    [House Hearing, 117 Congress]
    [From the U.S. Government Publishing Office]

                      A REVIEW OF DIVERSITY AND INCLUSION
                            PERFORMANCE AT AMERICA'S
                             LARGE INVESTMENT FIRMS

    =======================================================================

                                 HYBRID HEARING

                                   BEFORE THE

                           SUBCOMMITTEE ON DIVERSITY

                                 AND INCLUSION

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                DECEMBER 9, 2021

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 117-64

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    46-509 PDF                 WASHINGTON : 2022

    -----------------------------------------------------------------------------------

                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                     MAXINE WATERS, California, Chairwoman

    CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina,
    NYDIA M. VELAZQUEZ, New York             Ranking Member
    BRAD SHERMAN, California             FRANK D. LUCAS, Oklahoma
    GREGORY W. MEEKS, New York           BILL POSEY, Florida
    DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
    AL GREEN, Texas                      BILL HUIZENGA, Michigan
    EMANUEL CLEAVER, Missouri            ANN WAGNER, Missouri
    ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
    JIM A. HIMES, Connecticut            ROGER WILLIAMS, Texas
    BILL FOSTER, Illinois                FRENCH HILL, Arkansas
    JOYCE BEATTY, Ohio                   TOM EMMER, Minnesota
    JUAN VARGAS, California              LEE M. ZELDIN, New York
    JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
    VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
    AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
    MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
    CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
    SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
    AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
    RITCHIE TORRES, New York             JOHN ROSE, Tennessee
    STEPHEN F. LYNCH, Massachusetts      BRYAN STEIL, Wisconsin
    ALMA ADAMS, North Carolina           LANCE GOODEN, Texas
    RASHIDA TLAIB, Michigan              WILLIAM TIMMONS, South Carolina
    MADELEINE DEAN, Pennsylvania         VAN TAYLOR, Texas
    ALEXANDRIA OCASIO-CORTEZ, New York   PETE SESSIONS, Texas
    JESUS ``CHUY'' GARCIA, Illinois
    SYLVIA GARCIA, Texas
    NIKEMA WILLIAMS, Georgia
    JAKE AUCHINCLOSS, Massachusetts

                       Charla Ouertatani, Staff Director
                    Subcommittee on Diversity and Inclusion

                         JOYCE BEATTY, Ohio, Chairwoman

    AYANNA PRESSLEY, Massachusetts       ANN WAGNER, Missouri, Ranking
    STEPHEN F. LYNCH, Massachusetts          Member
    RASHIDA TLAIB, Michigan              FRANK D. LUCAS, Oklahoma
    MADELEINE DEAN, Pennsylvania         TED BUDD, North Carolina
    SYLVIA GARCIA, Texas                 ANTHONY GONZALEZ, Ohio, Vice
    NIKEMA WILLIAMS, Georgia                 Ranking Member
    JAKE AUCHINCLOSS, Massachusetts      JOHN ROSE, Tennessee
                                         LANCE GOODEN, Texas
                                         WILLIAM TIMMONS, South Carolina

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on:
        December 9, 2021.............................................     1
    Appendix:
        December 9, 2021.............................................    33

                                   WITNESSES
                           Thursday, December 9, 2021

    Clements, Michael E., Director, Financial Markets and Community
      Investment, U.S. Government Accountability Office (GAO)........    11
    Gadsden-Williams, Michelle, Managing Director and Global Head of
      Diversity, Equity and Inclusion, BlackRock.....................     5
    Pan, Eric J., President and CEO, Investment Company Institute
      (ICI)..........................................................     6
    Parker, Ronald C., President and CEO, National Association of
      Securities Professionals (NASP)................................     8
    Taraporevala, Cyrus, President and CEO, State Street Global
      Advisors.......................................................    10

                                    APPENDIX

    Prepared statements:
        Clements, Michael E..........................................    34
        Gadsden-Williams, Michelle...................................    44
        Pan, Eric J..................................................    52
        Parker, Ronald C.............................................    62
        Taraporevala, Cyrus..........................................    66

                  Additional Material Submitted for the Record

    Beatty, Hon. Joyce:
        Press release from the Diverse Asset Managers Initiative,
          dated December 7, 2021.....................................    72
    Wagner, Hon. Ann:
        June 2021 GAO Report entitled, ``Report to the Ranking
          Member, Subcommittee on Diversity and Inclusion, Committee
          on Financial Services, House of Representatives, Financial
          Services Industry--Factors Affecting Careers for Women with
          STEM Degrees...............................................    73
    Gadsden-Williams, Michelle:
        Written responses to questions posed during the hearing by
          Chairwoman Waters, and Representatives Wagner, Pressley,
          Lynch, Dean, and Garcia....................................   101

                           A REVIEW OF DIVERSITY AND
                             INCLUSION PERFORMANCE
                               AT AMERICA'S LARGE
                                INVESTMENT FIRMS

                                  ----------

                           Thursday, December 9, 2021

                 U.S. House of Representatives,
                              Subcommittee on Diversity
                                         and Inclusion,
                               Committee on Financial Services,
                                                         Washington, DC
        The subcommittee met, pursuant to notice, at 11:04 a.m., in
    room 2128, Rayburn House Office Building, Hon. Joyce Beatty
    [chairwoman of the subcommittee] presiding.
        Members present: Representatives Beatty, Pressley, Lynch,
    Tlaib, Dean, Garcia of Texas, Williams of Georgia; Wagner,
    Budd, Gonzalez of Ohio, Rose, and Timmons.
        Ex officio present: Representative Waters.
        Chairwoman Beatty. The Subcommittee on Diversity and
    Inclusion will come to order.
        Without objection, the Chair is authorized to declare a
    recess of the subcommittee at any time. Also, without
    objection, members of the full Financial Services Committee who
    are not members of this subcommittee are authorized to
    participate in today's hearing.
        As a reminder, I ask all Members to keep themselves muted
    when they are not being recognized. The staff has been
    instructed not to mute Members, except when a Member is not
    being recognized by the Chair, and there is inadvertent
    background noise.
        Members are also reminded that they may only participate in
    one remote proceeding at a time. If you are participating
    today, please keep your camera on. And if you choose to attend
    a different proceeding, please turn your camera off.
        Today's hearing is entitled, ``A Review of Diversity and
    Inclusion Performance at America's Large Investment Firms.''
        I now recognize myself for 4 minutes to give an opening
    statement.
        When I became Chair of the first-ever Subcommittee on
    Diversity and Inclusion, asset management was high on the list
    of priorities that I wanted the subcommittee to focus on, not
    only because of power, wealth, and the jobs it creates, but
    also because of the limited data available in this space
    suggesting it was one of the worst performers on diversity and
    inclusion within the financial services sector.
        Last Congress, as you will remember, we held a hearing on
    diverse asset management and heard from: researchers at the
    Knight Foundation; the founder of the largest African American-
    owned asset management firm, John Rogers; and the Chicago
    pension system, a leading institutional investor in diverse
    asset management.
        While this hearing demonstrated the breadth of the problem,
    we need to hear directly from the country's largest asset
    managers themselves and give them the opportunity to present us
    with their own data. That is why I want to thank our Full
    Committee Chairwoman Maxine Waters. Earlier this year, she and
    I worked together, and through her leadership, we sent a letter
    to the country's 31 largest asset management companies with
    more than $47 trillion in asset management requesting their
    diversity data, and their policies and practices.
        After months of analysis, the committee staff published a
    report earlier this week entitled, ``Diversity and Inclusion:
    Holding America's Largest Investment Firms Accountable.'' This
    wide-ranging report accounts for how America's largest asset
    management companies approach diversity and inclusion with
    respect to their workforce, their boards of directors,
    procurement, asset management, underwriting, and practices and
    policies.
        Also, it includes several recommendations that Congress,
    regulators, and companies can take to help ensure a more
    diverse and inclusive asset management industry.
        Now, here is what we have been waiting for: This report
    found that women and minorities are underrepresented in C-
    suites and on the boards of America's largest asset management
    firms.
        A little data: With women, representing 27.5 percent of the
    C-suites and 28 percent of the board seats, and minorities
    representing 17.3 percent of the C-suites and 17.5 percent of
    the board suites, only a third of the companies reportedly
    tracked diversity data with regards to the asset management
    firms they do business with, and thus their business diversity.
    They reported spending an average of .57 percent of total asset
    management services with women-owned businesses and 3.9 percent
    on minority asset managers. Only 21 percent of the companies
    reporting tracked diversity data with regards to the
    underwriting firms with which they do business.
        These findings reinforce what we heard from John Rogers,
    who sat where you are sitting now to testify, when he said,
    ``We must tackle inequality through business opportunity.''
        While this report and this hearing will not transform the
    industry overnight, we seek to bend the arc of progress and
    expand employment and business opportunities for both men and
    women, and minorities, by opening eyes and drawing attention to
    the glaring inequities in this corner of our society.
        And as I wrap up, let me simply say thank you to the
    witnesses today, and thank all of the firms that participated
    in the data submission for this report, and I look forward to
    hearing the testimonies of our witnesses today.
        Now, it gives me great honor to recognize the ranking
    member of the subcommittee, a colleague, a friend, and someone
    who takes diversity very seriously, and I am pleased to now
    yield to the Honorable Ann Wagner for 5 minutes for an opening
    statement.
        Mrs. Wagner. Thank you, Chairwoman Beatty. You have been a
    tremendous friend and colleague in this space and so many
    others.
        I want to thank our witnesses also for appearing before
    this subcommittee to discuss diversity within the asset
    management industry.
        Studies have shown that across the financial services
    industry, companies with a diverse workforce out-perform their
    less-diverse peers. A study conducted by Sheen Levine, a
    professor at Columbia University, found that, ``ethnically
    diverse trader teams priced assets more accurately, therefore
    yielding higher returns; while ethnic homogeneity promoted
    conformity and mispricing.''
        Despite strides in diversity and inclusion across the
    banking sector, women and minorities within America's asset
    management sector are still underrepresented. Progress is being
    made, however, and today's witnesses will provide us with their
    strategies that have proven successful, and also the challenges
    their firms face in hiring and retaining a diverse workforce.
        When looking at the report and the data gathered from 31
    U.S. firms, it is important to remember that every firm has its
    own story to tell. While an initiative or a program may yield
    positive results for one firm, it may not for another. As Mr.
    Pan, the President and CEO of the Investment Company Institute,
    said in his testimony, some of their members have been engaged
    in this area for many years and are leaders. But he also has
    members who have more recently begun to engage on this issue.
        Today's hearing should remain focused on what is working,
    what needs improvement, and also learning about the overall
    benefits of a diverse workforce.
        In 2019, I requested a GAO study to assess how firms are
    supporting increased participation among women in STEM programs
    at the secondary, the undergraduate, and the graduate levels,
    and what best practices firms are using to recruit and retain
    women with STEM degrees.
        Earlier this year, the GAO published this study, which I
    would request be submitted for the record, Madam Chairwoman.
        Chairwoman Beatty. Without objection, it is so ordered.
        Mrs. Wagner. The study found that several factors affect
    women's participation in STEM degree programs, along with a
    career in the financial services industry. After over a year of
    research and interviews with stakeholders, this report outlined
    factors that include young girls' early exposure to STEM
    topics, access to resources such as computers and high-speed
    Internet, and even a sense of whether they belonged in the STEM
    degree programs.
        This report also found that in order to encourage
    elementary or high school girls to learn about STEM, many
    financial services firms provide funding and other support to
    non-profit organizations that focus on increasing girls'
    participation in STEM, such as ICI's partnership with Girls Who
    Invest. With this support, non-profit organizations introduce
    girls to coding and basic programming and other activities that
    may inspire an interest in STEM education.
        We also learned that firms offer scholarships to women in
    STEM, sponsor conferences, and work with colleges and
    universities to recruit women with STEM degrees.
        We should be encouraging more partnerships such as those
    mentioned in this GAO report that I requested. Firms that make
    the effort to promote interest among women in both STEM and
    financial services will reap the rewards.
        I look forward to our further discussions, Madam
    Chairwoman, with our witnesses, about how we can include more
    women in the financial services industry talent pool, and the
    work that they are already doing in this space.
        Thank you, and I yield back.
        Chairwoman Beatty. Thank you.
        Now, I have the opportunity to recognize the Chair of the
    full Financial Services Committee, a national leader in
    diversity and inclusion who is committed to making a
    difference, and who is also a founder of this first-ever
    Diversity and Inclusion Subcommittee, none other than the
    gentlewoman from California, Chairwoman Maxine Waters.
        I yield to you for 1 minute.
        Chairwoman Waters. Thank you so very much, Chairwoman
    Beatty. I am so proud that your efforts have culminated in yet
    another groundbreaking report, this time on the diversity of
    our nation's largest investment firms.
        In March 2021, Chairwoman Beatty and I sent letters to 31
    firms that manage more than $400 billion in assets and
    requested their diversity and inclusion data, practices, and
    policies. The firms in this report oversee assets totaling more
    than twice the size of the United States' gross domestic
    product (GDP). They invest the retirement savings of millions
    of Americans and drive investment in companies and communities.
        The committee's report makes it clear that these firms have
    much work to do in transparency, and accountability is the path
    to progress.
        So, I look forward to discussing the findings of this
    report. And again, I thank you so very much, Chairuwoman
    Beatty, for the progress that you are making in this whole area
    of diversity and inclusion.
        I yield back the balance of my time.
        Chairwoman Beatty. Thank you, Madam Chairwoman.
        We will now recognize and welcome the testimony of our
    distinguished witnesses: Ms. Michelle Gadsden-Williams,
    managing director and global head of diversity, equity and
    inclusion with BlackRock; Mr. Eric Pan, president and CEO of
    the Investment Company Institute; Mr. Ronald Parker, president
    and CEO of the National Association of Securities
    Professionals, better known to many as NASP; Mr. Cyrus
    Taraporevala, president and CEO of State Street Global
    Advisors; and Mr. Michael Clements, Director of Financial
    Markets and Community Investment at the Government
    Accountability Office (GAO).
        Please, to all of the Members and those watching, we are
    having a hybrid hearing, so there are people seated with us in
    the room, and I will direct your attention to the screen.
        Witnesses, you are reminded that your oral testimony will
    be limited to 5 minutes. You should be able to see a timer on
    your screen that will indicate how much time you have left, and
    a chime will go off at the end of your time. I would ask that
    you be mindful of the timer, and quickly wrap up your testimony
    if you hear the chime, so that we can be respectful of both the
    witnesses' and the subcommittee members' time.
        And without objection, your written statements will be made
    a part of the record.
        With that said, Ms. Gadsden-Williams, you are now
    recognized for 5 minutes to give an oral presentation of your
    testimony.

