Olivia Gull, Analyst on the Governance and Responsible Investment Team, discusses the importance of diversity and inclusion from an investment perspective, and key indicators that investors can look out for when analysing a company’s diverse culture.

  Key Takeaways

• Companies are increasingly being held accountable by consumers who reward brands aligned with their values.
• For many global businesses, matters of diversity and inclusion go beyond the workplace, and efforts are made to address discrimination in the countries in which they operate.
• Investors should be wary of companies that fail to futureproof themselves in terms of diversity. Socially conscious brands that make inclusivity a central part of their business strategy and brand ethos are more likely to succeed.
• What gets measured, gets improved. Investors should focus on company disclosure, diversity-related targets, and meaningful initiatives in place. A list of suggested investor questions can be found at the end of this paper.

 

There is growing evidence to support the argument that diversity within the workplace is good for business. Reports from Credit Suisse¹, Exane², and Morgan Stanley³ all find a positive correlation between employee diversity and company share price performance. McKinsey⁴ and BCG⁵ studies also show that diverse leadership teams are more likely to outperform on profitability and value creation. There is growing demand for gender-equality investment bonds as well as diversity indices and a greater focus on ‘gender-lens’ investment products, which consider the positive and negative impact of financial investments on women and girls.

So, how should investors start thinking about diversity in their portfolio and what metrics are the most meaningful? As data providers try to fill the diversity vacuum with relevant environmental, social and governance (ESG) data – Bloomberg currently offers 77 diversity-related fields, most of which are unpopulated – it is difficult to know what to look for and where to look for it.

Ultimately, the value of diversity is tied to uncorrelated thinking. If members of a management team all share similar backgrounds, one individual’s over-weighted opinion may go unchallenged and it could lead to ‘group-think’. A team that is not actively pursuing uncorrelated thinking is probably not generating pioneering thinking and this lack of diversity could damage a company’s potential value.⁶

Moving past board diversity

Over the past few years, investors and regulators have focused on board diversity as a useful metric to analyse companies. Soft laws and regulations regarding female board representation have increased across the world and US states including California and New Jersey have passed bills respectively.⁷ Against this backdrop, the pressure on boards to diversify has increased and more investors are voting in favour of diversity-related shareholder proposals.

In the US, nearly 50 shareholder proposals regarding diversity were submitted in 2019 with a number of asset managers indicating that they will vote against boards that are progressing diversity too slowly.⁸ Meanwhile, Goldman Sachs announced that it will no longer help take companies public (the process of offering shares of a private corporation to the public) unless there is “at least one diverse” board member.⁹

Subsequently, all-male boards are moving towards extinction with only a handful left across companies that are constituents of the FTSE 350 Index in the UK¹⁰ and the ASX200 in Australia.¹¹ Japanese companies are lagging behind peers with only 70.7% of companies on the Nikkei 225 and 77.2% of companies on the Topix 100 Index listed having women on their boards in 2019. In addition, only one company among both indexes, which make up Japan’s largest companies by market capitalisation, had more than 30% female directors¹².

In terms of board diversity, the conversation is now moving away from gender and focusing more on ethnicity. In the UK, the Parker Review reported that in 2019, 37% of the FTSE 100 constituent companies and 69% of companies listed within the FTSE 250 Index did not have any ethnically diverse representation on their boards¹³. In Australia, the Governance Institute reported that the number of directors from non-European backgrounds has gone backwards since last year, with 90% of board members of Australia’s Securities Exchange (ASX) top 300 constituent companies from an ‘Anglo-Celtic’ background.¹⁴ Conversely, in the US the Spencer Stuart report highlighted 93% of the top 200 S&P 500 companies have at least one ethnically diverse director, and 78% have at least one African American/Black director.¹⁵

The Black Lives Matter movement has increased the spotlight on ethnic diversity and brought the conversation back into the boardroom. In the US, numerous companies have signed up to The Board Challenge, pledging to add a black director to their board within 12 months.¹⁶ And in the UK, the Confederation of British Industry (CBI) has launched Change the Race Ratio campaign, for companies to set and publish clear targets for greater racial and ethnic diversity at the Board and Executive level.¹⁷

