Making social investment more inclusive: diversity within our portfolio


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Earlier this year, we asked 25 of some of the largest fund managers in our portfolio to share data on diversity within their organisations and, for the first time, also on their portfolio companies. This blog presents our findings and sets out our next steps as we continue to track diversity and promote equity and inclusivity across the social investment market.

Why is this important?

We have undertaken this work because we are committed to Equality, Diversity, and Inclusion (EDI) at Big Society Capital and championing EDI within the social investment market more widely. We believe EDI is important to promote diversity of thought, better reflect the communities we aim to support, and ultimately lead to better outcomes.

In our 2020 blog, we wrote about the three principles that continue to guide our work in this area: intention, transparency and building capacity. Our intention is to make deliberate choices about what we are going to do and how we will know when we have made progress. We want to be transparent by collecting and publishing data and build capacity by developing answers to EDI challenges in collaboration with others. We certainly also have work to do ourselves, and we are committed to making progress in line with our 5-year EDI Plan. We’ve recently reported on our gender and ethnicity pay gap and steps we are taking to improve these.

Big Society Capital will continue to work closely with our partners across the ecosystem to ensure we build on best practice, such as the exciting and innovative work being done by our fund managers. We look forward to working with and encouraging our partners and colleagues in other organisations to do the same.

Data collection and methodology

We ran our first survey of fund managers in 2020, and we did not run it in 2021 due to disruption from the Covid-19 pandemic. Since then, we have iterated the survey to address privacy considerations and ease of completion to increase the response rate. For example, we amended the survey for our venture managers, who tend to have smaller teams and governance. In designing our next steps for this survey, we are consulting with experts in the sector including the Equality Impact Investing Project (EIIP), TSIC and the Diversity Forum.

What does the data Say?

This analysis is from 20 organisations that responded.

Overall, we note that limited data has been collected, particularly on disability, where there may also have been inconsistencies in definitions across organisations. Similarly, portfolio-level EDI data is not consistently collected and/or reported. Non-responses are likely due to a combination of factors, including:

  1. The fund manager does not collect that data, in the case of certain groups and characteristics.
  2. The data does not exist or was not declared due to General Data Protection Regulation (GDPR), such as where a fund manager’s team has fewer than five individuals.
  3. The fund manager prefers not to disclose the data.

In any case, we want to actively work with managers to understand what information is valuable for them to collect, and how we can help them to ensure EDI data is collected in the most effective, efficient, and consistent way.

Survey results are displayed as a percentage of fund managers who responded to the specific question. Where fund managers have not answered a question, they have not been included in the population (n = denominator). We issued a slightly modified survey to venture managers to reflect the fact that they tend to be smaller organisations, and so we’ve split out the data accordingly.

We have defined majority as >=51% of people within each of the respective teams are male / over-45 / white. For disability, however, the percentage represents % of able-bodied individuals in the respective team.

Explore the data in the chart by hovering over the bars.

Trends and conclusions

With small sample sizes and low response rates, it is difficult to draw conclusions. Some trends do start to show through, however, which help us identify areas for further investigation. From the respondents, investment teams appear to be broadly diverse on gender, age, and disability, which declines at more senior levels, particularly within Executive Teams.

There is a white majority at all levels and the response breakdown shows that the extent of white majority increases with seniority. By hovering over the bars, we can see that the proportion of fund managers that fall into the 76%-100 white majority band is higher at more senior levels. This is consistent with the Diversity Forum’s research (2018), which found that only 9% of executives in the social investment sector are from ethnically diverse backgrounds. For context, UK census data (2021) shows 18% of the population of England and Wales come from ethnically diverse backgrounds.

There is evidence of a gender pay gap across the 18 fund managers who provided this data (mean: 15.7%; median: 18.2%), in keeping with wider trends. In organisations with small teams, however, slight changes in personnel can vary these figures greatly, which was reflected in comments made by the respondents.

It is worth noting that Big Society Capital exhibits similar patterns across various levels as the fund managers surveyed:

Funa manager EDI screen grab.PNG

Next steps – improving data collection

Firstly, we want to improve our survey process in three ways:

  1. Encourage more consistent data collection by working with fund managers to understand what data is helpful for them and supporting them with tools and best practice. This will allow us to draw an increasingly accurate baseline of EDI data and identify gaps to better target building out our datasets, which we will continue to share.
  2. Broaden the characteristics we consider, especially around socio-economic status, which some of our fund managers already collect data on.
  3. Encourage data sharing so we can create a community where EDI data is valued, collected, and discussed consistently. Standardisation of EDI data collection across the sector may help this and we will work with managers and partners to consider how best to do this. Partner organisations are already beginning to show excellent practice of this, as highlighted above.

While crucial as a first step, metrics like this are only part of the story. In addition to this work, Big Society Capital has been working on embedding EDI considerations in our investment process, which we have been developing in consultation with expert practitioners as well as our fund managers. This is important to us as we ultimately want to make the sector more open and inclusive.

Next steps- embedding EDI in our investment process

Our hypothesis is that more diverse fund managers will lead to more diverse-led frontline organisations, who will in turn generate greater outcomes for underrepresented groups. There is a proven business case for this: organisations that are more diverse and have inclusive cultures often have better performance and greater innovation. There is also an impact case, as we are likely to have a greater positive social impact if we are more representative, diverse, and inclusive as a sector. And the reasons go beyond any economic rationale: it simply is the right thing to do.

Specifically, we are building in EDI considerations across our investment strategy, process, portfolio management and reporting for our four market systems. Considering both EDI-related policy and evidence of inclusive practice, our approach includes:

  1. Consciously and consistently considering how our investments contribute to specific EDI goals being set within our market systems. For example, in Impact Venture, we have set ambitious targets that a fund manager’s deal flow should include:
  • >50% with at least one female founder
  • >75% with at least one founder, partner, or CEO from an underrepresented group
  1. Looking at the organisation’s EDI policies, and, crucially, understanding how that organisation lives those policies in practice. We want to understand the equalities impact of their proposed investment strategy, and how that translates to how they originate and assess in their investment process.
  2. And track progress against goals by engaging with our managers on EDI in portfolio monitoring and data collection

We will be launching and explaining this process in greater detail in an upcoming blog.

Through these actions, we at Big Society Capital want to use our position in the sector to drive meaningful change for our fund managers, the sector at large and, most importantly, the people that we aim to serve.