclose the data and less than 1% investment managers are black, with only 3% identifying as LGBT+. 

Citywire’s Alpha Female 2023 report said the number of female fund managers in the UK increased to just 12% last year, and women account for just 20% of board seats globally.  

Last year’s Women in Finance Charter annual review also found that female representation in senior management among charter signatories averaged 35%. 

Increasing industry impact 

The code’s signatories will be required to provide an annual confidential progress report to CFA Institute using an accompanying Reporting Framework. This will allow reporting on industry-level statistics once a critical mass of signatories is reached. 

Maynard said that the code had been designed for organisations to “frame complex behavioural issues as they build on their efforts to address DEI challenges present within the investment industry”. 

The DEI Code also requires signatories to amplify the impact of their commitment by making the “economic, business, and moral case for diversity, equity, and inclusion”. 

To encourage participation, Maynard said that the CFA institute will initially reach out to US and Canadian DEI Code signatories with offices in the UK, as well as other organisations that don’t have a relationship with the Institute. 

Leanne Mair, CEO and Founder of gender and racial equity-focused management consultancy Benefactum Consulting, said that the code’s “biggest differentiator” was its “focus on impact over outcomes”, and its support for organisations taking a “first meaningful step” on DEI. The code sits at the “nexus of accountability and transparency”, she added.  

“The code is a way of making order out of what could potentially be quite a messy space,” Maynard said.  

Speaking at the event, Natalie Gill, Head of DEI Strategy and Industry Engagement at asset manager PGIM, said an “industry-wide approach” was needed, claiming the asset management sector had fallen “far behind its peers”. 

Any firm or organisation – irrespective of size or “maturity” – should identify “clear, tangible” actions and hold themselves accountable for following through, she added.  

PGIM also is expected to become a signatory of the DEI Code imminently alongside the CFA Institute. 

Stewart, Maynard, Gill and Mair were all members of the working group that developed the DEI Code. The group’s other members included Angelica Gonzalez, Senior Lecturer in Finance at the University of Edinburgh Business School, University of Cambridge CIO Arun Kelshiker, and JP Morgan’s Victoria Thompson. 

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