US investors will have an “enormous focus” on the treatment of workers and diversity and inclusion in the coming year, according to Neuberger Berman’s chief executive and chairman.
Speaking at the virtual Asian Financial Forum on Monday, George Walker told delegates that an audience survey of the biggest ESG concerns for companies in 2021 would have yielded different results if only US investors were surveyed.
Climate change and carbon-related issues topped the list with 51 percent of the vote, while public health was a close second at 45 percent. No other category garnered more than 3 percent of the votes.
“If you were to ask that question to US investors you would have gotten a quite different answer with a large focus, particularly post-pandemic, on labor; how were workers treated during this period, what firms are letting people go while increasing CEO compensation and the like,” Walker said.
There will be a “continued huge focus” on diversity and inclusion as the US has wrestled over the past year with important social justice issues, he added.
“I think I too might have put climate change at the fore but those two garnered a whopping total of 1.4 percent of the votes,” he pointed out.
Diversity, equity and inclusion were at the forefront of private equity’s ESG discourse last year. The Institutional Limited Partners Association launched an initiative last month to encourage investors and fund managers to lead by example on DE&I. The initiative serves as a means for GPs and LPs to publicly acknowledge their commitment to take concrete steps to advance the issue within their organization and the industry more broadly.
Evidence of diversity and inclusion at the GP level now forms either a minor or major part of the process for 80 percent of LPs, according to sister publication Private Equity International’s LP Perspectives 2021 Study, published this month. Still, only 13 percent of LPs have ever refused an opportunity based on an inadequate D&I response.
Climate change has also rocketed up the agenda. In 2020, three of the asset class’s biggest investors – representing nearly $2 trillion of AUM – published a joint statement urging sceptics that continue to question the growing role of sustainability to face reality. The California State Teachers’ Retirement System, Japan’s Government Pension Investment Fund and the UK’s USS Investment Management warned that focusing solely on short-term returns without considering other stakeholders would be to ignore “potentially catastrophic systemic risks”.