Incorporating Diversity and Inclusion in Your Portfolio
Diversity and inclusion (D&I) have become top priorities for workplaces as well as investors. There are still many opportunities to advance D&I across the economy, but it is clear that championing diverse teams and investing with a diverse lens generates undeniable benefits. Inclusive organizations make higher-quality decisions, cultivate healthier workplace environments with more employee satisfaction and retention, and have the potential to financially outperform. Globally, companies in the top quartile for ethnic diversity on executive teams are 36% more likely to have above-average profitability than companies in the bottom quartile¹. Goldman Sachs Global Investment Research estimates that confronting the earnings gap for Black women could create up to 1.7 million U.S. jobs and raise the level of annual U.S. GDP by 1.4-2.1% each year, or by $300-450 billion in current dollars².
At Goldman Sachs, we are committed to furthering diversity and inclusion within our firm and working with clients to incorporate D&I into their portfolios to meet both their unique financial and sustainability objectives. We find it helpful to assess D&I investment opportunities using the below questions:
1. Who am I investing in? You invest in diverse leaders, managers or entrepreneurs. The focus is on who is receiving the capital, not what they are using it for.
2. How am I investing? You invest in firms who are incorporating D&I as a material part of the investment process. The focus is how a manager is leveraging D&I to drive better financial outcomes.
There are many ways to emphasize D&I in your portfolio and your investment strategy may employ more than one approach.
If you are interested in discussing investments that address D&I, reach out to your Goldman Sachs representative today.
¹ Source: McKinsey & Company, Diversity wins: How inclusion matters, May 2020.
² Source: Goldman Sachs Global Investment Research, Black Womenomics: Investing in the Underinvested, March 2021.
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