Consistent with our commitment to offering investors comprehensive and cutting-edge resources around values-based and socially responsible investing, New Covenant Trust Company recently licensed newly aggregated data on diversity in the C-suites and boardrooms of corporate America.
This data, licensed through Institutional Shareholder Services, will be used to further enhance NCTC’s Diversity, Equity, and Inclusion (DEI) investment strategy and other positive impact strategies. The data set contains information on the age, gender, tenure, experience and ethnicity of the directors and executives of nearly 6,000 U.S. companies. Findings — such as the fact that with an average board size of 9, 40% of public U.S. companies still have zero ethnically diverse board members — highlight the importance of this level of transparency and reporting.
Metrics Put Pressure on Companies to Keep Up with Peers
Launched in early 2021, NCTC’s DEI strategy targets investment in companies with a history of strong commitments to equal opportunity, non-discrimination, and diversity. It measures companies not only on their workforce, but also on their supply chains, community involvement and climate commitments.
The strategy uses a positive screening approach, where companies are rated based on a variety of metrics. The best-in-class companies within each industry are highlighted or overweighted for investment. As more and more investors integrate these metrics into their investment decisions, companies will continue to feel the pressure to maintain best practices and to keep up with their peers on these ratings.
With the newly licensed data, we are able to measure and report that companies in the DEI strategy have the following characteristics:
- 76% higher levels of diverse executives than the index average
- 42% higher levels of diverse board members than the index average
- 38% higher levels of women executives than the index average
- 25% higher levels of women board members than the index average
While we are encouraged by the early evidence that DEI ratings can be successfully incorporated into a values-based investing strategy, we know that much remains to be done. Along with the Presbyterian Church (U.S.A.), the Interfaith Center on Corporate Responsibility and other values-based investors around the world, NCTC continues to advocate for greater levels of transparency and disclosure around diversity and pay equity issues.
If you’re interested in learning how your portfolio can incorporate DEI criteria, ways that NCTC supports DEI through proxy voting and shareholder engagement, or if you have any other questions, don’t hesitate to reach out to your Relationship Officer.