     STATEMENT OF MICHELLE GADSDEN-WILLIAMS, MANAGING DIRECTOR AND
       GLOBAL HEAD OF DIVERSITY, EQUITY AND INCLUSION, BLACKROCK

        Ms. Gadsden-Williams. Chairwoman Beatty, Ranking Member
    Wagner, Chairwoman Waters, Ranking Member McHenry, and
    distinguished members of the subcommittee, my name is Michelle
    Gadsden-Williams, and I am the global head of diversity, equity
    and inclusion at BlackRock. Thank you for the opportunity to
    testify on BlackRock's behalf in terms of our diversity, equity
    and inclusion (DEI) initiatives.
        DEI is core to our purpose, and I am pleased to appear
    before you today to discuss our commitment and our ongoing
    efforts in this critical area.
        I have spent over 30 years of my career leading DEI
    strategies for several multinational organizations in different
    industries in the U.S. and abroad. So, I understand the
    complexities and nuances, as well as the challenges of this
    work across businesses and cultures.
        I chose to join BlackRock in September of last year because
    I was convinced the organization truly wants to accelerate
    progress in DEI holistically. From our perspective, DEI is a
    critical business imperative that will position us and all of
    our key stakeholders for greater success in the long term.
        Now that I have been with BlackRock for 15 months, I
    continue to be impressed, but more importantly inspired, by our
    unwavering leadership and steadfast commitment, our movement
    with a real sense of purpose and urgency around issues
    pertaining to our people and our culture, and our relentless
    focus to ensure that DEI is not simply about doing the right
    thing or limited to talent and culture only.
        To be clear, we still have a lot of work to do at
    BlackRock. But through our continued commitment and focus, I
    know that we are on the right path to making meaningful and
    sustained progress.
        We have instituted a multi-year DEI strategy which closely
    aligns with our business imperatives, and has three distinct
    pillars. I will briefly touch on those areas where we have made
    progress, and also on our areas of opportunity. My written
    testimony includes more detail on each of these things, as well
    as other aspects of our DEI strategy.
        First, at the core of our DEI strategy is our most
    important asset, our people. At the start of each year, we set
    public representation targets and build goals into each
    business' objectives. In the summer of 2020, we committed to
    increasing our overall workplace representation of Black and
    Latinx employees by 30 percent, to doubling the number of Black
    and Latinx senior leaders, and to increasing our senior female
    representation to 32.5 percent by 2024. We are hiring women at
    almost parity and also achieved our initial goal of 30 percent
    of senior BlackRock employees being women globally. We have
    substantially increased the diversity of our new hires to the
    firm over the past year.
        Second, BlackRock has increased our supplier and vendor
    diversity efforts from historically underrepresented groups,
    including companies owned by and operated by minorities, women,
    military veterans, disabled veterans, people with disabilities,
    and members of the LGBTQ+ community. We started dedicated
    diverse broker and manager programs to increase connectivity
    and engagement with firms owned by minorities, women, and
    disabled veterans while helping them to grow their businesses.
        We also established a partnership with the Thurgood
    Marshall College Fund where we are donating a portion of the
    net revenues from BlackRock's management fee of a $7.5 billion
    money market fund to support students of Historically Black
    Colleges and Universities (HBCUs) and predominantly Black
    institutions.
        Third, our diversity strategy also focuses on the positive
    impact that we can have on the long-term success and
    sustainability of underserved communities through policy and
    philanthropic efforts. We strive to lead the industry on
    transparency on our diversity disclosures such as by releasing
    Sustainable Accounting Standards Board (SASB) and EEO-1
    disclosures. In 2020, the firm announced a $10 million
    philanthropic commitment to advance racial equity as part of
    the firm's long-term social impact initiatives.
        Importantly, success across DEI strategies requires
    leadership commitment from the top, and I am proud of the
    support and the focus coming from our CEO, Larry Fink, our
    Board of Directors, and other senior leaders across BlackRock.
        Thank you again for the opportunity to testify today and to
    allow me to share more about BlackRock's strategy. We have made
    meaningful progress, but we certainly recognize that there is
    so much more work that lies ahead to realize meaningful and
    substantive change. We appreciate the committee's focus on
    these important issues, and I look forward to answering your
    questions. Thank you.
        [The prepared statement of Ms. Gadsden-Williams can be
    found on page 44 of the appendix]
        Chairwoman Beatty. Thank you so much, Ms. Gadsden-Williams.
        Mr. Pan, you are now recognized for 5 minutes to give an
    oral presentation of your testimony.
        Members, please look to the screen.

    STATEMENT OF ERIC J. PAN, PRESIDENT AND CEO, INVESTMENT COMPANY
                            INSTITUTE (ICI)

        Mr. Pan. Chairwoman Beatty, Ranking Member Wagner,
    Chairwoman Waters, Ranking Member McHenry, and distinguished
    members of the subcommittee, thank you for the opportunity to
    testify on behalf of the Investment Company Institute (ICI).
        My name is Eric Pan, and I joined ICI as president and CEO
    in November of 2020. I am very pleased to be here today to
    share with you both ICI's and our members' commitment to
    increasing diversity and inclusion in the asset management
    industry.
        ICI applauds the work of this committee to make diversity
    and inclusion a core pillar of ensuring that our financial
    system works for all Americans.
        As the leading association representing regulated funds,
    ICI's members include mutual funds, exchange-traded funds, unit
    investment trusts, money market funds, and other funds publicly
    offered to investors in jurisdictions worldwide. With more than
    $40 trillion in assets under management, our members provide
    the investment vehicle choice to more than 100 million
    Americans, all seeking to create financial security and save
    for major financial milestones such as education, a home, and
    retirement.
        Now, I would like to take this opportunity to actually
    thank you, Chairwoman Beatty, for your participation this past
    October in joining the ICI and industry leaders, including our
    Board Chair and CEO of New York Life Investment Management,
    Yie-Hsin Hung, when you came to discuss the importance of
    increasing diversity and inclusion in the asset management
    industry. This event was part of ICI's broader initiative to
    making diversity and inclusion a key priority for us as an
    organization and for the industry.
        At this event, Chairwoman Beatty, in addressing some of the
    challenges the asset management industry faces in making real
    progress, you said that the best thing we could do is, ``be
    transparent, be accountable, and most importantly, be proud
    that you are part of making a difference, making a change, and
    growing this wonderful America that we live in.''
        I fully support your statement. Across our membership, we
    are seeing a growing momentum in the discussion and, most
    importantly, in the actions of our members to make diversity
    and inclusion a top priority. I am seeing a commitment to
    intentionality and a focus on making progress.
        This is reflected in the activity of ICI's own Board of
    Governors, which has set the tone for how important it is for
    us as an industry to make progress, and it is helping ICI
    launch initiatives to facilitate change across the industry. I
    would note that a discussion of diversity and inclusion is a
    regular agenda item at all ICI Executive Committee and Board
    meetings.
        Now, as has been noted, some of our members have been
    engaged in this area for many years and are leaders in the
    industry in this area, demonstrating the types of initiatives,
    programs, and measures that work. But we also have members who
    have only more recently begun to engage on this issue and are
    trying to identify ways to make changes within and outside of
    their organizations.
        All of this is to say that we as an industry are a work in
    progress in developing the strategies, practices, and actions
    that will achieve enduring results. In my written testimony, I
    discuss three core themes about the industry's work on
    diversity and inclusion, which also happen to track with the
    subcommittee's focus on examining the financial services
    industry more broadly. Given time constraints, let me just
    highlight them here.
        The first theme is disclosure, which ICI believes enables
    the industry to have a fact-based dialogue on diversity and its
    impact on the industry and its investors.
        The second theme discusses the industry's efforts around
    measurement and benchmarking to make meaningful progress toward
    creating a more diverse and inclusive industry in fund
    management and in fund governance.
        The last theme is an overview of the initiatives that ICI
    and the industry have launched to make meaningful progress
    toward ensuring that women and people of color are fully
    represented at every level of the asset management industry.
        In closing, I want to reiterate that the asset management
    industry plays a significant role in improving the financial
    well-being of investors by helping them build security. We are
    well-positioned to support women and people of color, and also
    to break down the barriers within the industry. Clearly, the
    industry must improve in this area, and we are working toward
    that goal, including at ICI.
        Thank you for the opportunity to address the subcommittee
    today, and I look forward to answering your questions.
        [The prepared statement of Mr. Pan can be found on page 52
    of the appendix.]
        Chairwoman Beatty. Thank you very much, Mr. Pan, and thank
    you for quoting me at the conference. I greatly appreciate it.
        Mr. Parker, you are now recognized for 5 minutes to give an
    oral presentation of your testimony.

