Private Equity – DE&I in Focus

Livingston James’ PE and VC specialist, Sophie Randles, discusses the progress being made by PE firms in the UK on diversity, equity, and inclusion.

There can be no doubt as to the benefits of creating a diverse, equitable, and inclusive workplace not only for business, but for society as a whole.  There are multiple reports that highlight the impact of diversity on financial outperformance , innovation, and decision making related to acquisition and investment in businesses.  A 2020 study looking at increased female participation on boards also revealed that companies with a strong gender balance on the board and a high concentration of female directors are more likely to prioritise CSR and ESG.

However, McKinsey’s most recent DE&I report, Diversity Wins: How Inclusion Matters, highlights the danger of complacency, with many firms stalling or indeed going backwards when it comes to pursuing DE&I, despite ongoing evidence of the clear benefits.

DE&I in Private Equity

A 2021 survey by the BVCA and Level 20, which builds on both the 2018 ‘Women in Private Equity’ report and on data published by Diversity VC in the ‘Diversity in UK Venture Capital’ report, suggests that overall, the number of women working in the UK PE industry has risen to 38%.  The report also highlights that the number of all-male investment teams has declined to just 12%.

It is also the first time that the BVCA has captured data on ethnicity for PE in the UK.  Results indicate that there is significant work to be done to improve representation in respect of ethnicity across private equity and venture capital, particularly around the intersection of gender and ethnicity in senior positions.  Current data shows that at a senior level, less than 1% of women are Black, less than 1% are Multi-Ethnic/Mixed and only 1.6% are Asian.

UK-based firms also dominated the top 10 spots in the VC listing of the Equality Group’s Top 20 Inclusive VC and PE Index, however in PE, representation in the top 10 was spread across Europe and the US.

Turning Awareness into Action

It is clear that leaders in the UK PE industry understand the benefits of diversity to business, with research by Intertrust revealing that 44 per cent of Private Fund CFOs in the UK describe gender diversity as crucial to investment opportunities.

The 2021 EY Global Private Equity Survey revealed that the top talent management priorities for respondents included increasing gender and ethnic minority representation across the front and back offices.

Progress is being made, including 80 European firms signing up as sponsors for Level 20, the not-for-profit organisation promoting gender diversity in the industry.  Organisations such as Blackstone Group and the Carlyle Group have also made significant progress to diversifying their workforce across the globe.  However, the scope of the challenge across PE and VC remains significant, with the Chief Executive of Equality Group calling for DE&I targets to be linked to pay and bonuses in order to incentivise firms and increase the pace of change.

At Livingston James we understand the impact of recruiting the right people for your organisation.  We have implemented an extensive DE&I policy to all our search processes and are passionate about ensuring robust inclusion strategies are in place across our client portfolio. We want to play a part, along with our clients, in fixing this problem by proactively empowering the next generation of talent to embrace these roles and markets.

Look out for our interview series featuring women working in the UK PE and VC sector discussing DE&I in the industry launching next week.

For a confidential discussion regarding your career aspirations or executive search requirements contact [email protected]