Stringer wants firms to OK Rooney Rule, raises MWBE goals for pension funds
At Friday’s annual Bureau of Asset Management’s “Emerging and Minority and Women-owned Business Enterprise Manager Conference,” New York City Comptroller Scott Stringer urged companies across the nation to adopt a version of the National Football League's “Rooney Rule.”
This policy requires firms to consider women and people of color for every open board seat and also for CEO appointments. It is first time a large institutional investor has called for the Rooney Rule to be used in CEO searches.
Last month, Stringer announced that over 600 firms have adopted proxy access, a hundredfold increase since the comptroller’s “Boardroom Accountability” program was launched in 2014.
“Increasing diversity at the biggest corporations has been our focus from day one — and we’re pressing forward with our campaign to change the face of corporate America,” Stringer said. “Not only have the New York City Retirement Systems exceeded our own goals for investing with diverse managers, our commitment to diversity has rippled across the industry and created a wave of change.”
According to the Comptroller’s Office, research suggests a positive correlation between board diversity and company performance. Research by McKinsey suggests that firms with greater gender and ethnic board diversity have stronger financial performance, the comptroller's office said, while MSCI research suggests gender diverse boards have fewer instances of bribery, corruption and fraud.
Stringer also announced on Friday that BAM has achieved its goal of allocating 10% of assets under management to MWBE firms — and is now increasing that MWBE goal to 12%.
Stringer is the investment advisor and the custodian and trustee of five New York City pension funds, which total over $207.7 billion as of July. The city pension funds are composed of the New York City Employees’ Retirement System, the Teachers’ Retirement System, the Police Pension Fund, the Fire Department Pension Fund and the Board of Education Retirement System.
The comptroller said he has put before the Board of Trustees a new initiate to raise the funds to early-stage managers and first-time funds. The initiative would allocate $1.5 billion to early-stage managers and first-time funds in private equity, real estate, alternative credit, and infrastructure and the board is expected to vote to approve it before the end of the year.
Earlier this year, the pension systems’ committed an additional $600 million to MWBE and emerging managers in private equity — $100 million more than the target-goal set at last year’s conference; bringing total assets committed to the in-house emerging manager program to over $1.5 billion.
The comptroller also presented “Diverse Practitioner” awards to Palladium Equity Partners and the FIS Group. The firms invest money on behalf of the city’s pension funds and were honored for their commitments to diversity in the composition of their investment professional staffs and boards and in their policies and practices.
Palladium is a minority-owned and NYC-based middle-market private equity firm with over $2 billion in assets under management. It was founded in 1997 and its principals have experience in consumer, services, industrials and healthcare, with special focus on family-owned businesses that it expects to benefit from the growth in the U.S. Hispanic population. Accepting the award for Palladium was Marcos Rodriguez, managing member of the firm.
FIS is a minority- and woman-owned investment management firm that provides customized manager of managers investment solutions for institutional investors in global equity, non-U.S. and U.S. equity. It seeks to identify high-performing entrepreneurial and emerging managers and strategies that have gone largely undiscovered by the institutional investor community. FIS was founded in 1996 and is wholly owned by its current and former employees. Accepting the award for FIS was Tina Byles Williams, CEO and CIO of the firm.
New York City is one of the largest issuers of municipal debt in the United States. As of the fourth quarter, the city had about $37.52 billion of general obligation (Aa1/AA/AA) debt outstanding. That's not counting the various authorities that issue debt.
The NYC Transitional Finance Authority has $38.52 billion of debt outstanding while the NYC Municipal Water Finance Authority has $29.57 billion of debt outstanding. The TFA’s debt consists of future tax secured senior bonds (Aaa/AAA/AAA), FTS subordinate bonds (Aa1/AAA/AAA) and building aid revenue bonds (Aa2/AA/AA). The MWFA’s debt consists of general resolution bonds (Aa1/AAA/AA+) and second general resolution bonds (Aa1/AA+/AA+).
Looking ahead, BAM will launch a new program next year aimed at sourcing and engaging with qualified diverse managers and firms by hosting webinars and workshops throughout 2020.
“As I said, we are doing this not just because it’s the right thing to do — we’re doing it because it’s the smart thing to do,” Stringer said. “Diversity must be front and center in conversations about wealth creation. It’s not a box to be checked, it’s a living, breathing commitment to empower people who have been fighting with one hand behind their back for far too long.”