Why are companies fleeing DEI when it’s clearly more profitable?
Jory Cohen, Inspirit’s Director of Finance and Impact Investment, wrote an opinion editorial for the Toronto Star that demonstrates a correlation between diversity and profitability. Diversity, equity and inclusion (DEI) encourages a variety of perspectives, experiences and considerations within business operations and decisions.
Read the full article here. Below is an excerpt.
Let’s take a look at how more diverse leadership teams correlate with profitability levels.
McKinsey, the global management consultant company, released a series of four reports over the past decade exploring the connection between corporate executive team diversity and financial performance.
Their findings are clear; companies with higher levels of gender and racial diversity on executive teams tend to produce higher financial returns.
McKinsey’s first report was released in 2015, demonstrating that companies in the top quartile of executive gender diversity have a 15 per cent greater likelihood of financially outperforming companies in the bottom quartile. The most recent report published in 2023 saw that figure rise to 39 per cent.
The 2015 report also displayed a 35 per cent increased likelihood of financial outperformance for companies with top quartile executive racial diversity compared to those in the bottom quartile. That figure jumped to 39 per cent in the 2023 report. Companies in the bottom quartile of both executive gender and racial diversity were 66 per cent less likely to financially outperform relative to average performance.