Diversity helps unlock opportunities

Oksana Patron

6 September 2022

Diversity and inclusion (D&I) help unlock investment and business opportunities that might otherwise go unnoticed, enabling companies with greater ethnic and cultural diversity to outperform in productivity, profitability and create innovations ‘from anyone, anywhere’, according to Franklin Templeton.

The profitability at companies with the D&I policies was often higher by more than a third versus their peers with less diversity and facilitated ‘disruptive innovation’, by creating new concepts and perspectives which would see new paradigm shifts and the developments of new markets.

Further to that, according to the fund manager, businesses with D&I policies benefitted from the greater talent diversity fuelling the growth sectors, such as technology and biotech, and from strategies meeting environmental, social and governance (ESG) investors’ needs.

On top of that, more investors now required D&I as a factor in their investments decision making with mutual funds within the Morningstar universe that included D&I criteria (including ESG) in their investment strategies seeing their assets under management (AUM) more than double in two years, to $49 billion.

Following this, publicly traded equity funds investing in companies with more women in leadership positions and strong additional equality metrics had seen their assets grow by 51% in 2021.

The fund manager also stressed that ‘thinking diversely and acting inclusively’ was essential for preparing for unpredicted challenges.

“The pandemic forced industries, communities, and countries to rethink, reshape, and provide transparency. Inclusive practices and diverse viewpoints enabled companies to move faster to produce strong results for all people and stakeholders,” the fund manager said.

“As our investment industry progresses and prepares for shifts in global populations and transitions of generational wealth, engaging D&I lenses increases wealth creation, identifies untapped opportunities, increases profitability, cultivates innovation, and reduces risk. Highlighting D&I as a firm business imperative will not guarantee success—but a lack of focus on it will put you at a competitive disadvantage,” Regina Curry, chief diversity officer, Franklin Templeton, added.