The importance of diversity and inclusion in private markets jumped up a notch last month after two members of the US Congress sent a letter to 31 investment managers, including Blackstone and BlackRock, requesting that they share information about their D&I efforts and policies with the Securities and Exchange Commission’s Office of Minority and Women Inclusion.

The request shows private equity isn’t immune to the political and public spotlights on the issue.

It should be noted that firms across the industry – including BlackRock and Blackstone – have been stepping up efforts to support this evolution. TPG in mid-March launched its NEXT platform, which aims to provide growth capital and operating resources to back managers led by women, people of colour and members of LGBTQ+ communities. Our conversation with TPG’s chief human resources officer Anilu Vazquez-Ubarri is here and we encourage you to read it.

The latest firm to join them is Investcorp. This week, the Bahrain-listed outfit said it had launched a tie-up with Philadelphia-based investment firm Xponance for a similar effort that will focus on established mid-market firms – providing strategic capital and resources to those that have been “historically overlooked”.

One person who knows more than most about the importance of D&I for LPs is Jill Shaw, a managing director at Cambridge Associates. Shaw is on the frontline of conversations with LPs – including endowments, foundations and high-net-worth individuals – and builds and manages private investment portfolios for them. Shaw told us this week that D&I has come to the forefront of those conversations over the past year, but remains a “balancing act” with mature portfolios.

“It’s harder for a portfolio in that position to now put a D&I lens on it and say, ‘All right, well, our managers are not diverse, so we are going to flip the portfolio and do something different because we want to access diverse managers,'” she said.

So strong is Shaw’s belief that diversity leads to better performance that she includes diverse managers in her clients’ portfolios whether they ask for them or not.

Shaw notes that it has been easier for investment firms over the last couple of years to understand when they’re getting a boilerplate answer from a manager when pushing on diversity, versus when the GP is genuine in its efforts. A lot of this hinges on conversations with second-level professionals – members of the up-and-coming generation, who Shaw says are often more thoughtful about their views and what they want to do at the firm.

Recent research from Cambridge Associates found that more than one-third of LP respondents who are engaged in sustainable and impact investing considered racial or gender equity in investment decisions. Most said they were interested in themes including increasing access to capital for female entrepreneurs and entrepreneurs of colour, workplace equity, and products and services that benefit women and communities of colour. Importantly, almost all respondents said the main motivation to do so was because it aligned with their organisation’s mission and values.

That LPs and GPs are more intentional in the management of their investments and organisations is a positive sign for an industry coming under greater public scrutiny, as recent developments show.