How to ACT Guidance Pillar 1 : Action
01. Pillar 1: Purpose, vision and values
An organisation’s purpose, vision and values should be the keystone of communication to stakeholders. This pillar is intended to enable the firm to be able to showcase their approach and demonstrate how their purpose, vision and values are linked and how this is visible across their external position and internal practice.
02. Question set
What is the Firm’s position on culture and values?
Explain the firm's commitment to DEI embedded in its values, including how it seeks to demonstrate and measure this.
a. Explain the Firm’s commitment to DEI embedded in its values
b. Explain why the Firm has no commitment to DEI embedded in its values.Does the Firm have a specific commitment to sustainability and culture embedded in its values?
a. Explain the Firm’s commitment to sustainability and culture embedded in its values.
b. Explain why the Firm has no commitment to sustainability and culture embedded in its values.How does the Firm promote DEI externally, and review and monitor DEI developments (include any external initiatives that the Firm supports or is aligned with)?
What is the Firm’s main priority in the coming 12 months to enhance corporate culture and support DEI?
02. Action
Building a firm-level statement that sets out the commitment to diversity, equity and inclusion (DEI) within its core values along with the vision of the impacts this is expected to have on the business.
The firm’s approach to sustainability and culture, in particular how these are embedded in values and the intended real-world impacts through investment practice.
The externally conducted initiatives that are supported by the firm, including industry collaboration.
The internal forums that are available to employees to influence and shape culture.
What can a firm say about its commitments to culture and inclusion?
Whether culture, diversity and inclusion is within senior considerations and remit; how success is measured, and who is responsible for it.
Any targets aligned with third-party initiatives or internal metrics and milestones (the details of which can be provided in more appropriate documents elsewhere).
How resources are allocated and the key aspects of implementation.
Identifying positive behaviours and actions.
The ownership of activity and a link to an underlying action plan that is signed off by senior executives.
04. What we expect to see
Ensuring that diversity, equity and inclusion are evident within existing firm-level statements or equivalent can be a signal that the firm considers it to be a strategic business consideration. But firms may not have made an explicit link between their external position on values and commitments, and what that means for what is happening inside the business.
Most firms have a policy or statement that demonstrates what drives their external behaviour in business and in investment practice. For example, stating the intended purpose or outcomes of investment practice, its vision for how it services clients and beliefs and commitments to sustainability. The firm can choose to include within these statements whether commitment towards a diverse, equitable and inclusive way of working that represents wider society.
Creating a link between the external commitments on values in investment practice and internal values that the business and employees adhere to helps draw a holistic picture for stakeholders. It can show, for example, how the firm will horizon-scan for risks, enable and encourage diversity of thought in teams, and ensure clients are offered the best range of products and services to suit their needs.
This communication does not have to be lengthy. It can be an impactful couple of paragraphs that direct stakeholders to underlying details, including signposting to relevant documents, committees and collaborations.
It should aim to clearly state what the firm is committed to, why it’s important (eg, is it a core value, a business driver, or does it relate to a principle or key activity?) and the overall activities or objectives that the firm undertakes to support and deliver on that commitment. For example:
This will help to show whether/how the firm demonstrates and measures the impact of its values. And how their activities move the business towards its objectives, as well as achieve or deliver outcomes on behalf of the client.
04. How to get there
These public outputs will build on internal conversations with key stakeholders in the firm, at senior levels. This will vary according to the firm’s level of engagement and progress.
For some firms this will simply mean having identified goals in relation to addressing DEI or deciding on future targets. Others will be in the process of development of more granular steps and measurement. They may have begun the process of acceptance within internal groups and implementation of concrete actions. Some will have integrated their thinking into their external statements – knowing that this can modify over time as conditions change.
Staff often look for the ‘why’ – (why should I do that, why do we support that), so having a clear understanding of the firm’s position on values, and how it publicly commits to them, will help clarify. It should be clear precisely where employees participate in the creation and cultivation of company values, and how key aspects of this are communicated to the employee base.
This approach extends to external initiatives that the firm supports. The firm and stakeholders should understand why each initiative is being supported, and how the selection process takes place, as well as if/how the business is assessing the impact of the initiative and its own role in the outcomes. There should also be the 10,000-foot view of all the commitments taken together; the firm should consider if there are inclusion measures and initiatives that aim to solve underlying factors that will bring change across more than one issue, rather than having a series of diversity lenses that can dilute overall impact.
This would mean, for example, assessing initiatives more strategically for impact rather than creating competition for funding, or having a low budget set across a multitude of initiatives that require larger or multi-year funding. Statements on purpose, vision and values can also describe at a high level how the company maintains or brings in expertise on relevant topics. Further details, including how this is cascaded through the organisation, can be described in more targeted disclosures or process documents.
“Clarity in firm-level statements enables all employees to understand the company’s commitments, as well as where individual employees stand in relation to them. This enables the creation of individual responsibilities, targets and access to resources and outcomes. It also helps to create understanding across the business and improve”
05. Showing progress and creating change
The firm should be able to demonstrate the real-world impacts of its activities, using references to targets and the milestones that are being identified along the way. Even if there is no formal measurement in place, there should be an outcome-focused objective that the business is moving towards. This could be implementing a process or improving employee involvement. Commitments can be for positive change but also zero tolerance of poor behaviour, for example having clear rules for how colleagues interact and consequences for breaches.
Identifying a key priority for the coming 12-month period helps to refine thinking. The goal might be to tackle a significant deficit that has been identified, to leverage on progress that has been made– perhaps one area is progressing well and needs a boost to become fully eective or to build on an opportunity to advance a lesser known issue or cause that has received publicity. An example of the latter would be the focus on well-being in recent years that led to open conversations on mental health in the workplace and changes in practice.
Firms should also consider how they will address data that shows progress is not being made, through actions including analysis of issues, the allocation of more resources and ensuring goals are appropriate.
06. Further resources and ideas
Financial Conduct Authority, 2021. A regulatory perspective: measuring and assessing culture, now and in the future, the role of purpose and the importance of D&I
Financial Conduct Authority, 2020. A regulatory perspective: the drivers of culture and the role of purpose and governance
World Economic Forum, 2019. The business case for diversity in the workplace is now overwhelming
https://www.weforum.org/agenda/2019/04/business-case-for-diversity-in-the- workplace/
Harvard Business Review, 2020. Getting Serious About Diversity: Enough Already with the Business Case
https://hbr.org/2020/11/getting-serious-about-diversity-enough-already-with-the-business-case
Industry examples
Aviva Investors, accessed July 2022. Our Culture
Schroders, accessed July 2022. About Us