Why asset managers could be the unlikely heroes who drive social, cultural, and economic impact at scale

Only 1.4% of that astounding sum is allocated to diverse asset managers. Asset allocators, therefore, have enormous room to build more inclusive societies by increasing investments in diverse managers.

Even when Black and Latin workers make up more than 20% of a particular workforce (take railroad workers, for example), less than 1% of their savings are invested by their pension in Black or Latin managers. In fact, often their savings are invested in companies that are under-serving their own communities. Addressing this issue isn’t charity, it’s equity. ​​Pensions belong to pensioners.

As I shared with industry leaders at the World Economic Forum in Davos, asset managers’ economic impact can also have an extraordinary social and cultural impact. Managers who embrace this unique responsibility can take several specific steps to drive change within their organizations and the companies they own.

First, we can turn unconscious bias on its head, in a way that is action-oriented and concrete, by establishing Conscious Inclusion programs. These programs must include rigorous, ongoing learning that employees are mandated to take part in. Programs should be paired with formal assessments of the environment and culture that each employee is fostering. And processes should be tied to compensation, forcing employees to constantly improve inclusion in measurable ways that cut across the entire organization.

Second, we can do better on board diversity. Much of the discourse on board diversity is around public boards. That’s important–but private boards are sometimes overlooked.

Private equity generated more than $500 billion in buyout deal value in the first half of 2022 alone, compared with $179.5 billion in capital raised from IPO listings in all of 2022. And while there are about 2,800 public companies with revenues greater than $100 million, there are 18,000 private companies of that size.

We’ve expanded the pipeline of diverse board members at Vista through a program we launched with the National Association of Corporate Directors (NACD), called the Pipeline Program Together. We’re producing 150 board-ready candidates each year–and making them available to any company in the world.

Third, we need to measure our work. Changing the culture of an organization that focuses on value creation to one that includes equity and inclusion as core elements of the investment process requires measurement. As we wade through a multitude of possible actions at Vista, we’re relentless about scale, impact, and sustainability. My suggestion for private equity and business leaders: If you can’t do it in a big way, if you can’t measure it, and if you can’t keep doing it and see it through, you need to rethink your approach. We must expect measurable outcomes from DEI programs in the same way that we expect returns from investments, even if we measure DEI “returns” in different ways.

These steps work. Our workforce at Vista is already at gender parity, with 53% women and 37% people of color. Some 92% of our majority-controlled boards of portfolio companies have at least one person of color, and 81% of our majority-controlled boards of portfolio companies have at least one woman on the board.

Increasing a sense of equity and opportunity among all workers decreases the risks to our investments, the economy, and the communities that comprise our workforce and consumer base. Inclusionary business practices require intentionality, sustained effort, and collaboration.

It’s vital that we maintain our resolve, share our learnings and best practices, and hold ourselves and each other accountable for delivering results on inclusion. This is our privilege and our responsibility.

Robert F. Smith is the founder, chairman, and CEO of Vista Equity Partners.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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