PE firms hired women at a higher percentage this year than in 2022 and 2021, particularly for junior positions, according to our annual PE Diversitometer benchmark. But the gains come amid a backlash against corporate efforts to embrace environmental, social and governance goals.
This year’s PE Diversitometer is based on a sample of 789 hires made by private equity firms in the United States, Canada and the United Kingdom. While the newsletter only tracks a fraction of industry hiring, the editors believe the sample to be reasonably representative.
Women Hiring: In tracking hiring this year, Private Equity Career News found that women made up 39 percent of junior-level hires, a jump from 32 percent in 2022 and 31 percent in 2021. A big portion of industry hiring takes place at the junior level, suggesting a step toward gender equity that should bear fruit well into the future. Across all levels, women accounted for 35 percent of new hires this year, up from 34 percent in 2022 and 32 percent in 2021. For senior positions, women comprised 27 percent of new hires this year. That was down slightly from 28 percent in 2022 and 30 percent in 2021. Women accounted for 46.8 percent of the overall US workforce in 2022, according to U.S. Bureau of Labor Statistics figures
Minority Hiring: Approximately 4 percent of new hires this year were Black Americans, the same as in 2022 and down from 5 percent in 2021. Black Americans make up 13 percent of the labor force, according to the Department of Labor.
Industry Snapshot: Needless to say, the industry has a ways to go before achieving the diversity present in society at large. A recent McKinsey & Company report on the state of diversity in global private markets found that women made up about 15 percent of managing-director-level investment positions. The report also found that about 20 percent of managing director investment positions were held by ethnic and racial minorities.
ESG Controversy: Progress hiring more women at the junior level takes place against a backdrop of boiling controversy over the ESG movement and its sub-category DEI (diversity, equity and inclusion). The U.S. Supreme Court ruled earlier this year to end affirmative action in college admissions. That decision, in turn, raised questions about the legality of corporate DEI efforts. ESG has also become a divisive issue in politics, with some, like President Joseph Biden, in support of considering ESG in investments, and others, like Florida Gov. Ron DeSantis, against it.
Move Away from “ESG”: To be sure, investors show few signs of easing pressure on the industry to become more diverse. Case in point: the New Jersey Division of Investment, which recently advertised for a diversity and inclusion investment officer, as reported previously by Private Equity Career News. But we have noticed some firms changing employee titles to eliminate the phrase.
- At money manager Aksia, a former director of operational due diligence and ESG officer is now director of operational due diligence and responsible investing.
- At buyout firm Tailwater Capital, a former head of ESG is now head of responsible investment.
- At growth equity firm Summit Partners, a former director of ESG is now director of responsible investing.
Meanwhile, the Massachusetts Pension Reserves Investment Management board voted in late November to approve a recommendation to change the name of its ESG Committee to the Stewardship and Sustainability Committee.
Correction: The original version of this post featured a since-deleted analysis of minority hiring that we no longer consider valid.