Although board representation is a good corporate governance metric, there is mixed evidence and inconclusive results from studies to prove that this impacts company performance. Investors have since moved further downstream, engaging with companies on representation at executive level, where studies have found stronger correlation between diverse management teams and company performance.¹⁸

Harassment hurts performance

Looking at high-level diversity data is not enough to determine a company’s inclusive culture. As a New York Times article on Signet Jewelers revealed: a company with a seemingly strong diversity profile – 50% board diversity, female CEO and part of the Bloomberg gender-equality index – also had a workplace culture of pay inequality and gender discrimination that led to an unresolved class-action lawsuit.¹⁹

Media coverage on workplace culture and inclusion is continuing to rise and is a growing reputational risk to companies. Harassment scandals have led to a number of CEO and executive resignations at a wide range of high-profile companies. The responses from these companies have differed; some have taken full responsibility, some have vowed to implement better systems, and some have refreshed management. How a company responds to these allegations provides investors with insight into whether human capital and an inclusive culture is a priority for senior management.

It is, however, difficult for investors to adequately analyse the risk of litigation in this area and many lawsuits are settled confidentially before reaching class-action status. In some cases, harassment claims have had a material financial impact: Guess shares dropped almost 18% on the media coverage²⁰, Wynn Resorts lost $3.5 billion in value when allegations of misconduct were published²¹, and Fox News paid $45 million related to litigation costs²². A recent academic study highlighted how ‘harassment-prone firms’ on average underperformed the US stock market by approximately 19.9% the subsequent year, negatively impacting profitability with a decline in return on equity, return on assets and an increase in labour costs.²³

Although anti-harassment policies do not represent how the policy is enforced and therefore should not be used as a proxy for good governance, they can be a good starting point for discussion. Investors can engage with companies to understand: how complaints are dealt with (what channels are in place to report issues and what level of management deals with these complaints); if there are comprehensive diversity, anti-harassment and human rights policies that mention certain committees, employee forums or governance structures; or if the whistleblowing hotline is regularly used and whether management can provide any examples.

Certain sectors are more vulnerable to harassment exposés, including male-dominated industries that have a historically reported ‘lad-culture’, such as the technology or finance sector. Sectors with a predominantly low-paid female workforce, including the hospitality, retail and restaurant industry, are also at risk. The Glassdoor website, which allows current and former employees to anonymously review companies, is a useful tool for investors to sense-check whether culture issues are consistently raised by employees online. Companies that struggle to change this corporate culture may find it difficult to attract and retain talent at their firm, and it may be a symptom of a wider systemic cultural problem.

An indicator of corporate culture

Adding new board members who are a different race, gender, or professional background is a good first step. However, an organisation with a deeply established closed-minded culture will not reap the benefits of a change in board composition. Diversity is only beneficial when an organisation has a culture that welcomes diverse opinions and encourages challenge.

It is therefore important for investors to look at diversity as part of a broad range of indicators that reflect a company’s culture. An example of this might be a company that puts policies in place to help disadvantaged members of society long before they are legally required to do so. If an organisation develops independent thinking based on its own beliefs regarding diversity, it may have the ability to stay ahead of the crowd on other matters.

UK water company Severn Trent is currently just one of two FTSE 100 companies with both a female chair and female CEO.²⁴ It aims to not just be a leader in gender equality, but has focused on social mobility, disability, LGBTQ+ (lesbian, gay, bisexual, transgender and queer or questioning, and others), and employee rights. As a founding member of the Social Mobility Pledge, the company removes name, grades, university (and gender/race) from CV information to reduce hidden biases in graduate hiring. The company also has strong labour relations, where non-executives regularly attend the Employee Forum alongside three trade unions. In 2019, the forum supported the expansion of female showers at operational sites, disability passports and the Dying to Work charter in the UK, which seeks additional employment protection for terminally ill workers.²⁵

