Conclusion: Beyond political correctness

While many D&I initiatives within the Private Equity industry are well intended, one may wonder whether all the guidelines published in recent years are realistic. For example, unconscious bias training is thought to have a place as part of a broader D&I strategy. However, it is not seen as effective when deployed on a standalone basis. This politically correct and social activist approach may result in the alienation of many smaller fund managers who often need to close a wider gap, yet have less resources available.

One may also wonder whether positive action is an effective tool in ensuring that diversity is retained in senior ranks, where experience and relationships are the key decision factors when hiring. At junior levels, targets may be effective in increasing the access for historically underrepresented groups to private equity careers. However, half of the issue is in making sure that diversity is retained and that all talent gets equal access to advancement opportunities so that professionals from all backgrounds can build successful careers within private equity.

While significant progress has been made to improve gender diversity at the junior level, we must point out that gender diversity seems to have become a convenient shortcut to hit D&I goals for many fund managers. Unfortunately, this means that other underrepresented populations may be ignored, namely diverse male candidates who would equally benefit from positive action. What about candidates and professionals identifying as LGBT+? Is the lack of research into the state of their current inclusion an illustration of the private equity industry’s choice to turn a blind eye?

We recognise that targeting a more diverse intake along dimensions other than gender, such as ethnicity or socioeconomic background, is trickier. Data collection beyond gender is generally more challenging but nevertheless, PE firms should still consider these routes if they are serious in achieving true diversity of background among their ranks.

D&I is often linked to the culture within a firm. Culture is a concept that is as subjective as it is intangible. At times, women and other diverse populations appear to face different norms, less favourable norms. Efforts must be made to change these norms.  At this point in time, not taking any step towards improving diversity and inclusion in your Private Equity firm could be rightly seen as a significant ESG failure and a somewhat controversial statement about your firm’s values.