In a world full of benchmarks against which the performance of a money manager can be measured, Alexis Klein has decided there is room for one more.
Klein is the developer behind the recently launched LGBT Corporate Canadian Index, the first of its kind in Canada. But the concept — the Canadian stocks included in the index are those deemed to be promoting diversity by embracing Lesbian, Gay, Bi-Sexual, and Transgender individuals as well as diversity and inclusion — is already being used by U.K. and the U.S. money managers. And the index has been given support by
provincial and federal governments and politicians.
The new index “is an important and valuable tool for championing the rights of LGBT individuals on a national level,” said Klein, adding companies that “actively embrace LGBT inclusion deserve recognition.”
Selecting the TSX-listed companies included in the index presented a challenge. The list started with the 240 companies that make up the S&P/TSX composite index and was whittled down to focus only on those that have a policy of non-discrimination based on sexual orientation and gender expression (which was deemed to be worth 50 points) and those that replied to a survey. Companies that lacked such a non-discriminatory policy,
or didn’t respond, were deemed not to qualify.
And a company could score additional points if it provided a positive response to three additional questions: Does it promote LGBT values through corporate initiatives? Does it offer educational collateral focusing on diversity in the work place? And does it have a chief diversity officer?
Those three questions were deemed to be worth 20 points, 20 points and 10 points respectively.
The maximum score was thus 100 points.
(It’s) an important and valuable tool for championing the rights of LGBT individuals on a national level
Twelve companies in total made the list. While there were two from each of the communication services, oil and gas and REIT sectors, the other six members come from six different sectors.
Under the scoring methodology, Manitoba Telecom, and Sun Life Financial, reached the maximum score. (BCE, which is set to acquire Manitoba Telecom later this week, is not on the list.)
Four other companies — PrairieSky Royalty, Rogers Communications, Cineplex and CI Financial — scored 90 points, and presumably didn’t reach the maximum because none had a chief diversity officer. Two other companies — Crombie REIT and Bonavista Energy — scored 70 points while four others (ATS Automation Tooling, Bombardier, Dream Global REIT and Amaya) scored 50 points.
The 12 companies in the index will stay for the next 12 months. But around year-end, Klein will survey the TSX companies and ask them to complete the series of questions. This time the companies will be asked “more, in depth questions,” he said. Depending on those answers, Klein expects considerably more members will be included in the index next year than this year.
With the index developed and the members identified, the next stage in its development is for a management company to create a fund around the concept. “The index is great for ethical investors and for those who are looking to maximize their return given that studies show that funds, with diversity, tend to outperform,” noted Klein, who is no stranger to developing different indexes. In 2013, for example, he introduced the concept of the Global Women Equity Corp., a socially responsible investment mutual fund formed to invest in companies that promote the advancement of women.