Oil and gas company BP has gone a step further than the required UK gender pay gap reporting and has committed to voluntarily report on the company’s ethnicity pay gap by 2022. The company has set specific goals of increasing ethnically diverse representation across all levels of the business, is partnering with racially diverse institutions and from January 2021 will be providing focused “development interventions to support career progress for UK black employees and other underrepresented ethnic ‎minorities”.²⁶‎

Global standards that go beyond the office

Diversity is especially important for companies with a global reach. A global understanding will become even more crucial for large US and European firms as market growth is expected to come from Asia and Africa. As an organisation becomes international, shaking off stereotypes and cultural biases is helped by building a team with diverse leaders. The growth in international CEOs is being seen across the US technology sector with leaders such as Satya Nadella (Microsoft), and Sundar Pichai (Alphabet).

For many global businesses, matters of diversity and inclusion go beyond the office, and efforts are made to address discrimination in the countries in which they operate. To date, same sex marriage is illegal in more than 70 countries, and state-sponsored oppression still occurs in many countries including South Korea, Nigeria and Russia.²⁷ Many businesses are therefore working harder to take a stand against LGBTQ+ discrimination in communities that they operate in. The Open For Business coalition recommends a number of key actions that businesses can take, which include making a public commitment to global standards of best practice for LGBTQ+ inclusion in the workplace; partnering with local LGBTQ+ groups and local business communities, and supporting legal redress in countries attacking civil society groups.²⁸

According to the Williams Institute, companies can start by introducing sexual orientation and gender-identity non-discrimination policies and domestic partner benefits policies.²⁹ For example, in India where same sex marriage is not legally recognised, Tata Steel introduced a policy where employees can declare their partner to benefit from all Human Resource benefits. The company also introduced financial assistance for gender reassignment surgery and 30 days special leave.³⁰

In 2015, Salesforce CEO Marc Benioff threatened to pull business out of Indiana due to laws that would discriminate against the LGBTQ+ community. Salesforce has since expanded its LGBTQ+ employee resource groups, Outforce, from 14 to 24, to countries including Japan and India. Employees’ sexual orientation and gender identification, including pronouns such as ‘him’, ‘her’, ‘they’, can be applied to internal systems, and a diversity dashboard is issued to all executives supervising more than 500 employees, tracking diversity and progress. Benioff believes there is real business value in promoting equality and reducing the ‘mental tax’ some employees may have coming to work.³¹

Diversity in design

Diversity in product design is also an area for investors to interrogate in order to understand whether a business is considering all users. Women account for a large portion of consumer spending and are decision makers across many different product categories. Lack of gender awareness in the product development cycle could reduce market access to over half the population. Often women are excluded from product design, which can lead to ‘gender-neutral’ products being biased towards men. According to author Caroline Perez in her book “Invisible Women: Exposing Data Bias in a World Designed for Men”, this is especially true in the technology industry where wearables do not fit on women’s bodies, speech recognition software is 70% more likely to recognise male speech and Apple’s health-monitoring system initially failed to include women’s health.

The same is true for the auto industry where seatbelts are not designed for pregnant women and crash-test dummies do not accurately reflect women’s bodies.³²

There is also a well-known bias in artificial intelligence (AI) facial recognition systems, where lack of racial representation in big data image libraries is having a dangerous impact on algorithms. As the data used to train AI software consists of overwhelmingly white male faces, faces of racially diverse groups are harder to recognise, increasing the likelihood for discrimination and abuse. For this reason, Microsoft, IBM and Amazon have all taken a position to not let their facial recognition technology be used by law enforcement until more regulations are in place.³³

Encouraging diversity in product design, however, can reap financial rewards. According to Bob Iger, Walt Disney chairman and former CEO, in his book: The Ride of a Lifetime, there was a common misconception in Hollywood that films with black leads would struggle in international markets. Despite the pushback he received, he prioritised the production of Marvel film ‘Black Panther’, the first superhero movie to feature a predominantly black cast. The film was released in 2018 and subsequently earned well over $1 billion, ranking then as the fourth-highest grossing superhero film of all time. In a letter to his employees, Iger stated how the success of the movie “speaks to the importance of showcasing diverse voices and visions, and how powerful it is for all sectors of our society to be seen and represented in our art and entertainment. The movies success is also a testament to our company’s willingness to champion bold business and creative initiatives”.³⁴

