John Randall, ICI update

Recently Delta Data conducted its sixth annual customer roundtable, bringing in more than 40 pundits and experts from the financial industry for a series of conversations covering a range of subjects, from regulations to managing COVID-19. Participants included representatives from the top 10 US banks, top five US retirement recordkeepers, and top five US investment managers. In this blog post, roundtable participant John Randall, director, operations, and distribution at the Investment Company Institute (ICI), discusses issues and initiatives the Institute is currently tracking.

John Randall — ICI
Corporate Environmental, Social and Corporate Governance

The next focus in Washington and certainly the Institute is corporate ESG and specifically the disclosure framework. There’s a vast regulatory focus on what disclosure looks like going forward. The first and most important thing is that the framework of what people will be expecting, both regulators and our consumers, will not be in isolation. It’s a global framework representing a coalescence of regulations that will standardize what you’ll see in the United States, Europe, and Asia. We should all be paying close attention to what’s coming out of Brussels.

We’re supporting the recommendations that the disclosures should be based on the Task Force on Climate-Related Financial Disclosures (TCFD), under the Sustainability Accounting Standards Board. We are all working hard to get to a more normalized global set of standards for what disclosure should be based on and what it should look like. US regulators have been very interested in layered disclosure rather than just adding existing documents, to provide more clarity, especially for the end consumer. ICI’s ESG Resource Center has the fund industry road map for environmental, social, and governance (ESG) issues and the disclosure regimen.

One of the most important things related to ESG is ensuring that the industry is using consistent terminology. In our white papers on this topic, ICI helped set a framework for the differences between exclusionary investing from an ESG perspective, inclusionary investing, and impact investing, as well as for firms that use all three approaches inside one matrix. We have emphasized that it’s not just climate change; it’s not just gender equality; it’s not just any one of those things—it’s all those things. One can approach it from either an inclusion or an exclusion perspective.

Diversity, Equity, and Inclusion

Another big topic ICI has been tracking is diversity, equity, and inclusion (DEI). We’ve done several surveys in 2020 and 2021 and created a working group that addresses ways to help members with their DEI to make sure that the industry is heading in the right direction. One of the big goals for the Institute, which we feel reflects what the regulators are looking for, is to become more like those we serve. The investing public has become more and more diverse, so we need to work to reflect that demographic. Getting there is going to require a few significant workstreams.

One workstream involves building diverse talent pipelines; this is a way to assist our members with reaching different segments of the population to make sure they’re recruiting responsibly by taking these factors into account. Second, understanding how to maintain a diverse workforce. Third, keeping on top of policy issues related to DEI, which will come into a much stronger focus based on the change of administration.

DEI is going to be a continued discussion at least for the rest of this administration, and it’s also an effort that is being led by our Board of Governors, so it represents all our members. Everybody is going to be working on getting their arms around this vital topic.