      STATEMENT OF RONALD C. PARKER, PRESIDENT AND CEO, NATIONAL
             ASSOCIATION OF SECURITIES PROFESSIONALS (NASP)

        Mr. Parker. Thank you, and good morning. First, I would
    like to thank the U.S. House of Representatives Financial
    Services Subcommittee, and particularly Chairwoman Maxine
    Waters, Chairwoman Joyce Beatty, and Ranking Member Ann Wagner,
    for having me testify today.
        My name is Ronald C. Parker, and I serve as the president
    and CEO of the National Association of Securities
    Professionals, a trade association that advocates for and
    supports the development of ethnic minorities within the
    financial services industry. We work on behalf of over 600
    members across the country, with our members coming from large
    and small firms, and covering all asset classes.
        I am here today to share some information about the current
    state of the industry when it comes to ethnic minority
    representation, to share some facts around the realities of
    minorities in the industry and some solutions that the NASP
    organization supports to bolster inclusion and equality in the
    financial services industry.
        I would like to make four points in my remarks.
        Point one. There are substantial resources, over $100
    trillion, that are under the control of governments,
    endowments, companies, and other institutions that are managed
    by third-party investment professionals. While minority- and
    women-owned asset management firms make up 8.6 percent of this
    sector, they only manage about 1.8 percent of all assets under
    management.
        Point two. We all understand that the consultants, asset
    managers and others owe a duty of fiduciary care when selecting
    asset managers and must pick top-performing, trustworthy
    managers. However, we know that the minority-owned firms
    produce some of the best results in the industry, often with
    fewer resources. Yet, according to the magazine, Institutional
    Investor, and research done by the Knight Foundation, as
    mentioned earlier, these organizations are stuck managing
    pennies on the dollar.
        Point three. We also find that the request for proposal
    (RFP) process requires high levels of assets under management
    to even consider minority-owned smaller firms for investment
    opportunities. According to that GAO report that Congresswoman
    Wagner mentioned, the minimum size requirements for assets
    under management could potentially exclude smaller minority-
    and women-owned firms. This process needs to be addressed.
        Point four. While these two patterns note the impact of the
    financial services industry directly, we also believe that the
    overall support of business supplier diversity will be a key to
    minority asset managers' success as well. It is imperative that
    public, private, and non-profit enterprises embrace business
    diversity by increasing the utilization of business diverse-
    owned professional services firms in addition to working within
    diverse businesses of their traditional procurement.
        Now, for solutions.
        NASP supports the passage of the Diverse Investment
    Advisors Act, spearheaded by Chairwoman Beatty and championed
    by the NASP Legislative Committee, that was put forth in 2019.
    By establishing this, ``Rooney Rule,'' or, we would suggest,
    ``Beatty Rule,'' these firms will be guaranteed the opportunity
    to make their case alongside other firms in the process that is
    less about longstanding relationships and more about bringing
    new investment philosophies and strategies to the table.
        This legislation would specifically address the issues of
    fiduciary care by ensuring that the top-performing minority-
    and women-owned firms, regardless of ownership, have access to
    the same RFP process and competitive processes of those firms.
        NASP also stands behind the legislation to amend the Dodd-
    Frank Act, Section 342, by requiring that the diversity and
    inclusion efforts be tracked and added to the Uniform Financial
    Institutions rating system. This legislation would require that
    firms track their diversity efforts and performance, and hold
    accountable the person who is in the office of the CEO.
        We also realize that NASP has worked very closely with the
    U.S. Securities and Exchange Commission, and we would like to
    compliment Gilbert Garcia and Garcia Hamilton & Associates for
    their work in recommending changes as it relates to the Office
    of Minority and Women Inclusion (OMWI) of the SEC.
        It is our hope that through legislation, rulemaking, and
    data collection and analysis, we can frame and execute creative
    ways to address this issue. We must move from promises to
    practice to process.
        I thank you, and I yield back my time to the Chair.
        [The prepared statement of Mr. Parker can be found on page
    62 of the appendix.]
        Chairwoman Beatty. Thank you, Mr. Parker, for your
    testimony.
        Mr. Taraporevala, you are now recognized for 5 minutes to
    give an oral presentation of your testimony.

       STATEMENT OF CYRUS TARAPOREVALA, PRESIDENT AND CEO, STATE
                         STREET GLOBAL ADVISORS

        Mr. Taraporevala. Chairwoman Beatty, Ranking Member Wagner,
    Chairwoman Waters, Ranking Member McHenry, and distinguished
    members of the subcommittee, thank you for providing me the
    opportunity to testify today.
        I am Cyrus Taraporevala, the chief executive officer of
    State Street Global Advisors, the $4 trillion investment
    management arm of State Street Corporation, headquartered in
    Boston, Massachusetts.
        The evidence is clear that greater diversity--racial,
    ethnic, cultural, and gender--contributes to better corporate
    performance.
        While I am proud of State Street's actions and achievements
    to date, increasing diversity and inclusion remains a work in
    progress for all of us, and there is clearly a lot more work
    ahead of us. Hence, I support the committee's efforts in this
    area.
        In July of 2020, we announced our 10 actions to address
    issues of racism and inequality, which have now become an
    important part of our corporate culture and governance and go
    to the core of how we operate. I provide more details in my
    written statement, but here are a few highlights of some of our
    progress, which falls under three broad pillars.
        First, for our Board and workforce, we have increased the
    racial diversity of our corporate board from 9 percent to 25
    percent. We have adopted a global diverse candidates slate
    requirement for hiring of middle management and above, the U.S.
    version of which I am going to refer to as the Rooney Rule. We
    have committed to the MLT Black Equity at Work certification,
    and we recently announced that we will undertake a full civil
    rights audit to gain additional perspective and strengthen our
    programs and initiatives, and we now recognize Juneteenth as a
    corporate holiday.
        Second, for our industry and other stakeholders, we enhance
    the diversity and effectiveness of the syndicates underwriting
    our corporate debt by introducing Black-, Latinx-, women-, and
    veteran-owned firms in issuances of $1.3 billion over the past
    year. We conducted an audit of our charitable foundation,
    resulting in our formally including racial equity as a funding
    focus. We have announced strategic partnerships with industry
    groups and non-profits A Better Chance, the National
    Association of Securities Professionals, the Toigo Foundation,
    and the Association of the Luxembourg Fund Industry, to
    increase representation of Black and Latinx talent in our
    industry.
        And third, for the companies in which we invest, in 2017 we
    launched our, ``Fearless Girl'' campaign to draw attention to
    gender diversity in boardrooms. You may be familiar with the
    statue we placed on Wall Street which identified 1,500
    companies lacking women on their boards, 900 of which have
    since added at least one woman director. In 2020, we expanded
    that campaign to include racial and ethnic diversity.
        We have urged our portfolio companies to disclose the
    racial and ethnic composition of their boards, and over time,
    to add at least one director from underrepresented communities,
    and we have also called for companies to disclose their EEO-1
    data on employees, which is something we do.
        We have made significant progress, but, as the committee's
    report reveals, there remains much more to be done.
    Sustainable, meaningful advancements in diversity and inclusion
    require enduring changes to the way we all operate, and State
    Street, and I personally, are committed to staying that course.
        Once again, thank you for the opportunity to testify today.
        [The prepared statement of Mr. Taraporevala can be found on
    page 66 of the appendix.]
        Chairwoman Beatty. Thank you, Mr. Taraporevala, for your
    testimony today.
        And now, Mr. Clements, you are recognized for 5 minutes to
    give an oral presentation of your testimony. Please look to the
    screen.

