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Can your investments help fight racism?
21 July 2021

Can your investments help fight racism?

In business, diversity can be the difference between success and failure. But while progress towards racial equity has been frustratingly slow, pressure is now mounting on companies and investors to act.

From Alabama to Amsterdam; from San Jose to Seoul; millions of people from across the world took to the streets in June 2020 to take part in Black Lives Matter anti-racism protests. Anger at the tragic deaths of three black Americans, George Floyd (46), Breonna Taylor (26) and Ahmaud Arbery (25), may have been the spark that lit the fuse, but the demonstrations reflected deep-rooted and long-held resentment against a societal ill that has festered for too long.

Racism remains pervasive across society, putting people from black and minority ethnic backgrounds at a disadvantage. It begins with things we depend on like education and housing. Black people in the UK are 21 times more likely to have university applications investigatedᶦ, while almost a third of minority ethnic respondents believed they would be treated unfairly by council housing departments, housing associations and private landlordsᶦᶦ.

This pattern is also reflected in business and finance. According to data made available from the US Federal Reserve, more than half of companies with black owners were turned down for loans, a rate twice as high as white business ownersᶦᶦᶦ. Discrimination leads to disparities in wealth. For example, the average wealth of a white family in America is ten times that of the average black familyᶦᵛ.

A profitable concern

Why is this an investor issue and something that pensioners and pension managers should care about? Beyond a clear ethical imperative, it matters because the economic and societal costs of racism are high and will impact on returns.

Research has found that top-team ethnic and cultural diversity is correlated with profitability, even more so than gender. McKinsey researchᵛ found companies with the most ethnically diverse executive teams – not only with respect to absolute representation but also of variety or mix of ethnicities – are 33 percent more likely to outperform their peers on profitability. Investors will therefore be negatively impacted if companies do not take this into account.

The McGregor-Smith “Race in the workplace” review found similar benefits at a national level. It highlighted that if the employment rate for ethnic minorities matched that of white people, and individuals were in occupations commensurate with their qualifications, the benefit to the UK economy would be around £24 billion a year, or 1.3 per cent of GDP. Pension providers who are large investors in the economy cannot ignore such evidence.

It’s not just hiring, but promotion and retention. Employees from black and other ethnic minorities are promoted at a lower rate and leaving companies at a higher rate than white colleagues, with black employees at a particular disadvantage. The Joseph Rowntree Foundation found black and ethnic minority groups tend to have unequal access to opportunities for development and a lack of clear information on training or progression routes within their workplaces was a key factor. This can be made worse if progression relies on opaque or informal processes, if there are a lack of black and ethnic minority role models or mentors at higher levels within their workplaces to provide support and advice, or if there is a gap between equality and diversity policies and the realityᵛᶦ.

Customers count

Racism is also present in how companies develop, produce and distribute products and services. In the beauty industry, for example, some companies have actively marketed to black customers with a detrimental effect, according to research published in 2017 in the American Journal of Obstetrics and Gynecologyᵛᶦᶦ. Over the decades, companies have sold products like hair straighteners, skin lighteners and odour-masking products disproportionately to black consumers, with some found to contain potentially hazardous substances like formaldehyde, mercury, and phthalate. The pharmaceutical industry, meanwhile, has been criticised for excluding black patients and physicians from clinical testing, research and product developmentᵛᶦᶦᶦ.

Not delivering for ethnic minority customer groups is not just a risk if done wrong but could mean missing out on opportunities.

By 2030, it is expected the proportion of people from ethnic minorities will be close to 20 per cent of the UK population and rise to over 30 per cent by 2051. Globally, between 2015-2050, one-half of the world’s population growth will be concentrated in nine countries, five of which are in Africa and three in Asia.

Generationally, being naturally more ethnically diverse, millennials represent the largest generational cohort that has ever existed, around 80 million people with a total buying power that exceeds the Baby Boomers'. Companies need to understand these markets and the customer segments within them to remain competitive.

The well-regarded Edelman trust survey showed that 64 per cent of consumers would reward firms they see as engaged in some kind of activism and punish those that weren’t sustainableᶦˣ. A more recent Edelman poll, carried out after the death of George Floyd, discovered Americans expect brands to play a key part in addressing systemic racism: 60 per cent said they would buy from or boycott a brand based on its reaction to the Floyd protests. This figure rose to 70 per cent for the 18-34 age group.

To tailor to these audiences, companies need to show that they are walking the walk and taking action or face boycotts and reputational damage.

A growing investor voice

Investor action against racism is intensifying and we expect this to continue to increase. Every spring, companies hold their Annual General Meetings to discuss their results and strategy with investors and other stakeholders. This year race and ethnicity was a new emerging theme with resolutions put forward calling on companies to take action, from calling on big firms like Citi and Amazon to commission racial equity audits analysing their impacts on civil rights, equity, diversity and inclusion, to calling on the board of Walt Disney to strengthen oversight of workforce equality issues including racial and gender pay equity.

