Why a diverse workforce is a necessity for long-term EM investor Arisaig Partners

Rebecca Lewis Arisaig Partners

A rash of financial institutions have recently made headlines with grand donations and initiatives to improve diversity within their firms, in response to the protests over the killing of George Floyd that gripped cities across the US and beyond. 

The world’s largest asset manager, BlackRock, has vowed to increase Black representation in its workforce by 30 per cent by 2024. Only 5 per cent of its employees, and 3 per cent of its senior leaders, identify themselves as Black.

“We need to do better,” wrote Larry Fink, Blackrock’s CEO, in a LinkedIn post. “We must use our voice and work with others to advocate for change within our industry and across society more broadly.”

For other investment firms, diversity and inclusion are simply “in the DNA”. Rebecca Lewis is the managing partner of USD4.3 billion AuM emerging markets investor Arisaig Partners, and she believes there is a strong business case for having diverse teams in investment firms.

“We focus on six billion people in a very diverse range of markets. We feel strongly, and have done since inception, that the way you best address those markets is by reflecting their societies as much as possible in your workforce,” says Lewis.

Arisaig Partners was established in 1996 in Singapore by “two Scots and an Englishman” – James Alexandroff, Lindsay Cooper and Torquil McAlpine. 

The firm is “a bit of an anomaly” in that 67 per cent of its workforce are BAME employees, and women account for 56 per cent of its employees.

It is a long-term investment firm, looking at consumer goods firms across emerging markets, with the aim of “holding these stocks forever”. 

Their funds include the flagship, long-only Arisaig Asia Consumer Fund, but they also run a Latin America Consumer Fund and a Global Emerging Markets Consumer Fund, which lists returns of 43 per cent since launch. It has outperformed the MSCI EM Staples Index, which was up 24.1 per cent over the same period.

Arisaig attempts to understand what drives consumers in emerging markets, which Lewis says is “impossible to do” without a diverse workforce.

“We need to continue to educate ourselves about these markets, and about what it's like to grow up in Pakistan, what's it like to grow up in Vietnam, and the different perspectives you bring to bear.” 

Lewis, who is gay, says her own choices are informed by the knowledge that “all the freedoms I enjoy today are on the backs of individuals and groups who fought for them and so it is a moral responsibility to be an agent for positive change”. She originally joined Arisaig Partners at its Singapore office in 2010, but she and her wife chose to move to Brighton two years ago, in order that she and her wife could raise their daughters in a society where their relationship was legally recognised.

Her career has taken sharp turns, since leaving her graduate role at Lloyd’s TSB to become a teacher in Asia for six years. Working with NGOs in Cambodia, she saw first-hand the positive role business can play in society, and in 2008 she embarked on an MBA programme at INSEAD in France.

Lewis’ emphasis on diversity is also reflected in Arisaig’s portfolio companies. Investee Godrej Consumer, an Indian consumer goods company selling toiletries, hair dye, and pesticides, has been prominent in pushing the conversation around LGBTQ rights in the country through the Godrej Culture Lab, founded by its managing director, Nisaba Godrej. It only became legal to be gay in India in 2018.

Lewis explains: “The reason that diversity has such a strong business case for her, aside from obviously the moral obligation, is the fact that she wants to be the leading employer in India, and she wants to attract the best and brightest. She knows that her business makes better decisions if it has people from lots of different walks of life with different backgrounds.”

But Lewis says that behind the scenes, diversity and inclusion is about “the boring stuff”: disclosures, monitoring, management information, policy, and accountability.

KPMG published a report in July, in which it noted that “good diversity practices are viewed as risk-reducing for both investment firms and investment funds” but that disclosure of diversity policies is still “mainly voluntary”. 

This year will mark the first year that Arisaig includes a diversity breakdown in its annual report. “When I talk to Nisaba Godrej about diversity, I'm like ‘disclosure disclosure disclosure’. But I can't do that if I won't disclose our own statistics.”

Disclosure is an important step as it encourages firms to take responsibility. “We have to hold the mirror up to ourselves and see where we're not measuring up,” explains Lewis, adding that this doesn't need to be done in a “vilifying” or “threatening” way.

At this point, Lewis says that Arisaig is still working to improve the BAME representation in its London office, which has been historically lower than at its other locations. “For us to incorporate BAME employees hasn't been challenging to do. In a vibrant and diverse city like London, it’s not hard to find great talent from lots of different backgrounds.”

In 2019, UK investment trade body, The Investment Association found that fewer than 1 per cent of investment managers are Black, even though 13 per cent of the population of London identify themselves as Black, which is the city where the majority of the UK asset management industry is based. 

In June, the UK government came under pressure from business leaders to create a dedicated race charter for the financial sector, that would push asset managers to increase the number of Black and Minority Ethnic (BAME) workers within their ranks.

Lewis is the managing partner, but says her other three partners, including one BAME partner, are committed to diversity. She says that diversity is a process. “Everyone talks about the glass ceiling for women, but surely that applies to any dimension of diversity. When you don't have that representation at the top level, progress will be slower,” she says.

In the near future, Arisaig is also hoping to be certified as a “B Corporation”, which is an independent assessment of a company’s impact with regard to its social and environmental performance, public transparency, and legal accountability.