Diversity drives growth for our businesses
More and more open conversations about diversity and inclusion are being held, leading to an increasing number of positions being taken. Which makes sense. Diversity and inclusion must be actively encouraged not only for reasons of fairness and social justice, but also because they lead to stronger teams and better organizations.
During this pandemic, where data shows that women, ethnocultural minorities and young people are more affected by the economic impact of the crisis, these issues need our attention more than ever. Whether in terms of gender, origin, experience, personality or opinions, diversity is an advantage and asset for our communities.
In fact, the numerous studies that have looked into this issue worldwide are unanimous: diversity is an outstanding growth driver for businesses. It enhances innovation capacity, creativity and performance while strengthening employee engagement, productivity and decision quality.
- For every 1% increase in gender diversity, Statistics Canada’s Workplace and Employee Survey found that businesses on average enjoy growth of 3.5% in revenue and 0.7% in productivity.
- The most inclusive companies generate 1.4 times more revenue per employee on average, and consider themselves more capable of adapting to change, according to a study by Deloitte.
- And these companies are 45% likelier to see their employees report that they have gained market share and 70% likelier to report that the company has captured a new market, as shown in research published in the Harvard Business Review.
- They are 57.8% more likely to improve their reputation based on a study from Catalyst.
In addition, organizations that include members from diverse backgrounds on their Boards of Directors are better able to identify the needs and interests of their stakeholders. They therefore have a better chance at attracting and retaining the best talent. What better reasons to take advantage of diversity?
Concrete action to effect change
To help them draw from this additional leverage, CDPQ launched Equity 253, the largest Canadian fund ever created to target diversity and inclusion in businesses, in October 2020. This $250-million fund to be deployed over four years invests in profitable SMEs and technology companies in Québec or elsewhere in Canada.
In exchange, the selected businesses commit to meeting an objective: within 5 years after receiving financing, people of diverse backgrounds—women, visible minorities or Indigenous peoples—will represent at least 25% of their Board of Directors, management team and shareholding. To reach these ambitious objectives, we offer the companies the support they need at every stage while they create and execute their customized plan.
In addition, CDPQ recently adopted new provisions for diversity and inclusion in its Policy Governing the Exercise of Voting Rights of Public Companies. We want to encourage measures that promote diversity and that allow a range of opinions to be integrated into decision-making. We also adopted a target of 30% women on Boards of Directors. Therefore, starting in 2022, if that level is not reached, we will have the option to vote against the directors in charge of nominations or to abstain from voting.
These new initiatives are part of a series of projects that we have undertaken in the last several years to promote the advancement of women in business and finance. Cheffes de file, an organization through which we support 70 companies owned by women in 11 regions of Québec. The Défi 100 jours by Effet A, a development program for women in business, which to date has highlighted the talent of over 2,500 women. The Investor Leadership Network (ILN), which we cofounded, brings together 14 leading global investors around issues of sustainability. One of its three priorities is increasing diversity in investment.
Joining forces to accelerate the trend
Despite numbers that increasingly demonstrate the benefits derived from diversity, and despite the growing number of commitments and action taken by companies, there is no doubt that we still have work to do to change management habits. Not only as a question of performance, but also as a question of social justice. This is why we are working to convince more businesses to set their own targets and use data-based metrics to track their progress towards achieving them.
The demonstrations and riots that shook the United States following the death of George Floyd and the outpouring of solidarity with the Black Lives Matter movement reminded us of the importance of mobilizing for greater social justice. Drawing on that energy, CDPQ joined over 350 Canadian companies to support the BlackNorth Initiative, whose mission is to end systemic racism against Black Canadians and other visible minorities.
It’s a simple proposition: together, we can change things.
And I firmly believe that there is no better time than now to take action. Despite the immense challenges we face, one positive outcome is that this crisis has forced us to reinvent ourselves collectively. Trends that we have long seen on the horizon are now materializing. All we have to do is seize this opportunity to move forward.