ILPA reports DE&I progress among growing list of signatories

Those that sign up to the organisation's Diversity in Action initiative track annual improvement in DE&I, board diversity and target setting.

The Institutional Limited Partners Association announced a growing list of signatories to its diversity, equity and inclusion initiative in private markets with its second annual report.

ILPA said the initiative’s geographic reach is expanding outside North America, with 38 new signatories, up 52 percent from April.

The latest report focuses on how signatories include DE&I in their investment process, including manager selection, due diligence and monitoring.

It notes how many signatories focus on DE&I beyond the initial investment, monitoring progress annually. Among GPs, 54 percent collect relevant information annually from portfolio companies. Among LPs, 59 percent do the same.

Board diversity receives particular emphasis among GPs. Seventy-two percent of GPs report that they promote board diversity within their portfolio companies, while 28 percent have set board diversity targets, the report said.

Information gathering and qualitative assessments receive special attention from LPs because of a lack of historical data. Twenty-two percent of LP signatories say DE&I progress would be a factor in deciding to invest in a successor fund.

The report also highlights revisions to the ILPA Diversity Metrics Template designed to capture team-level diversity. The template is open for public comment until 24 September. The initiative allows both GPs and LPs to signal concrete steps they have taken to advance DE&I both within their organisations and the private equity industry.

The Diversity in Action initiative started in December 2020 with 45 signatories and has grown to 180 firms. Names include KKR, the Carlyle Group, Apollo Global Management, Blackstone, Brookfield Asset Management, Chicago Teachers’ Pension Fund and Teacher Retirement System of Texas.

Capital allocators are now making DE&I a regular and prominent feature when they apply due diligence before investing, the report said. At least half of the signatories say they use the revised Diversity Metrics Template in their reviews.

While allocators look for disclosure on gender diversity within GP teams, they take a nuanced view of diversity beyond gender where localised considerations may present challenges collecting relevant information, the report said. Of the signatories, 68 percent rely on the manager’s narrative or make their own qualitative assessment.