Diversity In Action: In Conversation with ILPA’s Jennifer Choi

We sat down with Jennifer Choi, Managing Director of Industry Affairs for the Institutional Limited Partners Association (ILPA), to discuss their Diversity in Action initiative, the challenges of capturing diversity metrics in a global context, and the actions LPs and GPs can implement to advance diversity, equity and inclusion.

What was behind the creation of ILPA’s Diversity in Action initiative?

ILPA is a membership organisation serving the limited partner community - we have 560 member organisations, representing a broad and diverse group of institutions: public pensions, private pensions, insurance companies, foundations, endowments, sovereign wealth funds, and family offices. 

ILPA’s engagement in Diversity, Equity, and Inclusion (or DE&I) started in 2017, catalyzed by the issue of gender discrimination in Silicon Valley and the #MeToo movement. Intitally, the emphasis was on gender--we were trying to spark a conversation about gender representation and sexual harassment in the venture industry. We focused on trying to understand how LPs were thinking about DE&I in their portfolios, and how they’re engaging with GPs on the subject. Two of the tools that we developed early on to help LPs talk to their GPs were a set of DE&I-focused questions within the ILPA Due Diligence Questionnaire, which is widely used across the industry by LPs, and the creation of a template to capture team diversity at GPs, issued in 2018. 

“We wanted to know, what does good look like? What are the foundational actions - not commitments - that organisations with an authentic commitment to DE&I are taking?”

Initially, our emphasis was on providing resources to the industry, not forcing the conversation - a positive, not punitive, approach. As the conversation progressed, coming to a real inflection point around racial justice and equity in 2020, we wanted to know, what does good look like? What are the foundational actions - not commitments - that organisations with an authentic commitment to DE&I are taking? The Diversity and Inclusion Roadmap identifies 39 different actions that can be taken to really advance DE&I. 

What is the Diversity in Action framework, and how do you envision it moving the field forward?

The Diversity in Action framework consists of thirteen actions: four foundational actions that LPs should expect to see in place at GPs who are serious about DE&I, as well as nine optional actions that anyone can implement, regardless of the size of their organisation or the maturity of the platform. 

These 13 actions are framed around four areas: intention and accountability, workforce development, investment strategies (such as understanding the business imperatives for DE&I, and how you deploy capital), and the ecosystem (including industry surveys to capture demographic data globally, and advance the conversation around best practice).  We're using this framework to create momentum in the industry, identify leaders, and identify best practices among organisations that are authentically advancing DE&I. 

We brought the Diversity in Action initiative forward as a way to bring LPs and GPs together. Though GPs are not members of ILPA, they can join the Diversity in Action Initiative. We currently have 155 signatories, and we’ve also seen a tremendous amount of interest from the LP community to support and contribute to this work. 

The initiative recently released its first data-focused progress report. What are some of the challenges and emerging approaches that came up? 

Data from signatories has really underscored that the best information comes from employees about how they identify. Frame questions so they fit with your definitions for diversity, and so that employees understand why you're asking the question. Explain how you're going to use the answers to develop a workplace that includes them, and don’t ask for information that you won't act upon, because you don't want to appear disingenuous. 

“We’d like to see a movement away from trying to guess at the diversity of our teams based on pictures on a website, and open up the means of capturing that information from employees themselves.”

It’s also important to make it easy for individuals to answer the questions. Don’t force them to log on to a system and input their data; make it part of the natural workflow, and capture the information at the onset of employment. We'd like to see a movement away from trying to guess at the diversity of our teams based on pictures on a website, and open up the means of capturing that information from employees themselves.

The JEDI working group has identified language and labels as one of the ongoing challenges with data harmonisation - particularly the amount of nuance needed in a global context.

Labels are problematic, and yet we have to get to a more holistic, comprehensive understanding of who’s in our industry, and who's not represented. A number of the Diversity in Action signatories have tried to flip this on its head and put inclusion first and diversity second when talking with the internal committees. Bringing diverse individuals into the organisation is only the beginning - they have to feel like they have a home there, and a path to advancement. 

As far as the nomenclature, a pretty fundamental shift in our thinking has been to move away from country-specific designations around race and ethnicity, which we used in our 2018 template, and which don’t work if you're an LP invested across multiple countries trying to assess diversity across your portfolio. We’ve landed on a broader set of definitions around race and ethnicity, which can be mapped back to a local understanding based on contextual information (such as the location of the GP and fund team). We’re really looking at how we can get to a more global view, without losing the granularity in particular jurisdictions.

“As far as the nomenclature, a pretty fundamental shift in our thinking has been to move away from country-specific designations around race and ethnicity, which don’t work if you’re an LP invested across multiple countries trying to assess diversity across your portfolio”

It's not a perfect solution, and the framework we’ve developed is in draft form. We're running a public comment period starting in July and want to arrive at a data model with global relevance that will be widely adopted. We’re still not at the point where the industry has an accurate global baseline across all of the different pockets of the private markets ecosystem, at which point we can actually start talking about progress.

How can the GenderSmart community help advance diversity, equity and inclusion in the industry?

This is a competitive industry, so it's powerful to see influential sources of capital on the LP side, and influential investors on the GP side, who have prioritised this, are making public statements, and have signed on to the Diversity in Action initiative. Not only are they role models, it generates very helpful competitive pressure. It gives the sense of not wanting to be left behind, not wanting to be seen as anything other than best in class, and that’s a really powerful catalyst to bring more LPs and GPs into this conversation.

For more information on ILPA’s Diversity in Action initiative, or questions about supporting the initiative, or becoming a signatory, visit their website or email diversity@ilpa.org.