ILPA releases diversity guidelines and resources

Association adds questions on diversity into key area of DDQ
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ILPA has released a range of resources to suppose GPs and LPs seeking to improve diversity and combat discrimination.

Diversity and inclusion is a “strength” all in the private equity ecosystem should embrace, ILPA said

The institutional investor association said this week it wants to inspire “conversations” between LPs and GPs on inclusion as it published a batch of new guidelines and recommendations.

The documents, put together throughout 2018 by ILPA members, include a template for GPs to track and report on diversity in a structured manner. Managers adopting the new spreadsheet will be required to provide figures on gender and ethnic categories of professionals working across investment and back-office teams.

GPs can also subscribe to a new ILPA code of conduct on harassment, discrimination and workplace violence. Signatories to the document must not only commit to equal treatment of employees but also develop a process to enable infractions to be reported without fear of consequence, investigated and acted on accordingly.

Minority report
Private equity firms that do not make use of the new resources could find LP questions mount on the issue regardless. The association, which represents 475 LPs with $2trn in investments in private equity, added diversity to the key areas of its due diligence questionnaire (DDQ).

Throughout 2018, experts have noted the rising sophistication of LPs’ operational due diligence (ODD) exercises. On diversity in particular, investor types including pension funds are reported to be pushing to know more. ILPA’s new DDQ section provides a standardised set of questions, including whether the GP has faced discrimination claims or worked to attract and mentor minorities.

The share of female partners in UK GPs and other fund managers has not budged from the 13-14% range over the last five years

Diversity’s formal entrance to the ODD conversation comes as the threat of legal cases looms over private equity. According to lawyers, the class-actions now underway in the banking sector could replicate in the asset class, where senior diversity figures in the UK have remained stuck in the 13-14% range for years.

Speaking to The Drawdown in September, Caroline Field, partner at Fox & Partners, urged GPs to look “carefully” at decisions on women’s pay and progression. “What we’re seeing is a greater risk for firms making those decisions [at the partner level] without some degree of transparency,” Field commented.

See here for the new DDQ, here for the code of conduct and here for the template