Private equity is meeting the moment for change in diversity, equity, and inclusion as data increasingly points toward financial gains from diversifying teams, said panelists at Mergers Acquisitions’ PE Leaders in DEI SPEAK yesterday. “From my perspective there has been that social awakening, and now you have a number of LPs raising these sorts of changes,” says Stellex Capital Management founder and Carlyle Group alum Raymond Whiteman.
The Institutional Limited Partner Association has taken an iterative approach to industrywide DEI practices, releasing a diversity metrics template in 2018, a roadmap of best practices more recently, and providing an update on its progress in April. The newly released ESG assessment framework provides a starting point, with important caveats. “Many best practices are still being developed,” the document reads, and the framework is “not exhaustive.”
“I definitely feel that this [moment] could pass and not make a bit of difference if people don’t integrate it,” says Mizzen Capital co-founder and managing partner Elizabeth Karter. “And one of the ways I’m seeing LPs, especially the big public pension funds, leading the way, is people looking for results out of this. There’s nothing that speaks to continuity as much as results, and we are seeing more and more analysis showing the value of diversity. Diversity is another form of diversification. You have too much risk if your portfolio is not diversified and you have too much risk if your staff is not diversified. My hope is, and I’m an eternal optimist, I think that the results will drive the continuity of this moment.”
Time will tell!