Aviva Investors: striving to tackle racial inequality in the investment industry

Marte Borhaug, Global Head of Sustainable Outcomes at Aviva Investors, delves into the firm’s engagement strategy towards racial inequality

Although investor engagement in the investment industry has helped drive change within companies on many fronts in recent years, including climate change and gender diversity, it has had far less impact on racial inequality.

Marte Borhaug shares how Aviva Investors is incorporating black representation more explicitly into their engagement strategy through their new framework.

Marte, Part of your role is to ensure your investment insights are linked to the UN’s SDGs. Has your team made any progress in battling racial inequality?

It is not good enough that companies satisfy themselves with policies that simply prohibit racial inequality – this only serves to perpetuate the status quo. If we are going to make a dent in tackling a legacy of institutionalised racism and inequality, it will necessitate proactive action to address the imbalance. 

Last year we produced impact research into racial discrimination, which highlighted that racism is endemic across society and analysed the negative impact this has on employees, customers and local communities who are key stakeholders for the companies we invest in.

Despite evidence that ethnic diversity at board and exec level is a bigger driver of performance than gender, companies’ rooms of power remain white, with 37% of FTSE 100 companies having no ethnic minority representation on the board. In comparison, 37% of US companies do not have a black member on their board. Moreover, companies often do not disclose the information; of the Russel 1000, 72% don’t disclose any racial or ethnic information about their workforce.

Therefore, we set out what we expect companies to do to tackle this issue through leadership and governance, employee management, product development and disclosures. These expectations were highlighted in our annual letter to chairs of the companies we invest in.

Leadership must come from the top, and we will hold boards accountable for progress. We have already updated our voting policy and will be voting against companies that do not have ethnic minority representation on their board already this year in the regions where information is available.

It’s taken us a decade to get to 30% women on company boards in the UK. It cannot take another decade for us to address the lack of representation of ethnic minorities.

How important is it for you as your team’s leader to create a diverse working environment?

We believe that diverse businesses – using diversity in its broadest sense to include diversity of gender, race, backgrounds – will be more successful and perform better. For over a decade, we have been calling for greater levels of diversity and inclusion within our own corporate practices and embedding this into our voting.

As a starting point, for example, Aviva has pledged to review its recruitment and promotion processes and have at least one board member from an ethnic minority by the end of 2021. We’re also taking part in the #10000 Black Interns initiative, set up to help Black students across the UK kickstart their career in investment management.

We are members of the 30% club – an industry group launched in the UK to achieve a minimum of 30% women on FTSE 100 boards and senior management by 2020.

You’re a long-standing mentor for Bethnal Green Ventures, an accelerator for startups interested in driving impactful change through technology. What are the demographics of the emerging businesses you try and help there? How do we get more people of colour founders into the world of business innovation?

It’s no secret that the venture capital sector’s record of investing in diversity is extremely poor. A report by Extend Ventures showed that between 2009 and 2019, just 0.24% of venture capital went to teams of Black entrepreneurs, with only one Black female founder raising Series A funding. 

The management teams of VC firms themselves must first diversify to champion inclusion in their portfolios. Often, a barrier to entrepreneurship for people of colour is that they don’t even feel that door is open to them – an ‘all-white’ investment team is less likely to encourage people of colour to enter the world of business innovation.  Recruitment policies have to be put in place to foster a culture of inclusion for diverse talent to thrive in the world of business innovation.


You’re also a supporter of the Female Founders Accelerator programme. While women as a group require more role models in entrepreneurship, within that group, women of colour need support too. How does the programme seek to incorporate this group of entrepreneurs into its support and advice environment?

Research from the US shows women of colour are among the fastest-growing group of entrepreneurs – this isn’t a coincidence; they have always had the potential and ideas; it’s just been consistently overlooked. We need to be encouraging more talent into the industry, not just trying to grab the talent already there. We need to accelerate bringing women of colour with potential into the business, exploring every possible way to do this until we can prove equitable representation.

Programmes such as mentoring and sponsorship are vital. This is partly because having a network of senior people who can open doors (or at least being able to build one by virtue of sharing a similar background) is something that comes with a certain level of privilege.  As these doors often don’t exist for people of colour or less privileged employees, firms need to set up programmes to level the playing field.

As a white woman and a leader in your organisation, how do you hope to eradicate racial inequality in a truly inclusive and respectful way to the experience of other groups?

To tackle racial inequality in a truly inclusive and respectful way, the narrative can’t be controlled by white voices. As a white woman, who’s never faced racial injustice, it would be wrong for me to define what needs to be done and how we eradicate racism from the workplace, the investment industry, and society more broadly.

This is why it’s important to ensure that we learn and listen to what people from ethnic minorities have to say. We’ve introduced things like reverse mentoring, where Black colleagues mentor our senior leaders, mandatory training on anti-racism and inclusion, as well as the appointment of independent experts to join, and advise on, our Global Inclusion Strategy. In 2020, we appointed The Diversity Practice and Dawid Konotey-Ahulu of #10000 Black Interns.

But we can’t put all the responsibility to fix racial inequality on our black and ethnic minority colleagues. The majority has to bear the burden of change. As a woman, I have always asked men to step up, be feminist, fight for equal rights, equal pay, and equal opportunities.

To tackle racism, I must do the same as a white woman. I am learning more about the problem by reading and listening to people who have experienced racism, and I am using my voice and time to take action. I am sure that I won’t always get it right, but we can’t let our fear of failure lead to inaction. I urge everyone to think about what they can do to combat racism.

Asset managers also need to engage with governments and regulators to recognise institutional racism and create and implement legislation, not just on broader diversity matters but specifically on the issues faced by black people.  Education is key; by listening and learning, we can incite change.

The asset management industry has a long way to go. For Aviva Investors, timelines and measurable, urgent targets have been set. Black representation on boards and senior management must be improved. Business strategies must address the full array of customer types, recruitment and retention practices need updating, and accurate data must be collected to measure progress.

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