Financial groups are failing to beat companies operating in the professional services, pharmaceutical, drinks making, retail, telecoms, cosmetics and other industries, when it comes to the top decile and top quartile rankings in the latest Thomson Reuters Diversity & Inclusion index.
The index is based on relative performance measures covering some 7,000 companies. Each company is scored on diversity, inclusion, people development and news controversy factors. Only those with scores across all four areas are assigned an overall score. The companies that achieve the best overall scores are assigned rankings in the top 100, which constitutes the index. (The full methodology is available here: http://financial.thomsonreuters.com/en/products/data-analytics/market-data/indices/diversity-index.html)
In this year’s edition of the index, some 52 companies were new entrants to the top 100, while 17 remained ranked for a second consecutive year. However, financial groups have failed to prove a presence in the top decile and top quartile rankings. Geographically, Canadian banks have a strong presence across the full list of ranked companies. The only bank to make the top quartile was Bank of Montreal.
| Top 25 Index ranking and their corresponding overall D&I percentage score (%): | Company | Score |
|---|---|---|
| 1 | Accenture PLC | 84.25 |
| 2 | Novartis AG | 79.25 |
| 3 | Medtronic PLC | 79 |
| 4 | Diageo PLC | 78.75 |
| 5 | Gap Inc | 78.5 |
| 6 | Telecom Italia SpA | 77.75 |
| 7 | Kering SA | 77.5 |
| 8 | Natura Cosmeticos SA | 77.25 |
| 8 | L’Oreal SA | 77.25 |
| 10 | Acciona SA | 77 |
| 10 | Bristol-Myers Squibb Co | 77 |
| 12 | Ucb SA | 75 |
| 12 | Roche Holding AG | 75 |
| 14 | Woolworths Group Ltd | 74.75 |
| 15 | Nestle SA | 74.5 |
| 16 | Microsoft Corp | 74.25 |
| 17 | Colgate-Palmolive Co | 74 |
| 17 | Procter & Gamble Co | 74 |
| 17 | Eli Lilly and Co | 74 |
| 20 | HP Inc | 73.75 |
| 20 | Merck & Co Inc | 73.75 |
| 22 | Hera SpA | 73.5 |
| 23 | Bank of Montreal | 73.25 |
| 24 | Siemens AG | 73 |
| 24 | Kao Corp | 73 |
| 24 | Woolworths Holdings Ltd | 73 |
| 24 | Sempra Energy | 73 |
| Top 25 financial and insurance groups and their corresponding overall D&I percentage score (%): | Company | Score |
|---|---|---|
| 23 | Bank of Montreal | 73.25 |
| 28 | BNP Paribas | 72.5 |
| 37 | Generali | 71.75 |
| 47 | UBS | 70.5 |
| 52 | Bank of Nova Scotia | 70.25 |
| 52 | Sun Life Financial | 70.25 |
| 61 | Allianz SE | 69.75 |
| 68 | Deutsche Bank | 69.25 |
| 68 | Societe Generale | 69.25 |
| 68 | Royal Bank of Canada | 69.25 |
| 77 | Phoenix Group Holdings | 69 |
| 86 | Citigroup | 68.5 |
| 88 | NIB Holdings | 68.25 |
| 95 | CIMB Group | 68 |
| 95 | Nedbank | 68 |
| 95 | Fubon Financial Holding | 68 |
The index development reflects increasing demands by investors for insight into ESG factors that can affect performance, notes Elena Philipova, global head of ESG at Thomson Reuters, Financial & Risk. However, there are also regulatory developments driving the insight: Virginie O’Shea, research directors at Aite Group, is cited by Thomson Reuters as noting that “not only have firms been increasing their corporate disclosure with the intent of improving corporate governance and transparency, regulators have also been compelling change and 2019 will see the introduction of the second Shareholder Rights Directive in Europe to this end.”
“Investors are keen to see much more data related to topics such as diversity to factor these into their ESG strategies, which have been gathering pace over the last 12 months.”
Will Jan, vice president & lead analyst at Outsell, is cited saying: “Recent studies have revealed that diversity & inclusion is correlated to value-creation & profitability. As such, financial services have an obligation to inform investors of these opportunities.”
Brad Bailey, research director, capital markets at Celent, is cited saying: “With growth in ESG investing coming from more and more quarters, it is crucial to have transparent benchmarks for all types of portfolio managers (PMs) and investors, from long only to quantitative funds, to ensure that they have a clear framework for the effective allocation of resources into companies with the most astute approaches to diversity.”
This article was first published in our sister title InvestmentEurope.
