Gender Smart Diligence
We believe that the best performing investment firms will be those that are approaching gender equality as they would any other business priority.
In an effort to fully use the levers we, as investors, have at our disposal, Stardust Equity compiled the Gender Smart Due Diligence Questionnaire: a diligence tool assessing firms’ commitments to gender analysis and toward gender equality. We subscribe to the view that gender balance and a gender-focused investment approach will positively impact investment performance. A culture that celebrates diversity and inclusion fosters creativity and innovation, brings different skills and perspectives, and ultimately leads to better business decisions. As such, this assessment is an integral part of our diligence process and we request that all our investment managers and advisors complete this questionnaire.
This process is not solely motivated by profit: we also recognize that capital is a catalytic lever for social change. Fundamental to Stardust Equity is our mission to put capital to work for both competitive returns and positive social and environmental impact. We have found that this gender-focused diligence process creates essential change in the field, sparking conversation and igniting important self-assessment and internal policy changes. Many investment firms do not know that they have diversity and inclusion problems because they are not actively assessing or measuring where they stand, or the practices, policies and culture that got them there. Through our gender-focused engagement, investment firms are able to identify, measure, and address their representation issues whilst becoming more transparent in the process.
Our Gender Smart Due Diligence Questionnaire collects information in the areas of interest where we believe gender analysis is most impactful:
Internal Policies & Practices
Internal policies and practices play an important role in combating the unconscious biases that prevent women from achieving their full potential and creating an organizational culture that equally values and promotes female talent. The questions in this section aim to understand the actions that firms are taking in order to achieve gender parity within their own ranks.
We believe that integrating gender analysis into financial analysis leads to better ability to detect risks and opportunities that may otherwise be overlooked, resulting in better investment outcomes. Further, by simply incorporating a gender analysis in investment decision-making and portfolio management activities, investors have tremendous leverage to influence how systems of power value women. The questions in this section aim to understand the actions that firms are taking as investors, owners and operators to promote gender equality.
Below are select priority questions excerpted from our Gender Smart Due Diligence Questionnaire.
Internal Policies & Practices
Who makes decisions within the firm and how is diversity brought into that process?
- How many women are on the firm’s board of directors?
What percentage of the firm’s board is composed of women?
- How many women are on the firm’s investment committee (“IC”)?
- What percentage of the IC is composed of women?
(If more than one committee, please list the most relevant ones)
- What percentage of the firm’s senior management team are women?
- What is the gender balance of other relevant councils, such as advisory councils?
Gender by level
- What percentage of the firm’s total employee base are women?
- What percentage of the firm’s employee base are women of color?
- What percentage of investment professionals are women? (by level, if available)
What is total compensation by level by gender? (Total compensation includes salary, bonus, carry and equity compensation, if applicable)
- Does the firm have a fair remuneration policy in place?
- What percentage of the firm’s top 10% compensated employees are women?
- What is the firm’s mean gender pay gap? What is the firm’s median gender pay gap?
- Did the firm ever perform an internal or external compensation audit to identify gender-based variations in pay?
How does the firm view gender diversity in the context of hiring?
- Does the firm have an equal opportunity policy in place?
- What are the hiring practices used to ensure gender diversity? (e.g., removing gender-specific language from job descriptions, requiring balanced slate of men/women to be presented to hiring manager, removing gender-specific names/words from CVs, using standard set of questions to avoid unconscious bias…)
- What percentage of new hires in the last year were women?
- As the firm is searching and selecting for candidates, are they consciously looking for gender balance?
Does the firm use a recruiting strategy to increase women hires?
How well does the firm retain female talent?
- What is the median tenure (in years) of the firm’s female employees?
- What is the median tenure (in years) of the firm’s male employees?
Developing and Promoting Talent
How does the firm develop and promote female talent?
- What is the firm’s record of promotions by gender over the past three years?
- Does the firm have formal or informal mentoring programs?
What workplace policies and practices are in place to promote gender equality?
- Does the firm offer fully paid parental leave? How many weeks of fully paid primary/maternity and secondary/paternity leave does your firm offer? For those employees that returned from parental leave, what was the average number of weeks taken?
- Does the firm provide family care benefits/services? (e.g., back-up care, family care, on-site child care, etc.)
- Does the firm offer an option to control and/or vary the start/end times of the workday or workweek (e.g., flextime), or the location (e.g., telecommuting)?
- Does the firm offer insurance coverage for contraception and/or fertility services?
- Does the firm have a sexual harassment policy in place and sexual harassment training?
How are workplace policies effectively implemented in your firm?
- Does the firm require a gender-diverse slate of candidates for management roles?
- Do senior managers have clear diversity and inclusion goals included as part of their annual performance reviews?
- Does the firm train its employees and managers on eliminating unconscious bias?
- Does the firm utilize an impartial third-party investigator to evaluate all sexual harassment allegations?
- Does the firm prohibit inclusion of a confidentiality provision (or silencing agreement) in sexual harassment settlement agreements?
- Does the firm have a Chief Diversity Officer (CDO) or an executive with the primary function of managing the firm’s diversity and inclusion initiatives?
How does your firm support gender equality externally?
- Is the firm a signatory to, or is the CEO/Chair a member of any organization(s) in which the primary mission is to advocate for gender equality? (e.g., 30% Club, Signatory to the UN Empowerment Principles, Signatory to the Women in Finance Charter)
Deal Structuring/Term Sheets
- How is the firm valuing gender balance on investees’ teams and boards?
- Is the firm negotiating term sheets/investment agreements to pursue gender balance, policies and reporting? (e.g., tranching capital injections tied to ensuring gender balance on senior team, demanding fair pay/ policies, flexible working, etc.)
Post Investment Management
- How is the firm reinforcing a gender agenda as a board member and investor/owner of companies?
- Does the firm receive sex-disaggregated data from investees about their employees, customers, beneficiaries, and/or partners?
This question list was created in alignment with the Criterion Institute, Catalyst at Large, Bloomberg Finance, and Equileap.