Consumer demand for value driven companies

The issue of diversity has come to the fore during the rise of conscious consumerism. Companies are increasingly being held accountable by consumers who reward brands aligned with their values. Social media has intensified consumer access to information and made it easier to coordinate efforts to push for organisational change.³⁵ There is an increasing expectation for brands to challenge stereotypes, to take active positions on social issues, to set internal policies that reflect these values across the business, and for senior executives to be held accountable when things go wrong.

During social movements like #metoo or Black Lives Matter (BLM), it is even more important for organisations to respond with action instead of words. Companies are increasingly under scrutiny to do more than present an emotive press campaign and use social media to boost sales. Companies are at risk of facing a backlash internally from employees who find statements hypocritical, and consumers who want evidence of credibility. Social media companies like Facebook and Twitter have faced public criticism for verbally supporting the BLM movement while having products that undermine it. This led to a temporary advertising boycott from more than 1,000 brands for the month of July to protest Facebook’s failure to address hate speech. A 2020 report from the Anti-Defamation League found that of the 35% of Americans who experienced online harassment in relation to their race, religion or sexual identity, 77% of it took place on Facebook.³⁶

Futureproof or failure

Investors should, therefore, be wary of companies that fail to futureproof themselves in terms of diversity. An example of this is L Brands’ Victoria Secret, which failed to adapt to shifting consumer expectations around gender and diversity. The resignation of the company’s chief marketing officer after he made controversial comments around transgender models, the closure of a number of stores, the activist takeover by Barington Capital, which called the branding ‘tone deaf’, the resignation of the CEO/chairman in part due to ties with sex-offender Jeffery Epstein, and Victoria Secret UK entering administration, all highlight the retailer’s identity crisis in a changing retail marketplace.³⁷

Nearly all of L Brands’ top leadership is male, with only one woman in a senior brand leadership position as at September 2020.³⁸ This raises the question of whether retail and/or consumer discretionary companies can survive without a strong culture of diverse employees, and whether it is sustainable to be targeting a certain cohort without that cohort in strategic decision-making power.³⁹ Consumers increasingly want to think that the products they use and the companies they buy from represent them. Socially conscious brands that make inclusivity a central part of their business strategy and brand ethos are therefore likely to succeed.

Aerie, American Eagle’s loungewear and lingerie line, has a brand ethos centred around body positivity and inclusion and has been a benefactor from Victoria Secret’s loss of market share. During the period 2018/19 Victoria Secret’s sales dropped 8% while Aerie’s comparable sales were up 20%.⁴⁰ The brand has a strong track record in representing the disability community, and recently launched a collection that includes ostomy covers, insulin pump belts and underwear for customers with disabilities and medical needs. The brand ambassadors are carefully chosen to represent social causes that are important to the Aerie community and represent the different backgrounds and beliefs of their customers.⁴¹

What gets measured gets improved

Implementing best practices regarding diversity is a good indicator of a strong and adaptable company culture. There are a number of signals that investors can look out for including:

