Investors are moving the dial on diversity in private equity by starting within their own organisations, a panel has heard.
Speaking at the virtual BVCA Summit 2020 on Tuesday, Joana Rocha Scaff, managing director and head of Europe private equity at Neuberger Berman, said the firm takes equity, diversity and inclusion “very seriously”.
“We try to live by example…and there are concrete measures implemented in recruiting, mentoring, coaching and retention,” she said.
On the portfolio side, Neuberger Berman tracks diversity as part of its primary funds’ due diligence process, Scaff said. “We don’t have a certain KPI that [a manager] needs to attain in order to be approved for investment. It’s just a tracking exercise. But I am a strong believer that if you measure, you drive change.”
Through this process, the firm can understand if managers have prejudice and find out whether biases exist in the managers’ hiring and promotion policies, Scaff said.
“The next time they come to market, we would have tracked it and we will be able to see if there was any measurable improvement along the dimensions,” she said. “It’s a good way to foster a mindset change for the industry.”
Women make up about one in four senior investment professionals at Neuberger Berman globally, Scaff noted on the panel. Thirty-five percent of its more than 2,000 employees globally are women, and on a three-year average, 39 percent of new hires are women, according to the firm’s 2019 annual report.
Over the last few months some private equity industry participants have ramped up efforts and initiatives to create inclusive cultures.
In July, Carlyle Group expanded its portfolio board diversity goal to 30 percent of all directors for companies controlled by Carlyle’s private equity arm by 2023. In September, French investment firm Eurazeo said it aims to have at least 30 percent female representation among its portfolio companies’ executive management team members by 2030.
Texas-based fintech business Lenox Park Solutions rolled out in November last year its Lenox Park Diversity Impact Score, which measures diversity, equity and inclusion at asset managers. LPs including the $410 billion California Public Employees’ Retirement System and $216 billion New York State Common Retirement Fund are using LPI.