Whilst few of these proposals received the majority support needed to be adopted, support was high enough to send a strong signal to companies that these issues are here to stay and that they are likely to face increased pressure to agree to future reviews. Shareholder proposals for independent racial audits filed at Johnson & Johnson and Citigroup Inc. received backing from more than a third of shareholders at annual meetings this month. At Goldman Sachs Group Inc., 29% of shareholders voted for an audit at the company’s annual meeting. The investors’ recommendations called for a deep-dive analysis into the companies’ business models -- from policies to products and services -- to determine whether they cause or perpetuate racial inequities.

At Aviva, we are engaging with companies on these issues. Aviva Investors were amongst the first asset managers to commit to voting against directors in 2021 if they failed to make progress on ethnic diversity. We also supported all the above-mentioned race-related resolutionsˣ and have clearly set out our expectations as to what actions are neededˣᶦ.

First of all, we expect to see leadership, strategy and governance. Companies must create an inclusive culture, improve representation of black and ethnic minorities, particularly at the board and executive levels, and be aware of the presence of racism in business strategy and enterprise risk frameworks.

Secondly, companies must consider and address their impact on stakeholders. We expect firms to have policies and processes in place to ensure recruitment, promotion and retention do not discriminate against people from ethnic minorities. We also expect them to do more to understand and act to improve the impact they have on customers, ensuring products and services are truly inclusive. We also encourage companies to consider their suppliers’ practices and move towards actively supporting suppliers from diverse backgrounds. We also welcome companies taking steps to play a role in communities to tackle racial discrimination in society.

Finally, we need firms to improve transparency. Too few companies are disclosing the necessary data that allows an investor to assess their performance. Companies must disclose data, particularly on black and ethnic minority representation and pay.

Look in the mirror

We include ourselves as a company that must do better. We are already using our voice to ensure that our customers’ money is driving companies to change and we are working with the broader industry to encourage mutual action through the 30% Club investor group and the Investment Association. However, we too must walk the talk and to that effect we launched the Black Lives Matter Action Plan in 2020. It sets out our commitments in three key areas: support black colleagues, educate our people and act wider than Aviva through our Aviva Foundation and Aviva Community Fund.

We have already begun to turn words into action. We have audited our recruiters to make sure they use inclusive practices and this summer we take part in the #10000 Black Interns programme helping black students across the UK kickstart their career in investment management. We’ve signed up to the Change the Race Ratio pledge, which means in the UK we will publish our ethnicity pay gap in 2021 and go beyond board representation and set targets to increase representation of people from ethnic minorities among senior leaders by 2024. We have run mandatory anti-racism training for all our people in the UK and to ensure we’re getting the appropriate guidance and challenge, we have appointed two independent external experts to join, and advise on, our Global Inclusion Strategy: The Diversity Practice and Dawid Konotey-Aluhu of #10000 Black Interns.

It is a step in the right direction, but we will ultimately be judged by results. This is what we expect from companies we invest in, and what our investors and clients demand of us. The question you might want to ask is what can your pension do to tackle racism?



ᶦ The Independent (2018, 23 April) Black people in UK 21 times more likely to have university applications investigated, figures show, accessed here: 

ᶦᶦ Race and Equality foundation (2007) Ethnic Inequalities in health: the impact of racism, accessed here: 

ᶦᶦᶦ The Guardian (2020, Jan 16), Black-owned firms are twice as likely to be rejected for loans. Is this discrimination?: 

ᶦᵛ Brookings (2020, 27 February) Examining the Black-white wealth gap: 

ᵛ McKinsey (2017) Delivering through diversity which expands on their 2015 report Diversity Matters: 

ᵛᶦ Joseph Rowntree Foundation (2015): ‘Entry to, and Progression in, Work’. Available at: More can also be found in Joseph Rowntree Foundation (2015): ‘Supporting Ethnic Minority Young People from Education into Work’. Available at: 

ᵛᶦᶦ Zota and Shamasunder (2017), The environmental injustice of beauty: framing chemical exposures from beauty products as a health disparities concern, accessed here: 

ᵛᶦᶦᶦ Propublica (2018, September 19) Black Patients Miss Out On Promising Cancer Drugs, accessed here: 

ᶦˣ Edelman (2018) brands take a stand, accessed on 

ˣ There were 13 specific race-related resolutions in 2021, all of which were related to US companies, and we have supported them all. There could be other resolutions that focus on broader diversity and inclusion, including race, which we have not captured in this specific analysis.


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Last update: 22 July 2021

Marte Borhaug
Marte Borhaug
Aviva Investors
Global Head of Sustainable Outcomes

Pensions Manager

Salary: £50000 - £80000 pa

Location: London (Stratford)

Pension Administrator (Hybrid Flexible Working Option)

Salary: £27000 pa

Location: South Yorkshire (with Hybrid Flexible Working Option)

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