• Disclosure: Diversity data is being disclosed at a rapid rate and, in terms of ESG data, it is considered one of the most publicly available numeric metrics, even above greenhouse gas emissions. The more a company discloses around gender pay gap and diversity at different management levels, the more investors can understand best practice and monitor improvements. Whether it is encouraging further transparency at executive, management or firmwide level, disclosure is the best starting point for investors who want to engage on diversity.
• Goal setting and/or pipelines: More companies are setting diversity related targets, some even tying executive bonuses to diversity goals (Microsoft and Intel both have diversity as a strategic performance goal determining 50% of executives’ annual cash incentive. Other examples include Facebook, Johnson & Johnson, and Uber).⁴² Although diversity performance goals keep management strongly incentivised, any measurable objective where progress is tracked and reported is a positive indicator. The most successful companies develop a pipeline of talent throughout the entire organisation, regularly assessing a succession plan and monitoring the turnover/retention rates of diverse candidates.
• Meaningful initiatives: If management can provide meaningful examples of initiatives in place, it provides insight into the governance structures around diversity and level of buy-in from the top. Do employees take their paternity leave? Is flexible working encouraged? Are there mentorship programmes in place? What employee training is mandatory and how is this impact measured? Is there a Diversity & Inclusion committee and what is the reporting structure and objectives of the committee?
• How are issues managed? Many companies have been in the news regarding employee walkouts, scandals resulting in litigation, or general negative media coverage regarding gender/racial discrimination. How management deal with the issue will potentially tell investors more than the issue itself. Is management reacting with denial and excuses using more capital expenditure to dig a bigger hole? How fast is the acceptance of the issue and the plan to turn it around? How engaged is the company with shareholders on these issues?
• Design: Diversity in design is important across most sectors that are designing products and services to be used by both genders and/or a diverse market. How diverse are the individuals that are part of the product development cycle? Are there any women in the design team? Who is represented in demos and prototypes? Has data been broken down by gender/ethnicity? How diverse is the reviewing panel? How is feedback collected, and is it anonymous?⁴³
• Tone from the top: pioneering versus laggard?  What is management’s position on certain social issues and is this aligned to the company’s core values? What pioneering initiatives has the company established regarding diversity before being legally required to do so? For example, providing additional transparency and disclosure, having innovative diversity programmes, proactively focusing on diversity issues aside from gender and taking meaningful action, signing up to initiatives that hold the company accountable.
• How is a business supporting its workers inside and outside the business? What is the impact on the broader community regarding gender/racial/LGBTQ+ issues? If the company operates in an underprivileged community, are apprenticeships and other opportunities offered to local people? Are social mobility programmes in place? Are non-discrimination policies global? If businesses have operations in countries where LGBTQ+ or other discrimination is prevalent, are management implementing global non-discrimination practices and are they being vocal about social issues that impact their employee base?
• Action behind words: If the company has made statements supporting broader social movements, such as Black Lives Matter or #MeToo, has this support been reflected within the business? Has the company faced backlash for hypocrisy by employees/consumers? Are lobbying practices in line with press statements supporting these disadvantaged groups?

The conversation around diversity and inclusion is an evolving one, and companies that are on the forefront of change should be seen in a positive light. There will continue to be growing regulatory pressure as well as shifting social expectations around what is considered best practice. Companies that are seen to embrace diversity may find it easier to retain exceptional talent, have a more productive workforce and ultimately outperform less diverse peers on profitability. Investors should therefore continue to monitor this theme and engage with companies to help them navigate this changing landscape.

References:

¹ Credit Suisse Research Institute; September 2016; The CS gender 3000: The Reward for Change

^2] Hugo Dubourg; 9 August 2019; Exane BNP Paribas; More than a Woman 2019

³ Morgan Stanley; Jaiwish Nolan, Boris Lerner, Jessica Alsford CFA, Mark Savino, Diane Ding Ph.D., Michelle M. Weaver; 12 August 2019;  Introducing HERS: Employing Diversity Pays Off

⁴ McKinsey & Company; Vivian Hunt, Sara Prince, Kevin Dolan and Sundiatu Dixon-Fyle; May 2020; Diversity wins: How inclusion matters

⁵ Boston Consulting Group; Rocío Lorenzo, Nicole Voigt, Miki Tsusaka, Matt Krentz, and Katie Abouzahr; 23 January 2018; How Diverse Leadership Teams Boost Innovation

⁶ Coburn Ventures; July 2017; Discovering Cultural Advantage Version 2.0.