     STATEMENT OF MICHAEL E. CLEMENTS, DIRECTOR, FINANCIAL MARKETS
    AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
                                 (GAO)

        Mr. Clements. Chairwoman Beatty, Ranking Member Wagner,
    Chairwoman Waters, Ranking Member McHenry, and members of the
    subcommittee, I am pleased to be here today to discuss our
    prior work addressing key practices to increase opportunities
    for minority and women asset managers in Federal retirement,
    insurance, and endowment programs.
        The financial services industry provides services that help
    families build wealth, and is essential to the economic well-
    being of the country. However, GAO's prior work has shown that
    the financial services industry has made limited progress in
    increasing diversity.
        Federal retirement, insurance, and endowment programs
    control significant financial resources which could provide
    opportunities for minority- and women-owned asset managers.
    Yet, we previously found limited participation among diverse
    asset managers in Federal programs.
        We identified four key practices that can be used as part
    of an institutional investor's asset management selection
    process to help ensure that qualified minority- and women-owned
    firms are considered. We identified these key practices through
    a review of industry reports and interviews with State, local,
    and private retirement plans and foundations, and we
    subsequently validated these practices by obtaining feedback
    from experts and industry stakeholders.
        The first key practice is top leadership commitment. Top
    leadership can demonstrate commitment to increasing
    opportunities for minority- and women-owned asset management
    firms.
        The second key practice is to remove potential barriers.
    Investors should review policies and practices to remove
    barriers that limit the participation of smaller, newer firms.
    For example, investors could adjust thresholds for assets under
    management, insurance, and length of track records to ensure
    that requirements are proportional to the size of the firm.
        The third key practice is outreach. Investors should
    conduct outreach to inform minority- and women-owned asset
    managers about investment opportunities and the selection
    process. For example, investors could meet with industry
    associations and participate in networking events with
    minority- and women-owned asset managers.
        The fourth key practice is to communicate priorities and
    expectations. Investors should explicitly communicate
    priorities and expectations about inclusive asset management
    practices to staff and consultants to make sure that those
    expectations are met.
        It is important to note that these practices do not require
    investors to develop allocations for minority- and women-owned
    asset management firms, or to change performance standards.
    Further, many non-Federal plans and foundations, after being
    interviewed, have implemented these practices to increase
    opportunities for minority- and women-owned firms and told us
    that using these practices does not conflict with their
    fiduciary responsibilities where the firms are selected based
    on their track record of performance and that they may benefit
    their clients.
        Since our 2017 report, we have examined to what extent
    seven Federal retirement, insurance, and endowment programs use
    these practices. The Federal Reserve System, the Pension
    Benefit Guaranty Corporation, and the Smithsonian Institution
    used all four practices. In contrast, the Federal Retirement
    Thrift Investment Board used none of the key practices, and
    other Federal vendors only used some. We recommended that the
    Board and other entities fully implement the key practices.
        In the intervening year, the Board and other entities have
    taken action to address our recommendations. For example, the
    Trustees of the Army and the Air Force Exchange Service Pension
    Plan issued a letter to plan consultants stating it was the
    trustees' intent to increase opportunities for minority- and
    women-owned asset managers, and requested that the consultant
    take action to increase opportunities for those asset managers.
        Our work has shown that implementing a more inclusive
    selection process for asset managers can widen the pool of
    candidates, which can help ensure that retirement plans are
    identifying the best asset managers and better manage
    investment personnel.
        Chairwoman Beatty, Ranking Member Wagner, and members of
    the subcommittee, this completes my oral statement. I would be
    pleased to respond to any questions you may have. Thank you.
        [The prepared statement of Mr. Clements can be found on
    page 34 of the appendix.]
        Chairwoman Beatty. Thank you so much, Mr. Clements, for
    your testimony and comments.
        I now recognize myself for 5 minutes for questions.
        The first question is for you, Ms. Michelle Gadsden-
    Williams. As a professional with more than 25 to 30 years of
    experience, how important is it for someone in your position to
    be empowered to have a buy-in with the CEO, and with the Board?
    And what is your actual level of interaction with both at
    BlackRock?
        Ms. Gadsden-Williams. Thank you, Chairwoman Beatty, for the
    question. I think it is critically important that I have access
    and exposure to the right leaders in the organization in order
    to accelerate progress on DEI. I report to the Chief Human
    Resources Officer at BlackRock, Manish Mehta, who reports to
    our CEO, Larry Fink. I report regularly to our Board of
    Directors. I just presented to them in March when we unveiled
    our strategy to the entire firm and to the Board, and 6 months
    later, I gave them an update in terms of where we are relative
    to our progress.
        To answer your question, it is incredibly important for me
    to have access and exposure, and also feel a sense of
    commitment from these entities that we are committed to doing
    the right thing.
        If I may, one of the many reasons why I decided to join
    BlackRock--there are a couple of things. There are several
    things that I look for in my conversations with CEOs and other
    leaders when it comes to diversity, equity and inclusion. It is
    the courage to act, the commitment to lead, and the conviction
    to change. And if any of these things are missing from that
    conversation, I tend to look elsewhere because I have seen the
    movie before where there are organizations that are not quite
    as committed, and I was convinced when I was being courted by
    BlackRock a year-and-a-half ago, and even more so now that I am
    on the inside, that we are committed to DEI and to doing all of
    the things and have consistently demonstrated actions that
    convince me as their head of diversity globally that we are
    committed to accelerating the pace of change going forward.
        Chairwoman Beatty. Thank you. Thank you so much. And we
    will be following that commitment to change, so I have made a
    special note of that, and you may tell your president and CEO I
    said so.
        The next question is for you, Mr. Pan. From the findings of
    the report, only 32 percent of the firms that reported tracking
    asset management spent only about 21 percent reported in
    tracking underwriting spending. I am a firm believer in what
    does not get counted does not get measured, and what does not
    get measured does not get done.
        As a trade association that represents many of these firms,
    how can you commit to assisting these firms to standardize
    tracking these metrics and encouraging your members to
    implement data collection? I only have a short time, because I
    am trying to get to everybody, so if you could give me the
    abbreviated answer?
        Mr. Pan. I think the short answer is it has to start from
    the top, right? As I said in my opening statement, there is a
    commitment at ICI to improve diversity and inclusion. When the
    Board of Governors, who are the leaders of the industry, get
    together, they talk about D&I, and there is clearly a change in
    tone. A lot of the desire for better metrics and better
    information has to start off first with recognition of the
    issue, and we are there.
        I think when you talk more granularly about what can be
    provided, these are discussions that are ongoing right now.
        Chairwoman Beatty. Thank you very much.
        Mr. Parker, this question is for you. Chairwoman Waters
    worked very hard and allowed me to work with her to get the
    SEC's Asset Management Advisory Committee to focus more on D&I.
    I know that NASP also joined in support of writing a letter.
        As you may know, on November the 4th the SEC's Asset
    Management Advisory Committee disbanded. Do you believe this is
    a misstep by the SEC to not re-constitute an advisory committee
    to ensure more diversity representation?
        Mr. Parker. Yes. Thank you, Chairwoman Beatty, for the
    question. Yes, I do, and we believe that it is a misstep. Why?
    Because we have seen that while there is oversight and
    governance by the regulatory agencies, having an external point
    of view, to be registered on the record, starts with the
    conversation. The art of the conversation is all about
    leadership. And we think reconstituting this particular
    advisory council will serve as a resource to the SEC in getting
    what we call on-the-street, Main Street feedback of what is
    working well and what needs to be addressed going forward.
        Chairwoman Beatty. Thank you for that, and we would like to
    follow up with you on that.
        I only have 3 seconds left. But, Mr. Clements and Mr.
    Taraporevala, I will have questions I will send to you because
    I enjoyed hearing your testimony.
        At this time, at the request of our ranking member, Mr.
    Rose is recognized for 5 minutes.
        Mr. Rose. Thank you, Chairwoman Beatty. And thanks to
    Ranking Member Wagner for her gracious indulgence.
        Thank you also for holding this subcommittee hearing on
    this important topic, and I want to thank all of our witnesses
    for taking the time to join us today and testify, and for your
    thoughtful prepared statements.
        Mr. Taraporevala, State Street Global Advisors' inclusion
    and diversity webpage states that in August 2020, State Street
    launched 10 actions to directly address and strengthen racial
    equity across your firm, and I believe you mentioned that in
    your opening statement.
        How do you define, ``equity,'' versus ``equality?''
        Mr. Taraporevala. Thank you for the question. We view
    equity as really a level playing field in every sense of the
    word. There are lots of technical definitions to it which I
    will not get into, but it is really a level playing field, and
    I think that is the key.
        Mr. Rose. Thank you for that insight.
        Ms. Gadsden-Williams, the word, ``equity,'' appears in your
    business title, so I think this will be a fairly easy question
    for you. How do you define, ``equity,'' versus ``equality?''
        Ms. Gadsden-Williams. As a seasoned DEI executive, as you
    can imagine, diversity of yesteryear was focused on--it was
    more of a head count exercise, versus inclusion, which speaks
    more to the environments that we are trying to create.
        Equity is the most important factor in the equation, at
    least in my view, and it is all about creating parity,
    fairness, and fair outcomes to advancement by way of policies
    and programs for all individuals within an organization.
        Mr. Rose. Thank you, as well.
        On September 22, 2021, the Heritage Foundation held a panel
    discussion entitled, ``Unequal Protection: The Push to Replace
    Equality with Equity is Unconstitutional.'' This discussion was
    held as a part of the Heritage Foundation's, ``Preserve the
    Constitution 2021'' event series. The description of the event
    states that, ``Equity is being embraced wholesale by schools,
    corporate America, and even the Biden Administration. It has
    infiltrated hiring, curriculum, admissions, trainings, and
    more. But equity is not the same as equality and delivers very
    different results. Rather than providing all individuals with
    equal opportunities to succeed, equity segregates individuals
    by race, while driving a narrative of oppressor versus victim.
    It calls for institutions to treat people unequally in order to
    achieve equal outcomes. Equity recklessly embraces legally
    prohibited classifications as a way to eliminate perceived
    differences in outcome in violation of equal protection in
    Federal law.''
        Mr. Taraporevala, do you believe that it is fair to use
    equity as an excuse to treat people unequally in order to
    achieve a desired outcome?
        Mr. Taraporevala. With all due respect, I do not actually
    agree with those definitions that you just laid out.
        Mr. Rose. To the question, though, do you believe that it
    is fair to use equity as an excuse to treat people unequally?
        Mr. Taraporevala. No. As I said, the definition is an equal
    playing field, both in terms of the inputs and the outcomes.
        Mr. Rose. Thank you.
        Ms. Gadsden-Williams, do you believe that it is fair to use
    equity as an excuse to treat people unequally in order to
    achieve a desired outcome?
        Ms. Gadsden-Williams. Thank you for your question,
    Representative. I am a firm believer that equity is far more
    important than equality. They are very different, at least in
    my opinion. It is all about creating the right opportunities,
