This article is part of a week of coverage by Responsible Investor to mark International Women’s Day 2023. 

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In October 2017, #MeToo went viral when actor Alyssa Milano invited anyone who’d been sexually harassed or assaulted to tweet the phrase first coined by activist Tarana Burke.

Millions spoke out, prompting widespread discussion around sexual harassment. Allegations against high-profile male figures hit the headlines and corporate practices came under the microscope on an unprecedented scale.

To what extent has this resonated in the investment industry? A 2017 Financial Times survey of almost 600 fund industry staff found that nearly a third of women in asset management said they had suffered sexual harassment at work.

Ulrika Danielson, head of communications and corporate governance at AP2, says MeToo has resulted in a “significantly increased awareness” of the issue. “Investors didn’t think sexual harassment was ok before that, but it wasn’t very high on the agenda,” she says.

As the groundswell behind MeToo grew, however, financial institutions realised very quickly that sexual harassment or misconduct “were issues that they couldn’t avoid and had to take seriously”, says Lara Zink, president and CEO of Women In Capital Markets.

“Many rewrote their sexual harassment policies, and it became very common post-MeToo for mandatory and regular training to be introduced,” she adds. “There was also a shift in attitudes – there was less tolerance for bad actors and they had to take accusers seriously.”

Indeed, after two fund managers exited Fidelity Investments in 2017 following allegations of sexual harassment or inappropriate behaviour, CEO Abigail Johnson moved her office from the seventh floor senior executive suite up to the 11th floor, where key portfolio managers, analysts and traders sat.

Johnson also formed a sexual harassment response committee, so that employees could report concerns, and introduced mandatory sexual harassment training.

Policy response

Other investment firms are less inclined to discuss their policies publicly. Responsible Investor asked a range of asset owners and managers about the policies, practises and/or training they have in place regarding sexual harassment and misconduct. Only a handful provided information.

One was AXA IM, which has ramped up its efforts in recent years. This included launching a “global standard on harassment” for all employees, interns, consultants, independent contractors, job applicants, agents, suppliers and clients.

The French manager has also made training on the topic mandatory for all employees and created channels for them to report concerns about harassment or other non-inclusive behaviours. An annual survey to track non-inclusive behaviour was established as well.

Swedish pension fund AP2 also has compulsory education on DE&I and asks questions in their employee survey if someone has been discriminated or been exposed to sexual harassment. “We didn’t ask those questions before MeToo,” says Danielson.

The Swedish pension fund also has a whistle-blower policy “to clarify to employees how they can and should report suspicions of irregularities and other serious inappropriate behaviour without the risk of subsequent reprisals, discrimination or other consequences”, she adds.

While other investment firms are shy of sharing their workplace policies, experts say progress is being made.

Dail St Claire, a former institutional investor who now provides training on sexual harassment for financial institutions, reports increasingly robust workplace policies, training and guidelines for reporting harassment and misconduct across the sector.

Key to ensuring executives take the issue seriously is making them aware that incidents of harassment or misconduct are not only damaging to the person but also to the fundamental culture, productivity and operation of the business.

“Once you tie sexual harassment/misconduct to the performance of the firm, you have a reason for a reporting line to the C-Suite in terms of who is designing and monitoring policies,” she says.

She also notes that work has to be ongoing. “It can’t just be a case of ‘It’s International Women’s Day, here’s some training’,” she says. “There has to be a continuous re-evaluation of the culture of the company.”

Cultural focus

This emphasis on culture, as opposed to just policy, is echoed by WCM’s Zink. “Culture eats strategy for breakfast,” she says. “Boards need to acknowledge that if you’re not fostering the right culture then all the strategies or policies in the world won’t be effective.”

This is supported by the testimony of one woman who spoke to RI on condition of anonymity. While working on the trading floor of a financial institution and then at a brokerage firm, she suffered repeated sexual harassment, including being propositioned for sex at conferences.

“It became unbearable, and I ended up having a mental health breakdown and leaving both places,” she says.

On moving to an asset manager in 2019, she found a very different culture. “The company genuinely gave me hope that working in finance doesn’t mean sexual harassment,” she says. “And if anything happened, I knew I could raise it with HR or my manager and not get scapegoated.”

“It’s all about the culture of the firm. You can have as many policies as possible and trainings in place, but if you don’t have the right culture it won’t work.”

This emphasis on culture is echoed in the responses to RI’s Women in Finance survey, the results of which will be published on Wednesday for International Women’s Day.

The survey did not address sexual harassment specifically. Nevertheless, some respondents shared experiences of inappropriate behaviour, including one instance of a senior male consultant forcing a women to host him at her flat after a night out.

Old boys’ club

Questions about inclusion within the industry, however, prompted multiple references to “old boys’ club” culture and “bro-culture”, as well as specific instances of objectification – including wolf-whistling – and demeaning or sexual language.

