Why Big Businesses Are Becoming More Progressive

Corporate eyes are opening, or at least that’s what they’re saying.

James Surowiecki wrote in a recent New Yorker piece that business giants are beginning to stand up for minorities. Nearly 100 companies, for example, signed a letter imploring North Carolina’s governor, Pat McRory, to repeal the state’s new anti-LGBT law. Other big businesses are taking similar action in other states with similar legislations. “Some of America’s biggest companies are pushing a progressive agenda in the conservative heartland,” Surowiecki writes.

While the United States government is gridlocked and enmeshed in a flurry of cultural debates—many of which led to the rise of Donald Trump—some financial titans seem to be aligning with more progressive causes. This was further evidenced at an event held at the Bloomberg Grand Central building on Tuesday night.

In a small auditorium, dozens of businesspeople came together to witness the unveiling of the Bloomberg Financial Services Gender-Equality Index. The index highlights what top financial firms are doing to promote gender equality. As Bloomberg LP’s head of strategy and corporate development, Angela Sun, said, the new data portal is “to measure how we are progressing toward parity.”

Indeed, following Sun’s introduction, Michael Bloomberg came to the podium to talk about the need for such a data analysis product. Companies and firms that promote diversity, explained the former New York City mayor, perform better than those that don’t. “It’s just smart business,” he said. The ultimate theme of the night was explaining why.

The index consists of an optional survey large financial firms can take. Twenty-six businesses participated this year, including MetLife, Deutsche Bank, and Citigroup. The survey asked questions about internal gender demographics—be it in the firm as a whole or just on the executive team—along with other services that promote equality, including parental leave and child care.

To bolster the business case, Bloomberg News editor-in-chief emeritus Matthew Winkler showcased performance data from the more than 1,000 companies in the Bloomberg World Equity Index. It found that the best performing companies—based on two-year stock performance—were the ones with the highest ratio of female executives. And bigger companies had a great percentage of women. “The smaller the market cap, the fewer the women hired,” Winkler said. He added that financial firms are hiring more women than those in other industries.

Of course, these sorts of statistics aren’t necessarily new. McKinsey released a report over a year ago that found similar findings, although it expanded beyond gender demographics to look at vectors beyond just gender. Pax World Management also offers a similar gender-based Index, as well as a fund to invest in such companies.

All these ventures aim to illuminate how diversity translates to better performance. Pax President and CEO Joe Keefe said at the event, “The data is beyond compelling; it’s overwhelming.” Now more institutions are beginning to see the light. “There’s a sea change going on that’s very palpable,” Keefe later added.

The participating firms seemed to be understanding this. The data, said Sun, was to be transparent so businesses better understand what they’re investing in. It lets investors get a sense of the firms they may end up doing business with. And this will translate to new untapped markets. Bank of America Vice Chairman Anne Finucane saw this new Index speaking to millennials who are looking for firms that fit their worldview.

The presenters also admitted that work still needs to be done. While the participating 26 firms all had much better gender parity than the rest of the world’s top businesses, there’s still a huge flow problem for women going from middle management to executive positions. And this data didn’t even touch on other demographics like LGBT or people of color.

This index is only the start. The data makes the business strategy crystal-clear, which will domino into more companies disclosing their numbers and hiring better. The first step is getting the attention of influential people with deep pockets. And now they say it’s happening.

“Investors have great influence here,” said Keefe. “Companies do listen to their shareholders.”