The Pensions and Lifetime Savings Association (PLSA) has launched a guide outlining how championing diversity and inclusion could drive better decision-making at financial services firms, as it claimed companies with diverse executive teams are likely to outperform their peers.
The PLSA last week published its 40-page Diversity and Inclusion Made Simple guide to encourage trustees, advisers and employers to diversify their workforce and boards in order to achieve better financial outcomes.
The PLSA found that companies and boards which are more diverse and inclusive are more likely to find more innovative solutions to problems which ultimately leads to better outcomes for members and clients.
A more diverse team is also able to achieve better investment returns, work more efficiently and better represent clients' interests, the guide said.
According to the PLSA, companies with the most ethnically/culturally diverse executive teams are 33 per cent more likely to outperform their peers on profitability.
In order to drive improved diversity, the PLSA said companies and boards should come up with a policy to recruit and retain more diverse individuals.
Caroline Escott, policy lead for investment and stewardship at the PLSA, said: “There is a growing body of evidence to show that diverse boards make better decisions, avoiding behavioural biases such as groupthink. Yet PLSA research shows that 83 per cent of boards are male.
“We’re pleased to have worked with Travers Smith to publish what we believe is the first practical, step-by-step guidance specifically aimed at building more diverse trustee boards. We hope this will create the diverse trustee boards which are needed to respond to and reflect diverse savers’ needs.”
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