CFA Institute introduces DEI code for finance pros

The CFA Institute has created a voluntary Diversity, Equity and Inclusion Code for the Investment Profession in the United States and Canada as financial firms wrestle with expanding a more diverse workforce.

The DEI Code, launched Thursday by the group of Chartered Financial Analysts, aims to encourage greater commitment from institutions to DEI action that will lead to greater inclusion of wider viewpoints from the best talent. The organization hopes that will lead to better investment outcomes, create better working environments, and generate positive change for future generations. CFA Institute also became the first signatory to its own DEI Code.

Investment firms, as well as accounting firms, have been struggling to improve the diversity of their organizations, spurred by the Black Lives Matter protests that erupted in 2020 in reaction to the killings of George Floyd, Breonna Taylor and others. Numerous firms announced efforts to improve their DEI programs, in some cases signing a CEO Action for Diversity & Inclusion pledge spearheaded by PwC U.S. chairman and senior partner Tim Ryan. Other groups like the CFA Institute have been working on greater diversity in the financial services field.

“For us, we’ve come to the realization at the CFA institute, as has the investment industry, that garnering diverse perspectives leads to investment outcomes and better investment choices which better serve society,” said Paul Andrews, managing director of research, advocacy and standards at the CFA Institute, during an online presentation. “If you look at what we stand for as an organization, it perfectly aligns with our mission, as well as what I would say is the mission of the industry, which is to work and help investors make better investment decisions and also to help ensure the integrity of the marketplace. Statistics also show that an inclusive culture really leads to a better workplace. That matters to all of us because we all want to be part of something bigger, and I think the launch of this code in the U.S. and Canada is our first step in making that more of a reality.”

The code comes after more than two years of an industry-wide consultation and drafting process and asks signatory organizations to commit to six metrics-based principles: Pipeline, Talent Acquisition, Promotion and Retention, Leadership, Influence, and Measurement:

• Pipeline: Expanding the diverse talent pipeline;
• Talent Acquisition: Designing, implementing and maintaining inclusive and equitable hiring and onboarding practices;
• Promotion and Retention: Designing, implementing and maintaining inclusive and equitable promotion and retention practices to reduce barriers to progress;
• Leadership: Using the organization’s position and voice to promote DEI and improve DEI outcomes in the investment industry;
• Influence: Using the organization’s role, position and voice to promote and increase measurable DEI results in the investment industry; and,
• Measurement: Measuring and reporting on progress in driving better DEI results within the firm. 

Signatories to the DEI Code are expected to provide a confidential, annual progress report to the CFA Institute using a specific Reporting Framework. The CFA Institute in turn will report on industry-level statistics once a critical mass of signatories has been reached. Signatory organizations are expected to meet the following foundational reporting requirements within two years of becoming a DEI Code signatory:

• An adopted DEI policy and statement;
• An established senior leadership ownership and oversight governance process; and,
• An implementation plan to integrate DEI within the signatory organization’s people processes and policies.

The challenges won’t be easy for many financial firms that have tried in the past to increase their diversity. “If we think about the industry more widely, there are really multiple challenges for this industry,“ said Sarah Maynard, global head of external diversity, equity and inclusion at CFA Institute. “The interesting thing is seeing this as an opportunity to frame the culture shift which is implied by the integration of diversity, equity and inclusion. This is not about saying that DEI is an additional piece for the industry leaders to be adding to their worrying list. It’s absolutely integral to the kind of change that we see needing to happen for the industry to really respond to the challenge as it is.”
Maynard plans to host a CFA Institute webinar presentation about the DEI Code on March 10. More information is available here.