    the right support systems and mechanisms so that all
    individuals will have an opportunity to realize their ambitions
    internally. That is my response to your question,
    Representative.
        Mr. Rose. In the remaining moments I have left, about a
    year-and-a-half before I was born, back in February of 1965,
    Dr. King, in his famous, ``I Have a Dream'' speech, said, ``I
    have a dream that my four little children will one day live in
    a nation where they will not be judged by the color of their
    skin but by the content of their character.'' I fear that
    equity, as currently defined and being implemented across our
    society, will take away the essence of Dr. King's dream. I have
    two little children, and I hope they can grow up in a country
    where they will be judged based on the content of their
    character.
        Thank you, and I yield back.
        Mr. Parker. Chairwoman Beatty, if I may just weigh in on
    this, given my numerous years in the private sector? I would
    like to weigh in with the fact that diversity is a factor--
        Chairwoman Beatty. Mr. Parker, we may have to come back,
    and someone will yield, because the gentleman controls the
    time, and his time has expired.
        Mr. Parker. Okay.
        Chairwoman Beatty. The Chair now recognizes the gentlewoman
    from California, Chairwoman Waters, who is the Chair of the
    full Committee on Financial Services, and the founder of this
    first-ever Diversity and Inclusion Subcommittee, for 5 minutes.
        Chairwoman Waters. Thank you very much, Chairwoman Beatty.
        Ms. Gadsden-Williams, and Mr. Taraporevala, I am committed
    to ensuring highest returns for consumers and retirees, and we
    have heard today that diverse asset managers perform as well,
    if not better, than non-diverse asset managers. Both BlackRock
    and State Street manage the Thrift Savings Plan (TSP), the
    largest retirement plan in the world, and I am concerned that
    BlackRock and State Street have not done enough to ensure
    actual diversity in business, specifically contracting with
    diverse asset managers and related businesses. And the TSP has
    done very little. The Federal Thrift Investment Board, which
    manages the TSP, was called out in October 2020 and again in
    November 2021 by Senator Menendez.
        What steps have been taken at BlackRock and State Street to
    increase engagement with diverse asset managers and related
    firms?
        Ms. Gadsden-Williams. We at BlackRock are committed to both
    supplier and vendor diversity, as well as asset managers. We
    have a number of programs in place, and our goal is to increase
    the number of diverse brokers, the number of diverse managers,
    and the number of diverse suppliers. It is our goal to remain
    connected and to engage with these individuals so that we can
    continue on this journey. It is certainly an area of
    opportunity for us. We recognize that, but we also recognize
    that we have a lot of work to do there. But we are certainly
    committed to it.
        Chairwoman Waters. Let me ask you, have you responded to
    Senator Menendez's inquiry about the pilot program trying to
    get information about what progress has been made? Are you
    aware of his very, very strong letter that was directed toward
    BlackRock?
        Ms. Gadsden-Williams. Thank you for your question,
    Chairwoman Waters. Unfortunately, this is out of my purview. I
    cannot answer that question, but I will circle back with my
    colleagues so that we can get back to you and your office with
    a response to that question.
        Chairwoman Waters. You mentioned contracting, and I am very
    interested in contracting, because Chairwoman Beatty and I are
    interested in wealth building, and this is one of the areas
    that if minority asset firms were contracted with, it could
    create a lot of wealth in our communities.
        You mentioned that you have done better or well contracting
    with LGBTQ, Black, and Latinx. Could you give me some
    definitive numbers on that?
        Ms. Gadsden-Williams. With all due respect, Chairwoman
    Waters, I do not have that information in front of me. Again,
    this is outside of my scope of responsibility. We will get back
    to you with those specifics.
        Chairwoman Waters. Mr. Taraporevala, could you give me some
    information about what is happening and what progress have you
    made working with this tremendous opportunity that you have
    been afforded, basically doing the contracting and working with
    our Pension Benefit Guaranty Corporation (PBGC)?
        Mr. Taraporevala. Chairwoman Waters, let me first and
    foremost reiterate that we are very committed to increasing the
    diversity of our suppliers and vendors, and this year we have
    increased our spend with diverse suppliers by over 50 percent.
    In my earlier remarks, I also--
        Chairwoman Waters. Could you disaggregate that for me? Tell
    me how many contracts, what are the percentage of contracts
    with Blacks, with Latinx, with women, what do they amount to,
    what is the bottom line? Can you give us some definitive
    information?
        Mr. Taraporevala. I will have to get back to you with those
    details. Let me then come to your question about the TSP,
    which, as you know, is overseen by the Federal Retirement
    Thrift Investment Board. We are hired as a manager by that
    board, and we run the money for those mandates ourselves
    internally. And, therefore, my prior comments about how we are
    committed to increasing the diversity of our workforce is the
    most relevant question when it comes to how we run those
    mandates and perform the job for which we have been hired.
        Chairwoman Waters. Okay.
        Chairwoman Beatty, I am going to yield back the balance of
    my time. I know you have a lot of others who have questions,
    but I think we need definitive information when they come
    before us. Otherwise, we don't know what they are doing.
        Chairwoman Beatty. Thank you, and I certainly agree with
    you, Chairwoman Waters. I would say to those last two witnesses
    that, per our guidelines, the expectation is you will have a
    time limit to submit those answers in writing to this
    committee.
        Thank you, Chairwoman Waters.
        The gentlewoman from Missouri, the ranking member of the
    subcommittee, Mrs. Wagner, is now recognized for 5 minutes.
        Mrs. Wagner. Thank you, Madam Chairwoman.
        Ms. Gadsden-Williams, in your testimony you mentioned
    BlackRock's leadership development programs. Could you describe
    the Women in Leadership Forum and how this program has helped
    women achieve senior-level positions?
        Ms. Gadsden-Williams. Thank you for your question, Ranking
    Member Wagner. The Women in Leadership Program is one of our
    signature leadership development programs where we identify
    high-potential women in the organization, put them through a
    rigorous learning and development opportunity to upscale
    themselves in a number of different ways, from core
    competencies, technical competencies, behavioral competencies,
    and they have sponsors and so forth that are also assigned to
    them in the program as a support mechanism, and that is
    essentially the crux of the program.
        Mrs. Wagner. When did you begin the program, and what has
    been its evolution? When did you begin this program?
        Ms. Gadsden-Williams. I'm sorry?
        Mrs. Wagner. When did you begin this program, and what has
    been its evolution?
        Ms. Gadsden-Williams. Unfortunately, I do not have the
    timing of when we started it. That was prior to my tenure at
    BlackRock.
        Mrs. Wagner. But it has been in place for some time?
        Ms. Gadsden-Williams. Yes, it has been in place for some
    time.
        Mrs. Wagner. Okay. In the United States, what percent of
    senior BlackRock employees are women? Do you have that figure?
        Ms. Gadsden-Williams. Forty-three percent.
        Mrs. Wagner. Forty-three percent?
        Ms. Gadsden-Williams. Correct.
        Mrs. Wagner. That's pretty amazing. I would be very
    interested to know the genesis of your Women in Leadership
    program, and how that has developed to allow you to reach a
    place of some 43 percent of BlackRock employees, of senior
    BlackRock employees in leadership.
        Mr. Pan, we have discussed in this subcommittee the results
    of firms implementing a Rooney Rule when it comes to candidates
    being considered for a position. But I am interested in hearing
    how this reverse Rooney Rule is working for your member firms.
    Could you please discuss the hiring practices of ICI's member
    firms and how many of them have hired diverse interview panels
    and slates for new hires?
        Mr. Pan. I do not have the information as to specific firms
    and their experience and practice with these types of interview
    panels. What I can tell you is that one of the initiatives that
    the ICI has done is we have a special committee of members
    focusing on D&I, where they come together and they exchange
    information about their experiences. They share best practices,
    they share ideas, innovations that they are doing to try to
    tackle D&I.
        I think one takeaway from these discussions is that firms
    are very different from each other. They have unique
    circumstances. We do not have one program that all of them--not
    to use a phrase, but one-size-fits-all is often not the
    solution. Instead, I think there is great value to them kind of
    picking each other's brains, and that is going on right now.
        Unfortunately, I do not have specific information about how
    individual firms have experience with these types of interview
    panels.
        Mrs. Wagner. I would like to ask this first to Ms. Gadsden-
    Williams, and then Mr. Pan, time allowing. When it comes to
    diversifying the workforce within the financial services
    industry, past witnesses have highlighted that diversifying the
    talent pool is kind of a key solution. The lack of female and
    minority students enrolled in STEM programs at the high school
    and college level has led to a pipeline problem that is
    creating challenges across the financial services industry.
        How can the asset management industry better increase
    participation in STEM-related fields of study for college, high
    school, and even middle school students in America?
        Ms. Gadsden-Williams, first.
        Ms. Gadsden-Williams. I'm sorry, I could not hear very
    well.
        Mrs. Wagner. Okay.
        Mr. Pan, did you hear my question?
        Mr. Pan. Yes, I did. Basically, there are two parts. We see
    it as education and exposure, meaning part of it is, how do you
    make these students--whether in STEM, and, of course, asset
    management, which looks for talent in a wide variety of
    disciplines, even non-STEM--aware of core opportunities in our
    industry?
        We partner with organizations, especially those
    organizations that do work a lot with women and minority
    students, to just make them aware. That is the education part.
        Then, there is the exposure part. For those students who
    are interested in exploring careers in the field, how do they
    make themselves known?
        Mrs. Wagner. Pardon me. My time has expired, but I would
    submit to all of you to take a look at the GAO study that I
    requested in 2019, the findings that came out. I think this is
    a very important pipeline issue that we need to tackle when it
    comes to getting women and minorities involved in STEM fields
    and the financial services industry.
        I appreciate the Chair's indulgence, and I yield back.
        Chairwoman Beatty. Thank you.
        The gentlewoman from Massachusetts, Ms. Pressley, who is
    also the Vice Chair of our Subcommittee on Consumer Protection
    and Financial Institutions, is now recognized for 5 minutes.
        Ms. Pressley. Thank you, Madam Chairwoman. I am so
    appreciative of your leadership in convening this hearing.
        Ms. Gadsden-Williams, thank you for being here today.
    BlackRock has an office in Boston, as you well know, and
    employs some of my constituents, and the well-being of my
    constituents is very important to me. Over the last year, many
    brave employees and former employees have come forward to share
    their experiences of sexism, sexual harassment, and racism at
    BlackRock.
        These stories are deeply troubling. Essma Bengabsia, an
    Arab-American Muslim woman, was mocked for using a standard
    Muslim greeting, repeatedly bullied, threatened with sexual
    harassment, and called un-American. A Black woman was sexually
    harassed by her manager. Latinx and Black employees have been
    called aggressive. A Black gay employee was told to, ``not be
    too flamboyant.''
        Your head of international and corporate strategy, Mark
    Weidman, has been identified as notorious for making
    inappropriate comments, especially towards women, yet he
    remains in a leadership position.
        The problem is clearly a systemic one. Hiring women and
    people of color into a hostile environment where they promptly
    leave, traumatized, is not the progress that we are aiming for.
    In fact, it is not progress at all.
        Ms. Gadsden-Williams, according to your testimony,
    BlackRock has increased the diversity of its new hires. I am
    interested to know if these new hires are sticking around? Is
    the retention rate for Black and Brown employees as high as the
    retention rate for White employees?
        Ms. Gadsden-Williams. Thank you for your question,
    Representative Pressley. The events that you are speaking of
    and that were recounted in recent reports have absolutely no
