Financial services group 27four launched their DEI Index Framework and DEInvest Annual Survey at the JSE on Wednesday, 30 October 2024.
This leading financial services group specializing in investment management, fiduciary management, and regulatory fund hosting solutions, has unveiled South Africa’s first-ever survey to benchmark diversity, equity, and inclusion in the asset management sector.
This innovative index benchmarks DEI progress across the sector and was based on five key criteria developed by 27four, which align with global standards. It will be needed in the sector as it enables asset owners to assess managers on DEI performance level while allowing managers to measure their progress relative to the wider industry.
Since 2007, their BEE.conomics survey, and more recently their Gender.conomics survey, have established a benchmark for understanding the performance and challenges of black and women-led firms.
This research, now evolving into the DEInvest Annual Survey, will continue to guide investors and policymakers in supporting these emerging managers.
They are laying the foundation for sustainable transformation by setting new standards for the industry.
The launch of South Africa’s first benchmark for diversity, equity, and inclusion (DEI) in asset management is quite significant for several reasons:
- Industry-standard: It establishes a clear standard for DEI practices within the asset management industry, encouraging firms to adopt and improve their policies.
- Transparency and accountability: By providing an in-depth industry analysis, it promotes transparency and holds asset managers accountable for their DEI efforts.
- Recognition and motivation: Celebrating top asset managers who achieve high DEI scores can motivate others to enhance their DEI initiatives.
- Socia impact: It highlights the importance of diversity and inclusion in the financial sector, potentially leading to more equitable opportunities and outcomes.
- Economic benefits: Diverse and inclusive workplaces are often more innovative and productive, which can positively impact the overall economy.
The diversity in investment teams can help mitigate cognitive biases in decision-making. Investment teams are composed of diverse individuals with varying perspectives which could necessitate slow thinking as different ideas and associated risks are more carefully deliberated.
Therefore, diverse investment teams are not just representatives in terms of gender, race, age, sexual orientation, country of origin, cognitive diversity, disability, qualifications, or socioeconomic status, they also encourage diversity of thought.
It is natural for individuals to gravitate towards and collaborate with those similar to themselves, including those who think alike. However, this tendency known as functional bias can foster groupthink and stifle innovation.
The point is simple, change is good, but the right change is necessary.