How data transparency can drive reform in gender diversity

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By Emily Gordon*

Data can be a powerful enabler of change, particularly when transparent, as we’re seeing when it comes to driving gender-diversity change and corporate-culture reform.

It is an historical moment for markets when the ‘push’ for gender diversity becomes a ‘pull,’ as growing sets of data reveal the adopters from the laggards. Further, investors and shareholders are increasingly interested in understanding and measuring how active a company is in embracing the benefits of diversity.

A recent study by McKinsey confirmed diversity as a competitive differentiator that attracts market share because they are considered more likely to win top talent, have a broader customer orientation, and greater employee satisfaction. Early performance analysis is also validating the old adage of ‘doing good while doing well’.

The recent Fortune Best Workplaces for Diversity list showed significantly higher year-on-year revenue growth for those companies included than those that did not make the list, while Bloomberg research shows shares of women-led companies outperformed the S&P 500 Index by 7 percent, improving on their prior 12-month advantage by 3 percent. One gender-focused strategy investing in S&P 500 companies with the most women in board, management, and workforce roles outperformed the benchmark by 141 percent over the past 10 years. These and similar performance indicators are driving a growing focus on diverse leadership – and an increase in demand for the data investors can use to build socially-responsible investment strategies.

As a financial information provider, Bloomberg’s mission is to bring transparency to critical evaluation metrics. In 2016, we launched the Bloomberg Financial Services Gender-Equality Index (BFGEI). The index was spearheaded by Angela Sun, Bloomberg’s Global head of Strategy & Corporate Development, and lives within Bloomberg’s existing ESG product and data suite. The index provides investors with objective, standardized aggregate information around difficult-to-measure areas in the gender-equality space that affect a company’s reputation and performance. The index was not created by Bloomberg as a diversity and inclusion initiative; rather, it was built to address an information gap in the market and to arm investors with information they care about.

The Index’s unique four-lens approach measures a company’s diversity health based on statistics, policy, product, and community engagement, including data such as a company’s paternity leave policy, their gender wage gap, and return to work and mentorship programs. Bloomberg makes all index-level and firm-specific data fully transparent on the Bloomberg Professional® service.

At the 2017 index launch this past January, we were particularly pleased to announce the addition of four Australian major financial services firms to the Index – ANZ Bank, Bank of Queensland, QBE Insurance and Westpac, expanding total index membership from its inaugural 26 to 52 firms. The overwhelmingly positive response to the Gender-Equality Index reflects the power of data transparency. Once information becomes investor facing, it attracts just as much attention from peers and competitors as it does from shareholders and industry stakeholders who recognize diversity as a game changer and competitive advantage.

Joe Keefe, President and CEO of Pax World Funds rightly pointed out that there’s an arbitrage opportunity today that won’t exist for long given the growing body of evidence that supports a correlation between diverse leadership and more sound decision making, better risk practices, and ultimately share price performance. Fortune 500 companies like Merrill Lynch, Goldman Sachs, and Bank of America are breaking new ground through their innovative return to work programs for women. Here in Australia, the ASX has also prioritized social transparency by making diversity data disclosure a requirement of listing.

The lack of standardization around diversity values and the varying degrees to which diversity fits with distinct cultures and traditions places the Bloomberg Gender-Equality Index at the frontier of data analysis. Diversity must be championed from the very top of organizations as a performance differentiator, and it begins with data disclosure. Index member firms recognize that they will be able to attract new investor capital by showcasing their efforts to mitigate operational risks, such as sound corporate governance, and employee retention and attraction.

Companies have long been instrumental in bringing about environmental changes that have safeguarded their businesses, people, shareholders, and environment. Just like the environmental movement began with awareness, discussion about gender equality has evolved enormously from workplace taboo to a critical area of reform and performance evaluation.

It is irrefutable that women constitute a significant wallet share and investors want to be assured that the companies in which they invest are connected to these segments in their policies and practices.

We hope that the Bloomberg Gender-Equality Index inspires firms across all markets and sizes to evaluate their policies and practices and disclosure more social data. The more diversity data that is disclosed, analyzed and measured, the greater its power to drive behavioral change and cultural reform, just like it did for a safer, cleaner environment. In today’s uncertain world, where there is less faith in government and legislative systems than ever, society is looking to companies to enact the change.

*Emily Gordon is head of Bloomberg Australia and New Zealand.

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