    place at BlackRock, and we have taken some actions to build a
    more inclusive work environment within our firm. Some of the
    activities that we have done in response to those claims are
    improving training for all employees, providing discussion
    venues to raise concerns, and increasing accountability for
    inclusivity, including among our senior leaders and managers,
    who have an obligation to ensure that we are creating the right
    kind of environment to address non-inclusive behavior when they
    see it.
        To answer the second part of your question, I do not have
    those stats in front of me at the moment, but I will get back
    to you and your office on those statistics around retention of
    women and/or people of color.
        Ms. Pressley. Yes. Specifically, is there a retention gap,
    and how disparate is it according to White employees? As the
    Chairwoman said earlier, for all of the data points that we are
    seeking, there will be a timeline, so we eagerly await your
    response.
        What about the retention rate for women versus men?
        Ms. Gadsden-Williams. Again, Representative, I do not have
    those stats in front of me at the moment. I would rather come
    back to you with firm statistics and data to support this
    conversation. So, we will get back to your office with that
    information in due course.
        Ms. Pressley. Okay. And would you happen to have any
    information on promotion rates? Are the promotion rates for the
    new hires who are women and people of color as high as White
    male employees, and are they being hired into management or
    revenue-generating roles at the same rate as administrative
    roles? I am just building upon what Chairwoman Waters was
    alluding to, and your earlier testimony in saying that there
    needs to be a paradigm shift and one that you certainly want to
    be leading, that diversity is not about counting heads but it
    is really about inclusion, and we also care about promotion and
    wealth building, especially since there is such a large racial
    wealth gap, and that certainly abounds in my district.
        Can you speak to any of those promotion rates or where
    people are being hired into? Are they in administrative roles,
    management, or revenue-generating roles?
        Ms. Gadsden-Williams. Year after year, we have seen
    increases in terms of diverse talent pipelines from women and
    people of color, particularly Black professionals and Latinx
    professionals. I do not have the specific data that you are
    requesting at this moment, but we will get back to you with
    that information. But I can confidently say, based on our
    pipeline efforts and initiatives that we have in place, from
    recruiting, retention, promotions, we have annual talent
    reviews that are meaningful, I think we have all the right
    systems and processes in place to ensure that, year after year,
    we are making meaningful, substantive changes in those areas in
    making sure that women and/or people of color--
        Ms. Pressley. Reclaiming my time--I am so sorry. I am
    trying to get one more question in on the record. We look
    forward to you getting that to us.
        I spoke with a former BlackRock employee who told me the
    firm has offered the victims of sexism or racism a severance
    benefits package tied to a non-disclosure agreement (NDA),
    which prohibits them from speaking publicly about their
    experience or to sue for any reason.
        Chairwoman Beatty. I'm sorry, your time has expired, but
    you can enter it into the record, and we will request that
    response.
        Ms. Pressley. Thank you.
        Chairwoman Beatty. Thank you.
        The gentleman from Ohio, Mr. Gonzalez, is now recognized
    for 5 minutes.
        Mr. Gonzalez of Ohio. Thank you, Chairwoman Beatty and
    Ranking Member Wagner, for holding this hearing today, and to
    our witnesses for agreeing to be here with us to discuss this
    important topic.
        While there is still a lot of work to do, I have been
    encouraged by the progress we have seen in recent years, and I
    am encouraged by the conversation that we are having here today
    in many ways.
        My perspective has always been that you should probably get
    your own house in order first before you start sort of pushing
    others to do things that you yourself might not be willing to
    do. And so, with that in mind, I sent a letter, along with
    Representatives Beatty, Wagner, and Sylvia Garcia, to the PBGC
    encouraging them to expand their pilot program to include
    smaller asset managers, and to maintain a commitment to
    including women- and diverse-owned firms while still
    maintaining their fiduciary responsibility.
        Mr. Parker, my first question is going to be for you. Do
    you believe that there are other opportunities that we should
    focus on to promote women- and diverse-owned firms within the
    various Federally-run pension programs while maintaining
    fiduciary standards?
        Mr. Parker. Thank you for the question, Representative.
    Yes, I do believe that we should institute intentional systems
    to gain exposure to talent that may not be recognized, and to
    potential that may not be fully tapped. I think by having an
    intentional, structured program with some regularity, we will
    build a cadence of engagement.
        Mr. Gonzalez of Ohio. Thank you. Some of the institutional
    investors that we spoke with--I am going to stay with you, Mr.
    Parker--what they would say is, we have these emerging manager
    programs where we try to get smaller firms, more diverse asset
    managers, in the door, and then they can hopefully graduate to
    the bigger platform where they can get the major investments
    from the institutions.
        Some of them have described sort of a chasm where in the
    jump from emerging manager to the full portfolio, there is a
    fallout that happens. In your world, have you observed
    something similar? And if so, what do you think we can do to
    bridge that gap, to make sure that more people can cross that
    chasm, if you will?
        Mr. Parker. Thank you for the question, Representative. I
    would say to you that intentional mentoring protege programs
    that would allow for these emerging managers at a certain stage
    to be exposed to new areas of the financial services sector--
    cryptocurrency, ETFs--we are working with some members who are
    in this particular hearing to create unique ways in which
    proteges and mentors can exchange ideas and build upon
    experiences and capabilities that can be useful in that growth
    trajectory, but yet not subjecting any firm to under-performing
    against its aspirations and the principles and standards of the
    clients.
        Mr. Gonzalez of Ohio. Great.
        Ms. Gadsden-Williams, same question, if you could? The
    question I just asked was, how do we help diverse asset
    managers bridge that gap from emerging manager programs to the
    broader platform for major institutional investors?
        Ms. Gadsden-Williams. Thank you for the question,
    Representative. Generally speaking, we are very much committed
    to diversifying our asset management. We are certainly
    committed to this, but this is certainly outside of my purview
    and area of responsibility.
        Mr. Gonzalez of Ohio. Fair point.
        Mr. Parker, back to you. You mentioned cryptocurrencies. We
    had a great hearing on this yesterday. One of the things that
    excites me about cryptocurrencies is I think it presents an
    opportunity for minority communities to get in at the ground
    level of a technology revolution and to reverse some of the
    previous discrimination we have seen in the traditional finance
    sector.
        How do you view cryptocurrencies in the context of the
    broader diversity and inclusion discussion?
        Mr. Parker. Thank you for the question, Congressman. I
    would say that any area that is an emerging area allows for
    underrepresented groups to get in on the ground floor. I think
    cryptocurrency, blockchaining, and other New Age, 4th
    Industrial Revolution tendencies allow for women- and minority-
    owned firms to get in, to understand the mystery behind it, but
    at the same time, to be fully engaged and to build in the
    capacity to take advantage of it in the future.
        Mr. Gonzalez of Ohio. Thank you.
        I have 20 seconds left. Let me just make one point. This is
    sort of a--I do not know how this will land, but we will go for
    it. The term, ``Latinx'' gets used a lot. I am Latino,
    Hispanic, Cuban American. If you look at surveys amongst
    Hispanic populations, it is not clear that that is a term that
    folks like to have put on them. I see it in a lot of the
    testimonies, and I guess I would just encourage your firms to
    be thoughtful in how you address folks, and maybe survey your
    own population, but also look at the broader Hispanic/Latino
    community as we go forward. I think that would be helpful for
    everybody.
        With that, I yield back.
        Chairwoman Beatty. Thank you, Mr. Gonzalez.
        The gentleman from Massachusetts, Mr. Lynch, who is also
    the Chair of our Task Force on Financial Technologies, is now
    recognized for 5 minutes.
        Mr. Lynch. Thank you so much, Madam Chairwoman. I do
    appreciate the opportunity.
        Just as a threshold matter, I am a little surprised that
    none of our witnesses have come up with any data or any
    benchmarks that reflect the diversity and inclusion in their
    companies. I just want to remind people that this is the
    Subcommittee on Diversity and Inclusion, and the name of this
    hearing, the title of this hearing is, ``A Review of Diversity
    and Inclusion Performance at America's Large Investment
    Firms.'' That is why you were invited here. So, when I
    repeatedly hear that people don't have numbers on this, what
    did you think we were going to ask you about? We have to do
    better on this. When you get invited to a hearing, you need to
    be ready to help us with our work.
        As the Chair remarked, I chair the Task Force on FinTech,
    and here is the problem. It merges, as you know, the world of
    finance and the world of technology. They are being merged, and
    it is really the future of the industry in FinTech. Finance is
    a world that has been hostile to or unwelcoming to women and
    people of color. Technology is also an industry and a world
    that has been hostile to women and people of color, and now we
    are merging them both, and that is where we have a big problem.
        Here's the thing. Congresswoman Pressley and I represent
    Boston. We have a lot of people in both of those worlds, and we
    are trying to introduce our constituents to those worlds and
    make those entities more diverse. So, I started a charter
    school. I co-founded a charter school, one of the most diverse
    in the City, probably one of the most diverse in the country,
    and we are focused on creating workers for your industry,
    finance and technology. One of our biggest problems is getting
    teachers to come into those schools and actually help us
    educate the workers of the future.
        We had a hiring round not that long ago where we got
    hundreds of applications from English teachers, but when we
    tried to hire math and science teachers, we got three
    responses--nine responses but three positions.
        So, what you could do--and I am speaking to BlackRock and
    others--to help us, and this goes to the pipeline issue that
    Congresswoman Wagner and others have raised, is to help us
    get--if someone has math and science skills, they are not
    coming into our public schools and teaching. They are going and
    making the big money in finance and technology.
        Help us. You could establish chairs at some of these
    schools, public charter schools, where you supplement someone's
    pay to teach math and science and finance in these schools. My
    charter school starts at 5th grade. You can't wait until a kid
    shows up at your door as an adult and try to train them in some
    of this. They have to have a good, solid foundation.
        Look, there is a solution here. It would be good for your
    industry to help us educate the workers of the future who are
    going to work for you. We have to change the way we think about
    this. I appreciate the internships and things like that, but we
    have to start much younger. We have to build math and science
    skills, and technology skills in these kids before they ever
    arrive on your doorstep. So, I am asking you to focus on that.
        I know there are very nascent efforts in this regard, but
    we have to do better in this. It will be good for your
    industry, it will be good for the people that we are trying to
    help, and it will build the future.
        Is anybody doing anything like that in the early years? Can
    I ask any of our witnesses, is anybody doing something at the
    elementary school, grade school, or high-school level?
        Ms. Gadsden-Williams. If I may respond, Chairwoman Beatty?
        Mr. Lynch. I will take that response in writing. My time
    has almost expired. Any responses that you have, I will take in
    writing.
        Thank you, Madam Chairwoman. I yield back.
        Chairwoman Beatty. Thank you so much to the gentleman from
    Massachusetts.
        The gentleman from South Carolina, Mr. Timmons, is now
    recognized for 5 minutes.
        Mr. Timmons. Thank you, Madam Chairwoman.
        Lack of diversity is not always an easy problem to solve
    because root causes are often complex and subtle. I think one
    way we can ensure that we continue to make progress in this
    area is to have a candid dialogue about what is working and
