Workplace diversity and inclusion have become a growing force in sustainable investing. That’s mainly because implementing such practices have not only benefited overall company culture, but also directly impacted work performances. Programs that promote diversity and inclusion aren’t just nice HR initiatives. They are highly central to business growth and necessary for achieving greater profits.
Diversity in the workplace means employing people of various backgrounds, education, and characteristics. Companies are encouraged to hire people of different gender, age, religion, race, and ethnicity. Doing this will help companies outperform competitors in the market and spur competitiveness amongst employees.
If diversity means physical characteristics, inclusion refers to how people feel at work. Even if a company is made of people with diverse backgrounds, if they don’t feel safe, welcomed, included, or valued, then the company is considered exclusive, more or less. In fact, companies that are diverse but exclusive may fail to leverage their diverse talent pool and ultimately minimize their success.
Growing Demands of D&I
Today’s young generations (Millennials and Gen Z) are considered to be the most diverse in history. For example, 56% of the 87 million millennials today are white compared to 72% with the baby boomer generation. In the 40 years between 1980 and 2020, the Baby Boomers have retired and exited the workforce while younger Americans have joined. And since then, they’ve focused on seeking out companies that reflect their moral values and share diverse perspectives.
There are several reasons why companies strive to include more diverse and inclusive practices in their workplace. Below is a list of the benefits that come with D&I.
- Gender-diverse companies are likely to perform 15% better (McKinsey Global Institute, MGI)
- Ethnically-diverse companies are likely to perform 35% better (McKinsey Global Institute, MGI)
- Executive teams in the top 25% for racial and ethnic diversity were 33% more likely to reap financial returns (McKinsey Global Institute, MGI)
- 67% job seekers prioritize diverse workforce when considering companies (Glassdoor)
- 57% current employees want their companies to increase their diversity (Glassdoor)
- Inclusive companies have a 2.3x higher cash flow per employee over a 3 year period (Josh Bersin)
- Inclusive companies are 1.7x more likely to be innovation leaders in their market (Josh Bersin)
- Companies with high diversity are 70% more likely to report that the firm captured a new market (Harvard Business Review)
- Teams with diverse and inclusive people make better decisions up to 87% of the time (Forbes)
Women In the Workforce
Women’s empowerment is all about shifting paradigms about how women are viewed and treated in society. It’s about allowing women to take on top level executive roles, make life-determining decisions, raise awareness and literacy, and bring about positive change to gender equality. According to the McKinsey & Company’s 2019 Women in the Workplace report, companies that promote gender equality are 35% more likely to succeed than companies that don’t. Today, 44% of companies have at least three women in their C-level leadership board, which is a 29% increase from 2015. This is a huge progress in just a few short years. However, while progress is apparent, women are still underrepresented at every level. Meaning, for every 100 men promoted to manager, only 72 women are promoted. To fix this issue, companies are encouraged to not only hire more women at entry level, but also promote and actively invite women to become senior level executives. If women are hired to first-level managers at the same rate as men, corporate America will gain one million more women to management roles in the next five years.
Invest In D&I
Considering to invest in companies that focus on inclusion and diversity is not only meaningful but also strategical especially since today’s economy revolves around diverse forces. University of Pennsylvania conducted a research on the list of the 100 Best Companies to Work for in America and found that higher employee satisfaction levels are directly correlated to higher profitability, higher customer satisfaction, and lower employee turnover. And inclusion and diversity in a company is at the center of customer satisfaction.