By Jayne Flannery
Calvert Investments’ Senior Sustainability Analyst Aditi Mohapatra wants to issue a wake-up call on the centrality of diversity as a key indicator of long-term shareholder value and sustainability performance. She describes Calvert’s second survey of diversity practice Examining the Cracks in the Ceiling below.
Calvert Investments places a unique emphasis on corporate diversity as a key contributor to long-term shareholder value. It is seen not only as a social and strategic business imperative but also as an investment prerogative, reinforced by third party research findings. A recent McKinsey study, for example, identified a direct correlation between the number of women in senior management-level positions and organisational excellence. Meanwhile, research by Goldman Sachs suggests that the U.S. GDP could increase by nine percent just by closing the gap between male and female employment rates.
Aditi Mohapatra, who leads Calvert’s efforts to advance boardroom diversity and women’s empowerment, is also a co-author of its latest survey Examining the Cracks in the Ceiling, which focuses on the performance of the companies within the Standard & Poor’s 100 (S&P 100) Index: “We chose to focus on these top 100 companies because we want our findings to impact the nation’s corporate thought leaders who create the trends that others follow.”
The report considers ten indicators, including Equal Employment Opportunity (EEO) policy, internal diversity initiatives, external diversity initiatives, scope of the diversity initiatives, family-friendly benefits, EEO-1 disclosure, highest-paid executives, board diversity, director selection criteria, and overall corporate commitment. It also goes further to include a road map for companies to identify and address gaps in their own internal practices.
For Mohapatra, the most positive finding was the growing number of innovative diversity programs internally.
“Our research showed that 30 percent of companies have board-level oversight of their diversity programs. This indicates accountability on the part of companies, which is very encouraging. It was no surprise that companies with this type of corporate commitment also had high scores in virtually every other indicator,” she says.
Leading examples? Chevron Corporation, she said, adding that Chevron actually ties managers’ performance ratings to their hiring of diverse candidates and operates diversity councils through the company. PepsiCo Inc., she continued, supports a dedicated female talent development division in the Middle East and Africa while Johnson & Johnson and IBM support business development for diverse suppliers.
However, all the news isn’t golden. The research also demonstrates that most corporations are still failing dismally to grasp the risks and opportunities challenges inherent in embracing diversity. “Too many companies are still struggling to grasp the business implications of diversity and the negative impact that lack of diverse leadership can have on overall sustainability performance,” she emphasized.
In particular, she highlighted serious concerns about poor levels of transparency and disclosure.
“As an analyst, it is extremely difficult to determine whether companies are making real progress when we do not possess simple baseline information on the number of women in the workforce.
In fact, 37 percent of the S&P 100 don’t disclose any employee demographic data whatsoever. We also find it almost impossible to access information on what percentage of employees are able to actually take advantage of diversity programs and what the outcomes are. Without this data, it is impossible to have a meaningful dialogue on corporate diversity. We want to be able to start proposing real solutions.”
Where concrete data does exist, for example, on board and executive diversity, two areas where Calvert has been able to capture representation data, the results showed that women and minorities have a long way to go in reaching parity.
She points out that, despite extensive research demonstrating a sound business case for diversity in the boardroom, the number of women and minority candidates progressing has proceeded at a glacial pace. The study found that women make up 18 percent of board of director positions, and only eight percent of the five highest paid positions within the S&P 100.
Mohapatra hopes this survey can help compel change. “We want this survey of diversity practices to stimulate discussion, catalyze action, and become an instrument for measuring how well women and minorities are faring in the corporate workplace. We want this information to bring about real change.”
“To date the main conversation has focused on board diversity and even then progress has been minimal. We want to encourage a much broader debate at every level of the organization and beyond, particularly in supply chain practices. Diversity is a baseline indicator for all sustainability initiatives and cannot be relegated to a function of the HR department. The business case for diversity has been made very clearly and it is time that companies started to challenge their traditional mindsets and culture,” she concludes.
About Calvert Investments, Inc.
A leader in Sustainable and Responsible Investments (SRI), Calvert offers investors among the widest choice of SRI strategies of any investment management company in the United States. Each SRI strategy employs one of three proprietary approaches. Calvert Signature® Strategies integrate two distinct research frameworks: A rigorous review of financial performance and a thorough assessment of environmental, social, and governance (ESG) performance. A company must meet standards for both frameworks to be considered for investing. Calvert Solution® Strategies selectively invest in companies that produce products and services designed to solve some of today’s most pressing sustainability challenges. Calvert SAGE™ Strategies emphasize strategic engagement to advance ESG performance in companies that may not meet Calvert standards today, but have the potential to improve. More information on Calvert SRI strategies is available at www.Calvert.com/SRI.
The company is also the driving force behind the Calvert Women’s Principles®, launched in 2004. This is the first global code of corporate conduct focused exclusively on empowering, advancing, and investing in women. In 2008, Calvert partnered with the City of San Francisco and Verité, to launch the Gender Equality Principles Initiative and its companion website—www.genderprinciples.org—which includes policies, guidelines, and indicators for direct implementation in the workplace. The Calvert Women’s Principles also formed the centrepiece of an international initiative spearheaded by the UN Global Compact and UN Women: the Women’s Empowerment Principles—Equality Means Business—which launched in March 2010. To date, over 250 leading executives of UN Global Compact companies, including Calvert CEO Barbara Krumsiek, have signed the CEO Statement of Support.