Inequality levels are high and rising. Even prior to the pandemic, income inequality was growing across the world. The virus has accelerated, hitting certain groups disproportionately, including least developed countries, the poor, women, the disenfranchised and marginalised. This is not just a health crisis (physical and mental) but also an economic one. There will be long lasting, multi-year impacts during the economic recovery to come.
In parallel, we’ve witnessed an unprecedented focus on themes of racial and social justice (the former is more prominent in certain markets than others) and diversity and inclusion, fuelled by #MeToo and the Black Lives Matter movements.
These macro trends, in combination with the pandemic, have catapulted social issues – the ‘S’ of ESG into sharp and immediate focus. The results are visible, led by action from policymakers, business leaders, investors, and civil society. We see this at Actis through greater urgency in how it matters to our LPs, portfolio companies and our colleagues.
Sustained recovery from the ‘deep ditch’ of the pandemic requires harnessing all human capital. It is only through inclusion of all voices and talents that stable societies and prosperous economies can be rebuilt.
Companies must adapt, respond and innovate to these trends to deliver value to shareholders and stakeholders and to remain competitive.
It is mission-critical to understand that millennials – who will hold leadership roles over the coming decade – have a razor sharp focus on diversity and overwhelmingly choose to work for organisations with authentic commitments to equality, inclusion, sustainability and purpose.
One clear value creation lever is talent. Attracting, retaining and nurturing the best talent will deliver outperformance. There is ample evidence now of a link between diverse teams and higher quality decision making across multiple industries. The smartest companies will look for ‘culture add’ not ‘culture fit’ in the understanding that it is our differences which drive value – the ‘diversity bonus’.
As you will see from the stories told by our portfolio companies, there are multiple ways to tackle inequality and deliver value. Like Actis, our businesses are on a journey but many have made important strides, and those who are tackling this area do so on the basis of sound business strategy, not solely moral imperative. To us this is an exercise in partnership with purpose.
Their initiatives include diverse talent attraction through scholarships and internships (Zuma), empowerment of women in their local communities (Atlas); vocational skills training to build livelihoods and increase income generating capabilities (Biotherm), and fair and equal inclusion across supply chains (Big Basket).
Applying the right lens, companies make significant contributions to more equitable and inclusive societies and position themselves for sustainable long term success.
Actis has increased its focus on human capital in recent years – recruiting more diverse talent through our long-running Associate Programme, increased attention to talent development, and establishing a Talent Executive, to oversee and contribute to our talent strategy. We also focus on developing talent in our investee companies and for the last few years have built a growing expertise in this area, encompassing management selection, retention, board evaluation, talent development, leadership training. We launched our inclusion and diversity journey in 2018, resulting in 19 different initiatives including female networks, open door initiatives, unconscious bias and inclusive leadership training.
In 2020 we have focused heavily on inclusion and diversity. While we are humbly a ‘work in progress’, our long term objective is authentic leadership – to create the environments within Actis and our portfolio companies to attract diverse talent and to enable it to flourish to full potential. For us this means the full integration of inclusion and diversity into our daily activity of making, managing and delivering investments; working with management teams, boards, industrial advisers; engaging with communities and other stakeholders. You can find more information on our website, including profiles of diverse talent inside Actis and our portfolio.
You can find more information about our Associate Programme here: Associate Programme Video