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Investment Approach to Core Issues

Diversity, Equity and Inclusion

For us, diversity, equity and inclusion are not only vital social issues; they are also business imperatives for institutions that want to succeed. Those who do not prioritize practices of diversity, equity and inclusion among their own leadership, workforces and communities limit their strategic options, their labor pool, and their reach. Ultimately, we believe these limits undercut the potential for long-term growth and social impact.

When evaluating potential investments, we typically look for commitments to diversity based on gender, race, ethnicity, sexual identity, ability, and other factors. We prioritize investments in those institutions that openly commit to diversity goals, or that are publicly recognized for outperforming their peers in specific diversity categories.

We examine diversity at several levels, beginning with the Board and executive leadership teams. We expect an institution’s Board and executive leadership to be representative of the community(ies) in which the institution is based, and ultimately of the communities it serves. If we feel such representation is inadequate, we may decline to invest, or we may decide to make an investment and then leverage our role as shareholders to engage in a push for greater diversity, through proxy voting or shareholder engagement.

When our research has produced as much information as possible on an institution’s overall workforce diversity, its hiring practices, and its human resources policies, we examine these factors on balance to inform our investment and engagement decisions. For instance, a company with low workforce diversity that is still strong compared to its peer group, that openly reports this figure, and that has specific diversity commitments would be likely to rate well in our evaluation. Policies like a requirement to consider women and minority candidates in the hiring process, employee benefits such as paid parental leave or gender transition coverage, or programs to train and hire entry-level workers from underserved, local communities, are examples of further commitments we have seen institutions make to diversity, equity and inclusion.

Other factors we look at may include the level of accessibility a company builds into (or addresses) with its products and services; the level of support given to equity and inclusion causes in local communities; any history of lawsuits or legal issues that may reveal a substandard commitment to equity in employment practices; and industry-specific areas like whether a drug company uses equitable models for drug pricing.
For more information on how Prentiss Smith & Company considers diversity, equity and inclusion in our approach to investment, please contact us.

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