⁷ Hugo Dubourg; 9 August 2019; Exane BNP Paribas; More than a Woman 2019

⁸ Jeffrey Karpf, Sandra Flow, and Mandeep Kalra, Cleary Gottlieb Steen & Hamilton LLP, 28 January 2020: Harvard Law School Forum on Corporate Governance: Board Composition and Shareholder Proposals

⁹ Carmen Reinicke, Jan. 23, 2020; Goldman Sachs will stop doing IPOs for companies without at least one ‘diverse’ board member starting in July

¹⁰ Daniel Thomas, Attracta Mooney and Alice Hancock, All-male boards return to FTSE in setback to diversity efforts, 19 June 2020

¹¹ Jessie Tu, Last all-male board ends on the S&P 500. But there are still 4 on the ASX 200, 20 August 2019

¹² Spencer Stuart, 2019 Japan Spencer Stuart Board Index

¹³ Sir John Parker, The Parker Review Committee; 5 February 2020; Ethnic Diversity Enriching Business Leadership: An update report from The Parker Review

¹⁴ Kate Hilder, Mark Standen, 20 May 2020, (Slightly) less male, but still stubbornly pale and stale?
https://www.minterellison.com/sitecore/content/MinterEllison/Website/articles/2020/05/20/01/28/summary-governance-institute-board-diversity-index-2020

¹⁵ Spencer Stuart; 2019; 2019 U.S. Spencer Stuart Board Index

¹⁶ Business Standard, 10 September 2020, Black Lives Matter: Firms pledge to add at least 1 Black director to board

¹⁷ CBI, 01 October 2020, British businesses to launch new campaign aimed at increasing racial and ethnic participation in senior leadership
https://www.cbi.org.uk/media-centre/articles/british-businesses-to-launch-new-campaign-aimed-at-increasing-racial-and-ethnic-participation-in-senior-leadership/ ¹⁸ McKinsey & Company; Vivian Hunt, Sara Prince, Kevin Dolan and Sundiatu Dixon-Fyle; May 2020; Diversity wins: How inclusion matters
https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity

¹⁹ Taffy Brodesser-Akner, 23 April 2019, New York Times Magazine: The Company That Sells Love to America Had a Dark Secret

²⁰ Samantha Cooney; 2 February 2018, Companies Are Losing Millions After #MeToo Allegations Like Kate Upton’s Claim Against Guess’ Paul Marciano
https://time.com/5130340/kate-upton-guess-stock-price/ ²¹ Lucinda Shen; 29 January 2018, Wynn Resorts Loses $3.5 Billion After Sexual Harassment Allegations Surface About Steve Wynn
https://fortune.com/2018/01/29/steve-wynn-stock-net-worth-sexual-misconduct/

²² Brooks Barnes, 10 May 2017, The New York Times: Fox Reveals Cost of Sexual Harassment Allegations: $45 Million

²³ Au, Shiu-Yik, 2 September 2019; The real cost of workplace sexual harassment to businesses.
https://theconversation.com/the-real-cost-of-workplace-sexual-harassment-to-businesses-122107
(Based on paper by Au, Shiu-Yik  and Dong, Ming and Tremblay, Andreanne, How Much Does Workplace Sexual Harassment Hurt Firm Value? (June 4, 2020). ²⁴ Severn Trent Water, 24 September 2020, Severn Trent named top FTSE firm for female representation
https://www.severntrent.com/media/news-releases/severn-trent-named-top-ftse-firm-for-female-representation-/ ²⁵ Severn Trent Water; Sustainability
https://www.severntrent.com/sustainability-strategy/social/awesome-place-to-work/

²⁶ Adam McCulloch; 27 August 2020; BP fuels diversity and inclusion drive

BP fuels diversity and inclusion drive

²⁷ Human Rights Watch: LGBT Rights, #Outlawed “The Love That Dare Not Speak Its Name”
http://internap.hrw.org/features/features/lgbt_laws/ ²⁸ Jon Miller and Lucy Parker; 24 January 2018; Open For Business: Strengthening the economic case
https://static1.squarespace.com/static/5bba53a8ab1a62771504d1dd/t/5d40964b36f8640001cd3a86/1564513872720/Open+For+Business_Full+Report.pdf ²⁹ M.V. Lee Badgett; Laura E. Durso; Angeliki Kastanis; Christy Mallory: May 2013; The Business Impact of LGBT-Supportive Workplace Policies
https://williamsinstitute.law.ucla.edu/publications/impact-lgbt-supportive-workplaces/ ³⁰ The Economic times, 09 December 2019, Tata Steel asks LGBTQ+ employees to declare partners, avail HR benefits
https://economictimes.indiatimes.com/industry/indl-goods/svs/steel/tata-steel-asks-lgbtq-employees-to-declare-partners-avail-hr-benefits/articleshow/72437377.cms?from=mdr ³¹ Patrick Hoge; 14 June 2018; For Salesforce, equality is at the center of everything (Video)
https://www.bizjournals.com/sanfrancisco/news/2018/06/14/salesforce-equality-lgbtq-pride-marc-benioff.html

