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BlackRock Finds Gender Parity Improves Performance

BlackRock Finds Gender Parity Improves Performance

by Starling Insights

Starling Insights Editorial Board

Nov 10, 2023


As reported in the Financial Times, a recent study by BlackRock found that companies with more gender-balanced workforces outperformed their less-balanced counterparts by up to 2 percentage points annually between 2013 and 2022. The study examined data from approximately 1,250 major companies in the MSCI World index that reported gender diversity figures.

The research shows that firms in the middle quintile for gender balance achieved an average annual return on assets of 7.7%, while those with the highest share of men had a return of 5.6%, and those with the highest share of women had a return of 6.1%. Particularly notable results were found in companies where gender parity was strongest in revenue-producing, engineering, and high-paying roles. "Human capital is very important to investment performance," said Sandra Lawson, the Managing Director who led the work. "It's a pretty powerful correlation."

In recent years, investment managers have faced criticism for considering Environmental, Social, and Governance (ESG) factors in their decision-making, as some believe the initiatives prioritize political goals over investment return. However, BlackRock's study may strengthen the argument for investment firms to consider gender representation and other social factors as part of their fiduciary duty. The research highlighted the importance of human capital in investment performance, with gender-balanced companies experiencing lower employee turnover and higher returns. Additionally, companies with employee-friendly policies, such as longer maternity leaves, demonstrated better financial performance, emphasizing the role of inclusive policies in enhancing organizational success.

In Starling's 2021 Compendium, Harvard Business School professor Amy Edmondson discussed the importance of DEI, emphasizing inclusion and 'belongingness' as the most important facets for improving employee experience and business success.

"Diversity is valuable—but it is inclusion that really drives performance," Edmondson argued. "Psychologically safe workplaces enable and harness the benefits of mutual trust among staff to create a meaningful sense of belonging, and this is the key to unlocking the benefits of diversity." ▸ Read More 

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