    what is not working. If we do that, we can learn from each
    other and not be shamed for things we are trying but may not
    yet be yielding immediate results.
        I would like to open it up to the entire panel. What are
    the challenges you are facing? What are you struggling with? Is
    there a factor here that we are not seeing, that you think we
    should be aware of and consider?
        Mr. Parker, I will with you.
        Mr. Parker. Yes. Thank you for your question. I think there
    is a cadence that needs to be established around this
    particular topic with some degree of frequency. Leadership
    starts with a conversation, and I think by having quarterly
    meetings, brown-bag lunches, somewhere we can engage and share
    what is working, and what is not working. To the question
    earlier, we are investing in a fast-track program that deals
    with high school students, but also getting to young
    professionals. There are a plethora of ideas out there, best
    practices that we can deploy to address your particular
    question. Thank you.
        Mr. Timmons. Thank you.
        Anyone else want to chime in?
        Mr. Pan. This is Eric Pan from the Investment Company
    Institute. I would just like to, again, indicate that we have
    made efforts to do exactly what you are suggesting, which is
    getting our members together, having them exchange information
    about different initiatives that they are doing, and learn from
    each other what is working, and what is not working. I would be
    happy to provide a list of things that have been discussed so
    far. But we are very much in agreement with what he had said.
        Mr. Timmons. Thank you.
        Yes, ma'am, go ahead?
        Ms. Gadsden-Williams. In terms of challenges around DEI,
    what I have seen over the years is that transparency and
    accountability are, in my view, key ingredients to any
    successful DEI strategy. Without that, I just don't know how
    you can measure and track progress over time.
        So, as a firm, one of the many things that we have done is
    we have several ways that we tie performance reviews and pay or
    compensation to our DEI strategy. First, we begin at the very
    top. We have a top-down approach to accountability, starting
    with our Global Executive Committee. Their performance
    assessments and compensation are assessed and determined by how
    they deliver against the DEI and/or talent strategies.
        Second, at the business level we track or measure progress
    over time. We have quarterly business reviews. We have talent
    reviews. We have diversity dashboards that track things like
    hiring and retention and development. We have integrated DEI
    into the performance management process.
        In sum, I think you cannot make progress without holding
    leaders and/or others accountable to DEI. That is a challenge
    that I have seen over the years where things can certainly
    unravel. Thank you.
        Mr. Timmons. Sure. I have one follow-up question for you. I
    serve in the Air Force, and the military has been struggling
    with this for years. As an officer in the South Carolina
    National Guard, I was training just about a year-and-a-half
    ago, and we had a lot of these conversations. One of the things
    that came up was, how do we make sure we are focusing on
    diversity and inclusion and giving people opportunities who
    deserve opportunities, without disadvantaging other people who
    may not be diverse but have had very challenging lives. How do
    you address that?
        Ms. Gadsden-Williams. I think you do that by focusing on
    inclusion. It is all about the collective, ``we,'' and not the
    individual. So, I think the more you can talk about DEI, it is
    about all of us and not some of us. That is the position we
    have taken at BlackRock, and I think that is where the success
    and where people turn corners philosophically around this
    notion of diversity, equity and inclusion, that it is about the
    collective, ``we,'' and not just the individual.
        Mr. Timmons. Sure. We had very frank conversations in
    training, and it was very challenging because a lot of people
    who go into the military do so for economic opportunity because
    they have not had opportunities wherever they grow up,
    regardless of their race/skin color, and it was a point of
    contention. So, I think we have to make sure we are factoring
    in equity for socioeconomic disadvantaged individuals and make
    sure that we are moving everyone forward together.
        Ms. Gadsden-Williams. If I may also add, Representative,
    when we talk about diversity, I think to your point, we should
    talk about it in all of its dimensions. A lot of organizations
    talk about gender and/or ethnic minorities, but there are other
    dimensions of diversity that get less air play--LGBTQ,
    veterans, individuals with disabilities, and so forth.
        Mr. Timmons. Thank you, ma'am. I yield back.
        Ms. Gadsden-Williams. Thank you, Representative.
        Chairwoman Beatty. Thank you, Mr. Timmons.
        The gentlewoman from Pennsylvania, Ms. Dean, is now
    recognized for 5 minutes.
        Ms. Dean. I thank the Chair, and I thank the witnesses for
    being with us today.
        At the risk of repeating what we have heard over and over,
    but I don't think we can repeat it enough, increasing diversity
    and inclusion--and, I would suggest, beyond inclusion,
    belonging--is not only the right thing to do from a moral
    standpoint, it is the right thing to do for the bottom line. An
    analysis by McKinsey using 2019 data found that firms with
    higher gender and ethnic/cultural diversity were likely to be
    more profitable than less diverse firms.
        So, Ms. Gadsden-Williams, Mr. Taraporevala, specifically to
    BlackRock, and specifically to State Street, how does
    increasing diversity improve the bottom line? What numbers do
    you have? What data can you share? What measurements are there?
        Ms. Gadsden-Williams. Thank you for your question,
    Representative. There is enough empirical data and research in
    the ethos to substantiate the business case for DEI. We as an
    organization have decided that it is, in fact, a business-
    critical imperative based on that empirical data and research.
        In terms of how and what specific numbers, I do not have
    that information in front of me, but what I can assure you,
    based on my years of experience, is that there is enough
    research that would substantiate all of the things that you
    have cited.
        Ms. Dean. You are absolutely right. We have seen the
    research. But I am just wondering internally, maybe you could
    get back to us with whatever measure you have, specifically to
    BlackRock?
        Mr. Taraporevala, for State Street?
        Mr. Taraporevala. Thank you for the question, Congresswoman
    Dean. I think you have just mentioned two great data points off
    data which demonstrates that, in fact, diverse teams do result
    in better outcomes in terms of profitability. There have been a
    plethora of studies I could quote a lot, whether it is a Morgan
    Stanley Capital International (MSCI) study on gender diversity
    and how companies with more gender--
        Ms. Dean. Pardon me. I am asking for State Street
    specifically. Do you have measurements on this?
        Mr. Taraporevala. On the outcomes? I think that is pretty
    hard. I am not sure, given all of the data that has already
    been accumulated, that searching for more data is the critical
    thing. I think the real focus needs to be on action and moving
    the needle on diversity and inclusion.
        Ms. Dean. I actually disagree. I would think that within an
    organization, you would want to see and bear out the proof on
    increasing diversity, and increasing profitability.
        I recently came across an interesting article in The
    Philadelphia Tribune by some faculty at Wharton highlighting
    that effective diversity, equity and inclusion, belonging, is
    key to retention, which should be especially of interest to
    corporate America, given that we are in the midst of the so-
    called, ``Great Resignation.'' The authors note the importance
    of middle managers, not just senior executives, in creating a
    truly inclusive workplace.
        Mr. Parker, could you speak to that notion of, how do we
    make sure that we have diversity in middle management,
    especially at this tumultuous time?
        Mr. Parker. Yes, thank you for the question. It starts at
    the top, Congresswoman. It starts with the CEO, with the
    leadership, with the Board, really. Governance, intervention,
    making sure that there are processes in place. It starts with
    the CEO, his or her staff, going down to the next level of
    those who are running operating divisions, getting into what we
    call the frozen middle, the middle management group, and making
    sure they understand that growth is contingent upon having a
    workforce that is reflective of their customer base.
        By measuring it and looking at it, just like we do with
    revenue, profitability, and market share, these things can be
    accomplished inside an organization. But it takes
    intentionality and accountability at the top.
        Ms. Dean. It really does take intentionality. I remember
    having a roundtable on diversity in my district, and a
    government leader, and he is African American and a highly-
    elected person, said, ``I believed that we were a diverse
    community of staff and employees. And I actually looked around,
    and found we weren't.'' He also said, ``We need to be
    intentional. We think we are, and sometimes we are not.''
        Ms. Gadsden-Williams, I wanted to ask you quickly, and
    maybe Mr. Parker quickly also, there is so much more to be
    done. I heard you say it. I heard others say it. Can you give
    us, granular, two specific things? And, Mr. Parker, the same
    thing?
        Ms. Gadsden-Williams. Yes, there is much more work that
    needs to be done around representation of diversity. That is an
    area of opportunity within our firm. Although we have seen
    year-over-year progress, we would like to see more diverse
    representation at the senior levels and at the frozen middle,
    as well.
        Ms. Dean. And I know my time is up, but Mr. Parker,
    quickly?
        Mr. Parker. Transparency and accountability.
        Ms. Dean. Thank you.
        Thank you. I yield back.
        Chairwoman Beatty. Thank you.
        The gentlewoman from Texas, Ms. Garcia--who is also the
    Vice Chair of this subcommittee, and I thank her for that--is
    now recognized for 5 minutes.
        Ms. Garcia of Texas. Thank you, Madam Chairwoman. It is a
    pleasure to work with you here on all of our issues on the
    Diversity and Inclusion Subcommittee. Thank you for this
    hearing. And, of course, thank you to all the witnesses for
    being here with us today or on the screen.
        The topic of diversity and inclusion is so important to the
    financial services industry, but it is especially important in
    the investment industry, one that works to build wealth and
    whose workforce is skilled and knowledgeable in creating
    financial opportunity.
        My district is 77-percent Latino. We as Latinos are the
    fastest-growing market in the United States. The Department of
    Labor found that Spanish-speaking Americans are expected to
    account for almost 65 percent of labor force growth through
    2029, adding 7 million new workers. Yet many institutions, from
    wealth managers to credit providers, have not actively sought
    to reach this growing market, and their workforce does not
    reflect it. Not only that, but cultural barriers exist for
    members of the community who have been historically
    disenfranchised.
        My question is for Mr. Pan. In your work representing
    regulated funds, you have come across cultural and
    institutional barriers that are as longstanding as they are
    resilient, and I am glad to see your organization is making
    concerted efforts to reach a more diverse workforce, so thank
    you for that.
        I understand this is a growing effort that is constantly
    under development, so I just wanted to highlight an important
    issue facing my district and many others, simply put, language
    barriers. I want to ask you this: Is the ICI exploring ways to
    reach future job applicants whose primary language is not
    English?
        Mr. Pan. We have not discussed this, but, Congresswoman,
    thank you for your comment, because I will bring this to the
    attention of our Board of Governors and the importance, as you
    have laid out, of making sure that we are able to access
    everybody in America regardless of what language they are
    speaking.
        Ms. Garcia of Texas. Thank you.
        Mr. Parker, what about your organization?
        Mr. Parker. Yes, our organization is an organization that
    is made up of all people of color, primarily African Americans
    and Latino, and we work very hard with trying to connect with
    young people through our fast-track program, our young
    professionals program, to demystify this world of financial
    services, and we are doing that with some of our strategic
    partners. So, it is very intentional.
        Ms. Garcia of Texas. Thank you.
        I have also been very concerned with the impact the
    epidemic has had on women in the workforce, particularly
    working mothers. A recent survey of 40,000 women in corporate
    America found that many of them have considered either leaving
    or downshifting their careers due to the pressures from
    balancing work and family.
        My question is to you, Ms. Gadsden-Williams. I know your
    firm has done a lot to hire diverse candidates for entry-level
