The top 10 PE and VC firms for DE&I, according to Equality Group

ICG, Hg and Eurazeo are the highest-scoring PE firms in an index formulated by Equality Group, a DE&I consultancy for private markets.

Intermediate Capital Group is private equity’s most progressive firm on diversity, equality and inclusion, according to the Equality Group.

The Equality Group, a DE&I consultancy for private markets, scores private equity and venture capital firms annually on their DE&I performance using an index it has developed in-house. The index, called Honordex, gives firms “an indication of how they’re performing on EDI and benchmarks them against their peers”, Equality Group chief executive Hephzi Pemberton told New Private Markets.

The top 10 private equity firms in 2023, scored out of 100, are: ICG (87); Hg (81); Eurazeo (80); Partners Group (73); The Carlyle Group (73); CPP Investment Board (72); Investcorp (67); Advent International (67); EQT (65); and TowerBrook Capital Partners (64).

Notably, none of these firms has a woman as chief executive officer.

The index only uses information in the public domain: “such as an organisation’s website, social media profiles, HR policies and company reports”, according to a statement from the Equality Group. The index was developed with a group of “social psychology and behavioural science academics and practitioners”, said Pemberton. Equality Group has been listed in ILPA’s DE&I roadmap, a list of best practices and resources, said Pemberton.

The top 10 venture capital firms in 2023 (scores in brackets) are: Kinnevik (86); Bethnal Green Ventures (82); Atomico (71); HSBC Strategic Innovation Investments (45); General Catalyst Partners (45); IP Group (44); Balderton Capital (41); Anthemis Group (40); BGF (33); Sapphire Ventures (28).

For this year, 301 private equity and venture capital firms were evaluated globally.

Equality Group releases these top 10 rankings “to inspire and elevate good performance – that can motivate the industry to see what they could be doing and how they can be performing better,” said Pemberton. Firms with more than £1.5 billion AUM, or those that make a direct request, are scored. The index evolves every year: “We’re always finding ways that we can make it more representative,” said Pemberton. The 2023 ranking, which counted 301 firms, was released last week.

“We are looking for demographic representation at leadership”; a flat hierarchy, as evidenced by staff listed alphabetically or by team on the website’s team page, rather than hierarchically or only leadership listed; opportunities to work remotely and work flexible hours, shown in job adverts and policies; equal parental leave options for all genders; equal benefits packages across the company.

Does Equality Group’s use of public domain information mean it evaluates the quality of firms’ marketing strategies, rather than actual DE&I performance? For example, a firm with a low marketing budget may be very progressive on DE&I but its website may not reflect this.

No, says Pemberton: Public-domain evidence such as this shows “the organisation is taking responsibility for [DE&I action]… It takes the cognitive burden off underrepresented individuals, whether candidates, management teams or suppliers about whether this is an organisation where they would be welcome and have the chance to thrive.

“There are certain aspects that feed into the Honordex score which cannot be massaged by a large marketing budget: most significantly, who leads the organisations, how diverse is your team overall and what data have you been measuring and publishing around DE&I both at the GP and the Portfolio level.

The index “breaks down very clearly what you can be working on”. “It uncovers areas where firms are potentially diversity-washing”: discrepancies where firms make public statements of commitment to diversity, but these are “not backed up with representation or any data or strategy that we can see to prove [that the firm is taking action on DE&I]”.

“There are a number of smaller funds ranking in the top quartile of Honordex, who are likely to have much smaller marketing budgets than the mega buyout funds, and yet they have tangible data and have taken significant action on DE&I over the past 12 months, which is reflected in their higher score.”