Ethnic diversity poses a challenge in Asia DEI policies
Investors and portfolio companies’ diversity, equity and inclusion (DEI) policies in Asia may be facing some headwinds from legal developments in the US, but the challenges really begin at home.
Debanik Basu, APG Asset Management’s senior manager of global responsible investing and governance for Asia-Pacific, told AsianInvestor: “Ethnic diversity isn't a very big theme in Asia, but globally, if you look at asset managers, it is a predominant theme.”
“Until very recently, even the largest multinational asset managers that were doing things intensely in their home jurisdictions would throw up their hands and say, ‘Oh, it's just too complicated – I can't do it in Asia’,” Marcia Ellis, a Hong Kong-based partner and global co-chair of the private equity practice at US-headquartered law firm Morrison Foerster, told AsianInvestor.
Ellis said ethnicity considerations had gained much less traction than other components of DEI, but that things may be changing due to pressures within institutional investment businesses.
AsianInvestor reached out to more than 20 institutional investment sources for comment on this story, but there was no response.
DIFFERING PRIORITIES
“On women, [investors] are doing pretty well,” Ellis said. “LGBTQ status? It differs between jurisdictions depending on the level of sensitivity, so in Hong Kong it's fine. Mainland China, not so much. Singapore, not so much.
“It was only after the Black Lives Matter movement in the US that there was basically a bottom-up demand among employees in Asia who started saying, ‘We want to focus on ethnicity in Asia, too,” she said.
Stereotypes involving supposedly Asian notions of discretion when it comes to personal matters such as sexual orientation and ethnicity are by now familiar, but Ellis said that notwithstanding these, a genuine difficulty confronted asset owners, managers, and portfolio companies when it came to identifying and recognising — and therefore promoting — ethnic diversity in the workplace.
“It’s complicated,” she said. “We’re really just at the early stages of figuring out how to count people. Until you can count people, you can’t do anything. And if you’re going to have people self-identify, what categories should you have in each jurisdiction?”
Basu said the lack of data was an obstacle to including factors such as ethnicity in DEI policies, but noted that India’s new Business Responsibility and Sustainability Reporting Framework, which mandates certain diversity disclosures, represented a step in the right direction.
“Companies In India will now need to disclose what they're doing on diversity and inclusion, especially regarding certain marginalised communities and certain vulnerable sections of society, so that data is slowly coming in,” he said. “Companies are just now in the process of slowly moving the needle on gender diversity, so they're making progress on that front, and I think the next stage will be to include these other forms of diversity into the overall picture.”
Ellis shared the view that gender had been the low-hanging fruit in DEI, not only because it was a simpler marker than ethnicity, but also due to organic factors.
“A funny thing about gender is people want their daughters to be successful, and they don't understand why their daughters are not being hired into private equity firms, for example,” she said. “There’s a slow, generational process of them having daughters and not wanting their daughters to be left out. But not everybody is going to have an ethnic minority child, so you don't have the same phenomenon of just waiting for that generational thing to happen.”
Ellis said that DEI was long going to remain a patchwork due in large measure to differences between prevailing social norms in various settings, and that progress would inevitably be gradual.
“You don’t push for the moon right away,” she said. “You need to start with some goals that are achievable, and it's going to be different within each jurisdiction. In Hong Kong, gender is a really easy one, as are LGBTQ status and people with disabilities. In Singapore, gender is really easy, and ethnic diversity is something that the government would very much support you on. So, it’s about having realisable goals in these areas and going for those goals and realising that other things are longer term.”
Basu said that regardless of government or regulatory imperatives, companies would only benefit from adopting DEI policies.
“The direction of travel is that companies need to embrace diversity to increase value in the long run,” he said. “It’s always going to be an opportunity in this region to capitalise on lots of diversity. Being able to accommodate all these viewpoints gives companies here a lot of leverage. That’s something that has to be seen as a positive.”