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As the #MeToo movement emboldens victims of sexual harassment and assault to speak out — and as investors increasingly prefer companies that align with their values — a due diligence group is warning institutional investors to keep a closer eye on the investment managers whom they trust their beneficiaries' assets.
Institutional fund allocators are doing a better job of identifying sexual harassment issues at investment management firms, but need to do more to respond when they uncover such problems, according to the Investment Management Due Diligence Association.
IMDDA's second annual sexual harassment survey, released Friday, found that only 26% of allocators said they inquired about sexual harassment in the workplace — still an improvement over the 11% in the 2018 survey that said they did so.
At the same time, 9% of allocators said they would still invest with a manager even after they had found workplace sexual harassment issues, up from 4% in last year's study.
Fifty-five percent of due diligence professionals said they would not press for answers if a manager declined to answer questions about sexual harassment. But 45% said they would dig deeper, way up from 18% in 2018 that said they would insist on answers.
Three-quarters of investors said they checked social media and lawsuit history for red-flag indicators of sexual misconduct as part of their due diligence, up from two-thirds in the previous survey.
"IMDDA's second annual survey of sexual harassment demonstrates that the global institutional investor community is continuing its efforts to uncover and react to instances of sexual harassment uncovered during the due diligence process," said IMDDA's executive director Andrew Borowiec said in a statement.
"The full impact of sexual harassment is, first and foremost, on the victim or victims and that must be addressed. Investors need to maintain their moral and ethical responsibilities while making sure not to ignore fiscal responsibilities."
