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Thomson Reuters launches diversity index

Thomson Reuters creates index to help investors track diverse and inclusive companies

Thomson Reuters has launched a Diversity & Inclusion (D&I) Index that ranks the top 100 publicly-traded companies with the most diverse and inclusive workplaces.
Speaking to Responsible Investor about the launch, Debra Walton, Chief Product & Content Officer, Financial Risk at Thomson Reuters, said: “What we’ve done with the index in essence is use our expertise in data gathering, an overlay of science and methodology, and combined it with an index for investors.”
Walton said the index had been developed over many years, in collaboration with its clients who are increasingly requesting non-financial metrics. It is measured by 24 metrics across four categories: Diversity, Inclusion, People development and News controversies.
Andre Chanavat, product manager ESG, said: “Each measure has an unique benchmark. The weighting system is dynamic. As a unique content operator it is updated every two weeks with data.”
The index also changes with news reporting.
Walton added that a company could not try to paint a good picture simply because it has women on its board if other elements of its business practices were not consistent with other measures of diversity, such as those picked up through legal claims for discrimination, or comments on employee community websites such as Glassdoor.This is the latest financial tool to be developed around diversity. Earlier this year, CalSTRS put $250m behind the State Street Global Advisors’ (SSGA) SHE Index, which invests in companies with more women in senior management. SSGA is drawing on research from the McKinsey Global Institute and MSCI that shows companies with strong female leadership outperform peers.
Walton said the issue of diversity was becoming material for investors, noting that global governments were increasingly looking at mandating 30% women on boards and that research showed organisations with diverse leadership teams had superior performance.
The D&I Index tracks diversity in multiple ways, beyond commonly-used gender and race metrics. Chavanat said it looks at cultural diversity – such as whether board members have a different nationality to the location in which the company is headquartered, the availability of day care, flexible working programmes and HIV programmes amongst other things.
Swiss multinational healthcare company Roche Holding Ag currently tops the D&I Index, followed by French tire manufacturer Compagnie General des Etablissements Michelin and health care firm Novartis AG.
The Matterhorn Group at Morgan Stanley is the first team to use the D&I index as an investment tool.