Mission Alignment and Manager Diversity

Strategic Investment Group has been developing and implementing sustainable and mission-aligned investing programs since 1989, and we have continued to refine and evolve our capabilities over time.  

As signatories to the UN-supported Principles for Responsible Investment (PRI), we support the integration of environmental, social, and governance (ESG) factors into our managers’ investment processes as well as improvement in the ESG disclosure and transparency of securities issuers. 

Beliefs

• ESG characteristics are value-relevant and should form a critical piece of every manager’s investment process.
• ESG investing should emerge from a distinct discipline to a component of the standard investor toolkit.
• Investment initiatives that are an issue of institutional identity require a distinct approach focused on ensuring alignment between institutional values and the investment portfolio.
• The best investment decisions arise from a culture and process that can harness the power of diverse perspectives.

We also engage with a number of other ESG-related initiatives such as:

• Athena Alliance
• Confluence Philanthropy (Members)
• Gratitude Railroad
• Intentional Endowments Network 

Download Strategic's 2023 Sustainability Report

Diversification of managers by philosophy, process, approach, and background is a core tenet of our portfolio construction philosophy.

We have long valued diversity in our firm and in our industry and recognize that increasing manager diversity is a multi-tiered challenge that requires proactive outreach and advocacy.  In order to find managers of diverse backgrounds, we need to actively seek them and work towards removing obstacles to our finding and retaining them. We also need to bring more people from underrepresented groups into our business, to create opportunities for their development and mentorship, and to forge a path to promotion into key positions of leadership and firm ownership. 

Our primary source of potential managers is our network of industry contacts, and networks tend to associate with people of similar backgrounds.  So when we find firms with meaningful diversity of ownership, we seek spinouts and referrals from these groups.  We have also been actively meeting with new potential partners and associations who help us further widen our lens in seeking diverse managers.  Manager databases that track diversity information can be useful tools to augment these efforts. 

Comparing information about the managers in our client portfolios with data provided by Knight Foundation studies in 2019 and 2020, we have found that the percentage of firms in our client portfolios with meaningful diversity of ownership is significantly higher than the average in each of the public equity, hedge fund, private equity, and real estate asset classes.  We will continue our efforts to source managers with diverse ownership and to stay meaningfully ahead of these averages.      

We also engage on issues of diversity, equity, and inclusion with the managers in our client portfolios as an important part of our due diligence and ongoing oversight.   We track diversity statistics for these managers, actively work with them to understand their plans for increasing diversity, encourage concrete steps toward this goal, and monitor progress. Our efforts focus both on short-term goals (e.g., addressing hiring practices, pay equity, inclusiveness in the workplace), and long-term goals (e.g., increasing the pipeline of candidates from underrepresented groups and ensuring greater diversity of senior leaders and firm owners).     

As part of this engagement, we routinely ask about recruiting and retention progress, inquiring about specific goals and timelines for reaching them with regular intervals of follow-up.  We discuss training, development, and career mobility of women and people from underrepresented groups, and focus on a manager’s organizational structure, human resource professionals’ role at the firm, and overall employee relations.

Over time, we have seen meaningful change.  Managers have been more forthcoming with information, have adopted practices espoused by us, and have engaged consultants to advance these efforts.  We are encouraged by this progress, and it will continue to be a focus.  We recognize there is more work to be done, and are committed to these efforts.