Accelerating the Diversity Flywheel in 2022 and Beyond

Accelerating the Diversity Flywheel in 2022 and Beyond

By Emily Chew and Jade Huang, Calvert Research and Management

Every year, the message becomes clearer. Diversity is just good for businesses that embrace it – and bad for those that don’t.

Emily Chew and Jade Huang of Calvert Research and ManagementBy now, many companies understand that a diverse workforce can enhance innovation and in turn profitability. Many are also realizing the reverse is also true. As research indicates, companies with less diversity tends to correlate with those that may underperform. One recent study from McKinsey & Co. found companies with executive teams in the top quartile for gender diversity were 25% more likely to have above-average profitability than companies in the bottom quartile.1

Moreover, the same McKinsey study found companies in the bottom quartile for both gender and ethnic diversity to be 27% less likely to achieve above-average profitability. This may be because such firms face a number of business risks, including acquiring and retaining the best talent, and creating an environment where that talent can achieve optimal productivity.

Women Move Markets

Calvert’s own research, available on our website (, shows that the number of women in named executive officer (NEO) positions has meaningful correlation with equity performance, as does the number of women on corporate boards. We found that U.S. large-cap companies with at least four women on the board outperformed the most when compared to those with less than four women board members. For the U.S. small-cap equity market and non-U.S. equity markets, we found the current tipping point for a positive performance correlation to be at least two women on corporate boards.2

In short, companies with a more diverse workforce, including more women in executive roles and in the board room, stand to benefit from a range of financial, social and reputational advantages.

As McKinsey and others report, companies with a diverse workforce are beating their less-diverse counterparts in terms of higher innovation, better employee engagement, improved reputation and decision-making, as well as performance. We see every reason for this trend to accelerate in 2022 and beyond, as responsible investors increasingly recognize that driving capital to companies with good diversity practices is a sound business decision.

Gains in 2020, More Work to Be Done

However, we still have work to do to achieve true gender parity in corporate America. McKinsey’s updated report, “Women in the Workplace 2021,” found that in company C-suites, fewer than one in four leaders is a woman, and just four percent are women of color.3 It noted that “in spite of the challenges of the COVID-19 crisis, women’s representation improved across all levels of the corporate pipeline in 2020.” However, pervasive burnout and dropout of women from the workforce during the pandemic are threatening progress. Significant gaps also persist, particularly for women of color, who are losing representation at every rung of the corporate ladder. The study states that from entry level to the C-suite, the representation of women of color drops off by more than 75 percent and that “as a result, women of color account for only 4 percent of C-suite leaders, a number that hasn’t moved significantly in the past three years.”

Taking some of these insights into account, Calvert has built a diversity factor that looks at a number of different criteria, including the number of people of diverse backgrounds on board, diversity on executive and management teams, and diversity demographics company-wide. But those are not the only factors we consider to be relevant or which we look at. An inclusive culture that harnesses the benefits of diversity is also very important, as is how companies are managing their human capital more generally. A culture that promotes all people’s best thinking is necessary to take full advantage of diversity’s benefits. Calvert recently launched a series of Diversity, Equity and Inclusion investment strategies that leverages this proprietary factor to identify companies demonstrating leadership and improvement in their diversity practices and inclusive workplace cultures.

Engagement Pushes Companies Forward

Despite the growing importance of diversity, it sometimes can be difficult to get the data necessary to evaluate a company’s performance in this area, particularly across workforce levels. Our engagement team has written to 100 of the largest companies in our portfolios, asking them to publicly release their EEO-1 reports. These reports provide details about the company’s workforce, broken down by several racial and ethnic categories and by gender at each of 10 professional levels. Companies of a certain size are required to disclose this information to the US Equal Employment Opportunity Commission, but are generally are not required to release this information publicly except in certain circumstances, such as a lawsuit.

When we began this project, 18 of the 100 were already publicly releasing their reports. For the others, we asked for a meeting with company management to allow us to explain why we think doing so is important. We have also reached out to other investors to encourage them to support this initiative and to coordinate with those that are already committed to the issue.

As of November, we have received responses from more than three quarters of the companies, and a total of 80 of the largest 100 companies now have agreed to release their EEO-1 reports. We will continue our dialogue with these companies to ensure that they follow through on their commitments.

Calvert will continue its decades-long efforts to push this process forward, using our research and engagement teams’ insights to give companies the business case for improved diversity and engaging with them to find the best way forward.


Article by Emily Chew, Chief Responsibility Officer for Calvert Research and Management; and Jade Huang, Director of Applied Responsible Investment Solutions for Calvert Research and Management.

See their biographies below.

This material is presented for informational and illustrative purposes only and should not be construed as investment advice, a recommendation to purchase or sell, or to adopt any particular investment strategy. This material has been prepared on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. However, no assurances are provided and Eaton Vance has not sought to independently verify information taken from public and third party sources. Information contained in this material is current as of the date indicated and is subject to change at any time without notice. Future results may differ significantly from those stated, depending on factors such as changes in the financial markets or general economic conditions.

Calvert Research and Management is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley. Eaton Vance Management is an SEC registered investment advisor and is also part of Morgan Stanley Investment Management, and is responsible for issuing this material.

Article Writers Biographies: 

Emily Chew is the executive vice president and chief responsible investment officer of Calvert Research and Management, which specializes in responsible and sustainable investing across global capital markets, and part of Calvert’s senior management team. She is responsible for the continued development of Calvert’s research, engagement and stewardship functions. She joined Calvert Research and Management in 2021.

Emily began her career in the investment management industry in 2011. Before joining Calvert Research and Management, she was the global head of sustainability for investment management at Morgan Stanley Investment Management (MSIM), and she currently co-chairs MSIM’s Sustainability Council. Previously, she was global head of ESG research and integration for Manulife Investment Management, head of Asia-Pacific ESG research for MSCI Inc. and a capital markets lawyer with Baker & McKenzie in Melbourne, Australia, with a focus on funds management, capital raisings and REITs.

Emily earned Bachelors of Laws and Arts (honors) from the University of Melbourne and an MBA from the University of Oxford. She is a member of the CFA’s Technical Working Group to develop a new global ESG disclosure standard for investment funds, and formerly served as rotating chair of the Steering Committee of the Climate Action 100+ investor engagement initiative and chair of the Asian Investor Group on Climate Change.

Jade Huang is a vice president and director of applied responsible investment solutions for Calvert Research and Management, which specializes in responsible and sustainable investing across global capital markets. She is responsible for managing the suite of Calvert Responsible Indices, including the index construction processes, as well as developing new investment products at Calvert. She joined Calvert Research and Management in 2016.

Jade began her career in the investment management industry in 2005. Before joining Calvert Research and Management, she was a portfolio manager with Calvert Investments. Previously, she was an investment analyst at Microvest, an asset management firm specializing in impact investing, and led the certification department at Fair Trade USA.

Jade earned a B.A. from the University of California, Berkeley and an M.A. in international finance and economics from Johns Hopkins University, School of Advanced International Studies (SAIS).

[1] McKinsey & Company, May 19, 2020, “Diversity Wins: How Inclusion Matters.”
[2] Calvert Research and Management, “Does an Ethnically Diverse Board Mean Better Stock Performance?” September 2021.
[3] McKinsey & Company, “Women in the Workplace: 2021.”

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