Zink agrees that this can be one of the biggest barriers to progress. “Harassment comes in many shapes and sizes,” she says. “Unfortunately, culture associated with the boys’ club, the locker room etc can foster and lead to language and actions which can be perceived as sexual harassment or misconduct.”

This can be particularly challenging for junior women. Again speaking anonymously to RI, a female staff member at a service provider described witnessing a man harassing a young woman at an ESG investing conference.

“Now that I’m more experienced I have the confidence to have no mercy and say back off – but I wish I could say to her, you needn’t accept this,” she says. “I think that’s a barrier particularly for younger or more junior women at financial institutions.”

As to what can be done to address the issue, respondents to RI’s survey highlighted the need for zero tolerance and for offenders to be reprimanded.

One female respondent also called for non-disclosure agreements (NDAs) to be banned where they relate to sexual harassment and/or discrimination. “The culture of silence must end and perpetrators need to be called out.”

For Zink, gender representation is also crucial. “There’s a lot of data that supports the notion that strong gender representation fosters better organisational culture and accountability,” she says. “Boards need to be more proactive on culture – encouraging diversity across the investment firm – and understand how sexual harassment policies and misconducts are managed at the firm.”

Work to do

The message both from RI’s survey and from interviews from women in the industry is that, despite progress on policies and even culture over the past few years, financial institutions still have work to do on addressing sexual harassment.

This is also the impression given by ongoing complaints of sexual harassment against investment firms.

In 2021 a former employee of PIMCO claimed she was sexually harassed by men at the firm and demoted after she rejected advances by her boss. The same year, two former BlackRock analysts claimed they experienced sexual, religious and racial harassment.

Perhaps more worrying are suggestions that in some cases apparent progress is being undermined internally at firms.

A woman who works at a financial consultancy raises concerns that, since MeToo, men have gone from “openly making comments to it being significantly more hidden and insidious”. “They are very much being better at talking the talk but not actually taking action,” she says.

Asset owners put managers on notice

For those hoping for action on sexual harassment within the financial industry, there are encouraging signs that assets owners are starting to hold their managers to account.

In the UK, a pension fund confirmed to RI that they failed a fund manager they were considering for appointment of a mandate due to their handling of a sexual harassment incident.

A spokesperson said: “We also undertake a quarterly monitor of fund managers and where there is an incident, we will ask for an explanation and reassurance the accusation is being treated seriously. The ability of a fund manager to attract and retain the best staff is an important concern.”

The most high-profile example, however, comes from the US.

In 2019, in the wake of MeToo, current and former employees of five giant Californian public sector pension funds set up Trustees United. Signatory members of the group – which include investors, investment service providers, trade unions, and individuals – must commit to a series of principles.

For example, boards must support the right of employees, individually and collectively, to safely bring forward claims of sexual harassment and violence. Similarly, company directors should publicly share due diligence processes used to respond to sexual harassment and violence complaints filed by all employees, including contingent, temporary and subcontracted workers.

“We have a collective belief that asset managers, consultants, and vendors engaged by allocators must have robust sexual harassment policies,” says Nilza Serrano, president of the board at the Los Angeles City Employees’ Retirement System (LACERS).

“When those policies are absent, it creates an unsafe environment that can create undue stress for staff who may feel underappreciated. It can also create an adversarial work environment that creates headline risk, weakens productivity, and ultimately hurts returns. If an organisation has large payouts to the victims, it also affects investors’ returns.”

The initiative also engages with corporates such as Amazon, Google and McDonald’s on their sexual harassment policies.

On behalf of LACERS, Serrano personally asks every asset manager, consultant or vendor whether they have an internal policy to protect workers from sexual harassment. It is also a question in the fund’s RFPs.

She reports significant progress among asset managers. “In the past I would ask, ‘do you have an ironclad sexual harassment policy?’, and many times they did not. Now when the questions are asked of managers, basically everyone says ‘absolutely.'”

The Los Angeles County Employees Retirement Association (LACERA), another Trustees United member, also keeps a close eye on its asset managers.

CIO Jonathan Grabel says that, as part of the fund’s due diligence, all asset managers are questioned on policies, risk mitigation strategies and any known history of workplace discrimination, sexual harassment or misconduct.

“We monitor all managers on workplace harassment risks continuously, including annual update questionnaires, periodic meetings and analysis of publicly available information, and reflect the findings in quarterly manager scorecards used to assess overall manager quality.”

If a prospective asset manager lacks anti-harassment provisions, Grabel says LACERA will engage with them. “We are now up to 98 percent of LACERA’s asset managers having an anti-harassment policy in place.”

Moving forward, he would like to see more asset managers tie misconduct to clawback provisions, something only 24 percent of LACERA’s providers currently do. “We see it as a way to resolutely convey expectations for compliance across the firm’s entire employee base.”

While welcoming the progress in recent years, however, Serrano stresses that there is more to do.

“Our work is forever work,” she says. “It doesn’t stop just because an employer has a policy in place. This does not guarantee it will be followed, and steps have to be taken to ensure that culture changes, and the workforce is reminded that policies are part of everyday life.”