INVESTING IN D&I - Financial data and products to help you invest

Elena Philipova, REFINITIV

For an initial universe of companies, the Refinitiv Diversity and Inclusion Index draws on a broad range of publicly traded companies that are representative of global equities as an asset class. The index is produced based on Diversity and Inclusion (D&I) ratings powered by Refinitiv ESG data. The D&I ratings were created to transparently and objectively measure the relative performance of companies against factors that define diverse and inclusive workplaces. Refinitiv’s D&I ratings were designed on the hypothesis that companies tracking, reporting and achieving on measures of diversity, inclusion and people development will, collectively and over time, offer diversification away from portfolios constructed using different selection criteria such as market capitalization alone(1). A fourth pillar (controversies) provides an additional dimension for measuring corporate performance in this area. Refinitiv’s D&I ratings rank over 70% of global market cap, as measured by 24 separate metrics across four key pillars (see above). The data is gathered from publicly available information sources and is manually collected to ensure that the information is standardized, comparable and reliable.

At Refinitiv, we believe that company disclosure and standards of reporting on these issues is critical for driving accurate investor information, public discourse and regulatory guidance. We also believe that transparency is critical to driving positive outcomes at both a financial and social level. Refinitiv’s D&I rating provides the information to help users identify long-term opportunities and risks in their investments. Since its inception in 2016, the Refinitiv Diversity & Inclusion index has outperformed other major ESG related indices. Investors across the world are looking to invest in sustainable companies and as one of the most comprehensive and robust Diversity & Inclusion Indexes on the market we have seen an uptick in the use of the index as an investment vehicle. There has been several trends and insights, which we have gleamed from the D&I ratings and index:

• Although the top score in our Diversity and Inclusion Index has increased by 3 points since the index inception, the average D&I rating has decreased by 2.16 points.

• Over the last 5 years, the number of companies in our ESG database reporting on gender diversity on the board has increased by 63% and the number reporting on cultural diversity on the board has increased by 47%.

• Although more companies are reporting on gender diversity, the data shows that the actual membership of boards is more culturally diverse than gender diverse.

• Despite increases in female representation across the workforce, there is still a divergence on equality between levels: - Female representation on the board – 18% - Female management representations – 27% - Female employee levels – 35% • Companies with flexible working hours has increased 164% over the last 5 years • From our data we find that 85% of companies have a diversity and inclusion policy, when we assess forward-looking commitments in the form of targets against these policies we find that only 17% of companies have a target.

The Refinitiv Diversity and Inclusion Index offers an innovative benchmark for fund managers and investors wishing to commit capital to companies that actively invest in and promote environmental, social and governance (ESG) values and principles in the running of their businesses. We strive to be the industry-standard database that reflects official company disclosure on ESG metrics. All Refinitiv ESG data collected is quality controlled and verified in a rigorous process by our experienced analysts and robust automated checks.