WHY
incorporating
a diversity mindset into
investment decisions
leads to higher portfolio returns
Financial performance
At least no performance difference, evidence of higher business performance and higher fund returns.
Higher Investment Return
Lower competition offers lower bid-up deal prices, and significant open opportunities for investment.
The risk of not
With diversity on the agenda for institutional and individual investors, questions are currently asked on the diversity of the investor team. The rapid introduction of the questions, has left many firms with a challenge to catch up.
The next step will be the diversity of investment portfolio, for performance gains, for the avoidance of group think in management, alongside diversification of portfolio risk and reputational risk.
Drivers of future growth
A diverse leadership team is a significant indicator for current, and future prospects, of financial business performance.
FINANCIAL PERFORMANCE
Diverse leadership teams, in study after study,
correlate with higher financial company performance.
FUND
FINANCIAL PERFORMANCE
1
Private equity portfolio received a financial boost from diverse led investments
Calvert Impact Capital
to maximise returns,
seek out companies with
gender diversity
Financial performance higher with +33% diverse board and senior management.
Portfolio study covered 11 years of data, for 160 companies, representing $23bn in assets.
Sales +18%
RoE 8.6% v 4.4%
After analyzing the gender composition of more than 8,000 firms, we found that gender balance has a significant impact on companies’ financial performance.
Private equity firms where women make up at least 30% of the team responsible for making investment decisions, achieved 10% - 20% higher rates of return than those in which women were not well represented.
"Funds with gender-balanced senior investment teams generated 10-20% higher returns compared with funds that have a majority of male or female leaders"
BUSINESS
FINANCIAL PERFORMANCE
1
Companies in the top-quartile for
gender diversity on their executive
teams were 21% more likely to have
above-average profitability than companies in the fourth quartile
’Delivering through Diversity, McKinsey 2018
Return on capital 35% higher
Global trends in gender diversity on corporate boards
MSCI 2015
Market capitalisation twice as high
Higher ‘Organisational Excellence'
EBIT 11.1% vs 5.8%
Lower risk of insolvency
Gender Balance & Insolvency Risk,
2009
‘Gender diversity, a corporate performance drive’
McKinsey 2007
2
Innovation revenue 20% higher
3
In the VC world, female led businesses show
returns of 20% more revenue
with 50% less money invested
Yet, male entrepreneurs 86% more likely to be funded
Barclays, 2017
4
For every $1 in funding,
female entrepreneurs generate $0.78 in revenue
compared to $0.31 by male entrepreneurs
BCG & MassChallenge, 2018
Causation or Correlation
The wealth of evidence offers up a causation or correlation debate,
or can prompt us to seek further granularity on sector and size,
yet the overriding rational remains.
Performance and returns provided by diverse and female led
businesses are not reflected in current investment levels. Offering an untapped opportunity for investors.
FOCUSED ON DRIVERS OF
GROWTH, CUSTOMERS & TALENT
A customer-centric and collaborative approach to innovation
A diverse leadership team focused on innovation through an outward-looking,
customer-centric and external-collaboration approach, has competitive advantage.
Competitive advantage to understand and engage the fast-evolving consumer demands, and acquire higher market share now and into the future.
A driver to attract and retain top talent
Diverse leadership teams are seen to correlate with a businesses ability to
attract and retain top talent, a key driver for growth and competitive advantage.
Is the X chronosome the X factor in leadership?
Find out why businesses led by women are outperforming the market, EY 2018
REFLECT & UNDERSTAND
THE TALENT POOL THEY DRAW FROM
& THE CUSTOMERS THEY SERVE
The future of work
flexibility, purpose, collaboration,
Diverse leadership teams see higher employee satisfaction and attract top talent
EY 2018
Ann Pickering, Chief of Staff,
O2
Under 30s ask for flexibility, trust and work mobility, before salary.
60% of graduates are women
in the UK and globally
for the last 30 years
34% of millennials have left a job because it wasn't flexible
FlexJob 2017
CONSUMER AND BUSINESS CUSTOMERS ARE INCREASINGLY DIVERSE
Businesses that expect to keep up with their fast-changing customer demands,
require leadership teams with the diversity to match the external environment.
65% of discretionary spend decisions
made by women
75% by 2028
McKinsey 2018
An under-estimation of the market that women represent,
has led to an under-investment in
businesses with products and services aimed at the female market.
Providing an investment opportunity for those who do invest.
Opportunities for the taking
for example
nVision
Offers an early detection for ovarian cancer.
Originally dismissed by investors as 'niche' and 'a women's issue'.
Exit value $275m
