London-based Thomson Reuters has launched a new socially responsible index geared towards recognizing companies that have made the most progress diversifying their workplaces.
The Thomson Reuters Diversity & Inclusion Index ranks the top 100 publicly traded companies globally with the most inclusive workplaces as measured by 24 metrics across four categories: diversity, inclusion, people development and news controversies.
“We see this as a very important tool for our financial customers that are increasingly looking for ways to invest in socially responsible investments,” says Debra Walton, chief product and content officer, Financial & Risk at Thomson Reuters. “The Diversity & Inclusion Index sits at a sweet spot for us at the intersection of our in-house big data gathering around financial and ESG information, internal data science and analytics expertise, and our index business for which we calculate over 12,000 indices today.”
Using measurements like gender diversity of the overall company, cultural diversity of the board, proportion of employees with disabilities, and companywide targets on diversity and opportunity, Thomson Reuters will algorithmically process scores for over 5,000 global companies using industry and/or country benchmarks, combining them with a dynamic weighting system. All of the scores for each individual measure will be rolled up into their respective categories.
Only companies with scores across all four of the categories — diversity, inclusion, people development and news controversies — will be given an overall score and considered for the index. The ratings will be supported by the Thomson Reuters’ ESG data.
The Diversity and Inclusion Index, which is available on Thomson Reuters Eikon, is calculated by weighing each metric based on its importance in the market and how each company compares with its peers. The firm is making available all of the underlying metrics to offer additional insight to financial professionals screening investments for risks and opportunities.
“We see broad interest,” Walton says. “Globally responsible investments have grown to over $21 trillion in AUM today and continue to rise, and we have also noted the rise in the number of financial products available around diversity. Morgan Stanley is the first company to invest using our Diversity and Inclusion index.”
The Matterhorn Group of Morgan Stanley, a New York-based advisory team, is the first firm to use the Diversity and Inclusion Index as an investment tool. The team previously developed “The Parity Portfolio,” a strategy designed to encourage a move to greater gender fairness at the executive level.