[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                     
          
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                 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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