    positions, and also for your Board. What are you doing for
    those in the middle, especially those who are in the parenting
    stages of their lives? What are you doing specifically to
    support working mothers?
        Ms. Gadsden-Williams. Speaking about the pandemic
    specifically, our priority at BlackRock is to ensure that the
    health and safety of our employees is paramount, number one.
        Ms. Garcia of Texas. Can you speak to working mothers,
    please?
        Ms. Gadsden-Williams. For working mothers, we provide all
    types of virtual programming and such to ensure that they are
    still connected. For those who have caregiving
    responsibilities, we have buddy programs and the like. So, we
    do have support programs for working mothers and individuals
    who may have had a tough time based on the research that you
    are citing to continue to engage in the organization during the
    course of the pandemic.
        Ms. Garcia of Texas. Do you provide child care or a child
    care stipend to your working parents?
        Ms. Gadsden-Williams. We do. I do not know the details of
    our programming, but someone on my teamwe will get back to your
    office with those details.
        Ms. Garcia of Texas. Okay.
        Mr. Taraporevala, what about your firm, sir? What are you
    doing for working mothers?
        Mr. Taraporevala. Yes, thank you. And I do want to
    acknowledge your point that the effects of the pandemic have
    been particularly acute for working women. I actually believe
    that where the workforce and the workplace of the future are
    headed is towards more either hybrid or home working
    arrangements.
        Ms. Garcia of Texas. But what specifically, sir? Excuse me,
    just reclaiming my time, I only have 20 more seconds. What are
    you doing specifically for working mothers?
        Mr. Taraporevala. We are supporting more hybrid working
    arrangements, of which working mothers are more likely to avail
    themselves.
        Ms. Garcia of Texas. Sir, with all due respect, just about
    the whole world has because of the pandemic. But what
    specifically are you doing to be supportive to make sure that
    we retain them or make sure that they continue in their
    careers?
        Mr. Taraporevala. Again, we have done many of the things
    that we have already talked about, whether it is mentorship,
    sponsorship, having folks more connected with more senior
    leaders, and all of that is helping them as they get through
    this tough time.
        Ms. Garcia of Texas. Thank you, Madam Chairwoman, and I
    yield back.
        Chairwoman Beatty. Thank you.
        The gentlewoman from Georgia, Ms. Williams, who is also the
    Vice Chair of our Subcommittee on Oversight and Investigations,
    is now recognized for 5 minutes.
        Ms. Williams of Georgia. Thank you, Madam Chairwoman.
        My home City of Atlanta, unfortunately, has the largest
    racial wealth gap in the country, but my district is also a
    global business hub and one of the strongest incubators of
    Black wealth. I know firsthand that the fates of our businesses
    and the people who work there are interconnected.
        On this committee, I am dedicated to ensuring that our
    business partners advance racial justice and help close the
    racial wealth gap through diversity, equity and inclusion. One
    area where this is key is to make sure that diverse individuals
    can become successful asset managers.
        Mr. Parker, how would ensuring diversity, equity and
    inclusion in asset management create greater opportunities for
    Black wealth and closing the racial wealth gap?
        Mr. Parker. Thank you for the question. It really is
    embedded into all of our programming, starting from our fast
    track, our young professionals, to our women's forum, of which
    we have 11 chapters around the country where we roll out these
    programs on an annual basis, inviting all of the subject-matter
    experts in the different asset classes to participate, as well
    as firms that you see here in this hearing.
        We try to address it from a regional standpoint, but we
    also look at it from what we call a workforce lifecycle
    standpoint, starting with young professionals, working our way
    up to those seniors who are in transition to possibly out of
    the workforce as well.
        Ms. Williams of Georgia. Thank you, Mr. Parker. And as you
    mentioned in your testimony, only a small fraction of asset
    management firms, 8.6 percent, are women- and minority-owned.
    But what is even more troubling is that these firms only manage
    about 1 percent of all assets. We can't make progress on
    diversifying the industry and ensuring that diverse firms are
    truly included in it until we do more to collect the data.
        Mr. Parker, why is tracking data so crucial to diversity
    and inclusion results, and can increased transparency around
    the utilization of diverse professional service firms,
    including asset managers, spur action toward improving the
    numbers that you cited in your testimony?
        Mr. Parker. Thank you for the question. You manage what you
    measure, and we have said numerous times that full transparency
    as to where you are, not to say to be critical but to try to
    apply practices that we know are tested in other markets that
    we can apply. So, managing what you measure and measure what
    you manage is our mantra coming out of NASP.
        Ms. Williams of Georgia. Thank you, Mr. Parker.
        Mentor-protege and emerging manager programs are intended
    to cultivate diverse and talented asset managers, but we have
    to be sure that those programs are working as they are
    intended. For example, we can't have large asset firms creating
    smaller firms and then just checking a box to meet program
    criteria but not divesting their ownership interest.
        Finally, Mr. Parker, what is your opinion about the
    continued value of mentor-protege and emerging manager
    programs? How would these programs be amended to be more
    effective in serving women- and minority-owned firms, as
    intended?
        Mr. Parker. Great question, Congresswoman. We would say
    that a new model that should be introduced in the mentor-
    protege relationship is accountability, and that is for the
    mentor to have some accountability on the outcome of the
    performance of the protege as the protege continues to go
    through the different professional stages of their ability to
    service their particular clients. This relationship is
    something that we are going to be introducing across some of
    our programs, but having the mentor be accountable for the
    outcomes of that protege tied to the relationship they have
    with their stakeholders and shareholders.
        Ms. Williams of Georgia. Thank you, Mr. Parker.
        Madam Chairwoman, I will yield back the balance of my time,
    but I want to thank you for this hearing today, and as we
    continue to do our work on this subcommittee to make sure that
    we are closing the racial wealth gap, which, unfortunately, in
    my home City of Atlanta, leads the country. I am committed to
    this work and I appreciate your leadership in getting this
    done. Thank you.
        Chairwoman Beatty. Thank you to the gentlewoman from
    Georgia.
        The gentlewoman from Michigan, Ms. Tlaib, is now recognized
    for 5 minutes.
        Ms. Tlaib. Thank you so much, Chairwoman Beatty, for always
    centering since the beginning of my days here last term until
    now. And, of course, thank you, Chairwoman Waters, for
    continuing to support the work of Chairwoman Beatty.
        I think it is really important, as a person who did
    organizing for a long time, this conversation and debate about
    equity versus equality. Something I learned early on, and for
    the panel and my colleagues, is that equality is giving
    everybody the same pair of shoes, just give everybody a pair of
    shoes. Equity is giving them a pair of shoes that actually fit.
    That is something that I learned. I don't know where I picked
    it up from, but I remember that and it really stuck with me in
    understanding the difference.
        But let me get to some of the panelists here, and thank you
    so much for your patience and for sticking with us on really
    important questions and really understanding how we can be
    helpful and be a partner here.
        With $47 trillion in assets under management, the decisions
    that these firms make with regard to diversity and inclusion
    have implications for the entire financial services industry
    and our economy, and I think that is why we are having this
    hearing.
        As the committee's report found, we have a lot of work to
    do, the industry does. I would like to ask all of you about the
    SEC's recommendations for diversifying the industry. In July,
    the SEC's Asset Management Advisory Committee, the Subcommittee
    on Diversity and Inclusion, found, ``widespread gender and
    racial bias in the decisions by those in positions making asset
    and asset manager allocation decisions regarding who manages
    money for governments, universities, charities, foundations,
    and the institutional market in general.''
        The committee made a number of recommendations. They went
    on to state that investors, the industry, and the public
    markets would benefit by SEC guidance which clarifies that a
    wide variety of factors may be considered by fiduciaries in the
    selection of asset management firms, and that fulfillment of
    one's fiduciary duty in this context does not require automatic
    exclusion of asset managers who are newer to the industry or
    who do not already have a certain level of assets under
    management (AUM).
        So, Mr. Pan, Mr. Taraporevala, and Mr. Clements, if a firm
    acquires the services of outside asset management firms, how
    are they assessed? Is the assessment based exclusively on
    things like assets under management or years in industry, or is
    a more holistic evaluation completed?
        Mr. Pan. I am happy to go first. I cannot speak to how a
    specific individual firm goes about this activity, given my
    position at a trade association. But what I can tell you is
    that different firms follow a variety of factors that are
    unique to their circumstances, and their needs. The fiduciary
    duty that exists today, that of the duty of care, the duty of
    loyalty they have to their shareholders, is a fiduciary duty
    but also something that all of our members take extremely
    seriously. And the reason why diversity and inclusion is so
    important to our industry is this recognition that a diversity
    of viewpoints, diversity of staffing, is highly consistent with
    ensuring that you are doing the best you can for your
    shareholders.
        Mr. Taraporevala. Congresswoman, this is Cyrus
    Taraporevala. I will go next. Thank you for your question.
        Just to clarify, as a large asset manager ourselves, we are
    on the receiving end, if you will, in terms of that selection
    process that you are describing, not on the deciding end. But
    we do agree, I think, with what you are describing, which is
    that a wide variety of factors should be considered in the
    selection process. Very rarely, we do hire ourselves what are
    called sub-advisors, another asset manager to manage part of
    our assets. That is a tiny part. Most of what we do, we manage
    ourselves internally. But when we do think about sub-advisors,
    we do consider diversity and inclusion factors as part of that
    decision criteria.
        Mr. Clements. This is Mr. Clements. I would note that when
    we report our key practices, one of those key practices is to
    look to remove potential barriers, for example, looking at
    assets under management or track record, and trying to target
    those better to the firm so that it better matches the needs
    and works for firms of all sizes while still maintaining our
    fiduciary obligations.
        Ms. Tlaib. And I agree with regard to tracking data, how
    incredibly important that is in producing diversity and
    inclusion results.
        Madam Chairwoman, that is all for my line of questions.
    Again, I really cannot thank you enough for your commitments
    and really just determination to make sure we get this work
    right. You were there when I asked bank CEOs at one point if
    they knew what environmental racism was, and my heart sank when
    every single one of them had no idea or had heard the term.
    Again, my district lives it every single day, and I just was
    taken aback by that. But I know by including people like us in
    these places that are making decisions, it is going to make a
    huge difference.
        Thank you so much, Chairwoman Beatty. I yield back.
        Chairwoman Beatty. Thank you.
        I would like to thank our witnesses for their testimony
    today.
        The Chair notes that some Members may have additional
    questions for these witnesses, which they may wish to submit in
    writing. Without objection, the hearing record will remain open
    for 5 legislative days for Members to submit written questions
    to these witnesses and to place their responses in the record.
    Also, without objection, Members will have 5 legislative days
    to submit extraneous materials to the Chair for inclusion in
    the record.
        And without objection, I would like to enter a statement
    from the Diverse Asset Managers Initiative for inclusion in the
    record.
        This hearing is now adjourned.
        [Whereupon, at 12:50 p.m., the hearing was adjourned.]

                                A P P E N D I X

                                December 9, 2021

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