³² Caroline Criado Perez; 2019; Invisible Women: Exposing Data Bias in a World Designed for Men pp. 146-191.

³³ Glenn Gow; 23 June 2020; Why Are Technology Companies Quitting Facial Recognition?
https://www.forbes.com/sites/glenngow/2020/06/23/why-are-technology-companies-quitting-facial-recognition/#89399fc6994a

³⁴ Robert Iger, 2019; The Ride of a Lifetime: Lessons in Creative leadership from 15 Years pp169-172.

³⁵ Anjali Lai; 23 May 2018; Millennials Call For Values-Driven Companies, But They’re Not The Only Ones Interested
https://www.forbes.com/sites/forrester/2018/05/23/millennials-call-for-values-driven-companies-but-theyre-not-the-only-ones-interested/#2b6d9de45464 ³⁶ Kari Paul; 24 June 2020; Online harassment increases to 35% for American minority groups
https://www.theguardian.com/society/2020/jun/23/online-harassment-increases-for-american-minority-groups ³⁷ Mary Hanbury, 05 March 2019, An activist shareholder is urging Victoria’s Secret parent to update ‘tone-deaf’ brand image to boost sales
https://www.businessinsider.com/shareholder-urges-victorias-secret-to-update-tone-deaf-image-2019-3?r=US&IR=T ³⁸ Cara Salpini, 12 October 2020, Bras and BB cream: Why aren’t brands for women run by them?
https://www.retaildive.com/news/bras-and-bb-cream-why-arent-brands-for-women-run-by-them-gender-equality-beauty-industry/585783/ ³⁹ MSCI ESG Now Podcast, Episode 38, The ESG Weekly: Walmart’s CEO gets called out in the gun debate, and L Brands CMO resigns amid company turmoil on the week of August 5, 8 August 2019
https://www.msci.com/esg-now-podcast ⁴⁰ Shelley E. Kohan; 28 June 2020; AEO’s Aerie Brand, Built On Body Positivity And Inclusion, Is Slowly Edging Out Sexy Supermodel Juggernaut Victoria’s Secret
https://www.forbes.com/sites/shelleykohan/2020/06/28/aeos-aerie-brand-built-on-body-positivity-and-inclusion-is-slowly-edging-out-sexy-supermodel-juggernaut-victorias-secret/#7a91f52f42ba ⁴¹ Sarah Kim; 31 January 2020; Aerie Continues To Include Authentic Disability Representation — Ali Stroker Joins #AerieREAL Role Model Family
https://www.forbes.com/sites/sarahkim/2020/01/31/aerie-disability-representation/#7bf45e1e50bd

⁴² Jingcong Zhao, These Companies Are Tying Executive Bonuses To Diversity Goals, 07 March 2019

https://www.payscale.com/compensation-today/2019/03/tie-bonuses-to-diversity-goals ⁴³ Gayna Williams; December 2013; The Business Of Gender: Is Your Product Gender-Neutral?
http://www.ifshecanican.com/uploads/4/7/8/6/4786906/isyouproduct_genderneutral-20141.pdf

Janus Henderson Investors makes no representation as to whether any illustration/example mentioned in this document is now or was ever held in any portfolio. Illustrations shown are for the limited purpose of highlighting specific elements of the research process. The examples are not intended to be a recommendation to buy or sell a security, or an indication of the holdings of any portfolio or an indication of performance for the subject company.