CVCA Endorses ILPA’s Industry Code Of Conduct Guidelines
Diversity and inclusion have become top priorities in organizations worldwide driven by the powerful #MeToo movement and a number of high-profile cases of harassment, discrimination and violence in certain workplaces.
There’s also a growing body of research showing a more diverse and inclusive workplace, from the ground floor to the executive suite, leads to greater innovation which can, in turn, help to boost a company’s brand and bottom line. What’s more, a lack of diversity is increasingly considered a risk for organizations, especially among investors looking at where to put their money.
To help develop a more diverse and inclusive environment, more organizations are developing codes of conduct to guide their values and activities. These new policies not only aim to prevent future incidents, but also set up a system to address potential complaints.
The venture capital and private equity ecosystem, which has not been immune to allegations of misconduct around harassment and discrimination, is stepping up its efforts to build in better processes and systems around diversity and inclusion.
For example, the Institutional Limited Partners Association (ILPA) recently released an Industry Code of Conduct Guidelines on Harassment, Discrimination and Workplace Violence, which is intended as a resource for all stakeholder organizations within the private equity ecosystem to develop their own policies. The ILPA recommends its guidelines be applied by organizations “as appropriate and in conjunction with their unique programs alongside the input of organizational leadership and legal counsel.”
The ILPA also cites examples of other codes of conduct that address the issues of harassment, discrimination and workplace violence such as The California Public Employees’ Retirement System (CalPERS), Business Development Bank of Canada, Scale Venture Partners and the National Venture Capital Association.
ILPA’s motivation is not to have a one-size-fits-all version of a code of conduct, which is why it published guidelines and samples rather than a universal Code of Conduct. The goal is to have GPs implement a code of conduct that is applicable to the firm’s size.
The CVCA has endorsed the ILPA’s guidelines and is recommending members do the same, including taking into consideration other policies when developing their own guidelines. Examples of policies used by CVCA members that could be considered include: inovia’s Crafting a Better Workplace & Community Through Diversity, Relay Ventures’ Zero Tolerance, and BDC’s Diversity, Violence, Discrimination & Harassment Policy.
“One of the main drivers for the ILPA and the CVCA developing guidelines supporting code of conduct is to better prepare Canadian GPs to deal with requests from larger institutional LPs from around the world, who often have their own policies and guidelines in place,” says Kerri Golden, Partner and CFO at Information Venture Partners and chair of the CVCA’s best practices for an inclusive workplace sub-committee.
Golden recommends organizations develop guidelines that best suit their company size, values and stakeholders. For instance, during her committee’s consultations on diversity and inclusion guidelines, she says some members recommended policies cover not just employees and directors but also advisors and contractors of the organization, as well as employees, directors, advisors, co-investors and contractors in existing and prospective portfolio companies, for example.
Golden believes that organizations should be consistent in their application of policies, such as setting a zero-tolerance standard around harassment, discrimination and violence in the workplace.
With these types of policies and guidelines in place, Golden believes members will be more successful when it comes to recruiting more diverse talent to the industry and casting the widest possible net for great investment opportunities. “Innovation happens when you have people with different backgrounds,” Golden says.
Alison Nankivell, Vice President, Fund Investments and Global Scaling at BDC Capital, says Canadian firms need to act quickly to prevent falling further behind the competition in other developed countries when it comes to setting diversity and inclusion policies and guidelines.
“While Canada may be a smaller ecosystem, the industry has had its own share of reported incidents of harassment and discrimination. Setting a diversity and inclusion policy isn’t just the right thing to do but will also help the industry become more competitive when it comes to attracting capital.”
Nankivell also helped develop BDC Capital’s code of conduct, which was a resource for the ILPA guidelines.
“There is a need for our Canadian industry to recognize that these types of questions around diversity and inclusion are now being asked of fund managers in other jurisdictions, particularly within in the U.S. If Canadian fund managers want to attract capital from new and existing institutional investors, they will be asked the same questions. They will need to have to have a policy and an answer to questions around it.”
Nankivell, who is also on the ILPA’s diversity and inclusion committee and is working with the CVCA on its position, says her goal is to help Canadian fund managers be more professional by developing these important new standards.
“We ask things of managers that we know will be hard for them to implement, but we do it with a view of wanting them to grow and become more sophisticated about these kinds of issues over time,” she says.
More broadly, Nankivell is optimistic that more offshore capital will start to flow to a more diverse group of funds and startups who demonstrate a willingness to establish processes for addressing diversity and inclusion as part of a broader environmental, social and governance (ESG) program.
“It’s our hope that with this next round of funding that’s going into invest in Canadian venture capital funds, we will see more attention to this issue of diversity and inclusion,” she says. “Institutional investors who invest in these funds should be having serious and honest discussions with GPs about this to make sure they have clear processes in place. Our goal over time is to have diversity and inclusion policies become just a normal part of due diligence and discussion between GPs and LPs.”