Carla Harris, Morgan Stanley Vice-Chairman, Global Wealth Management and Senior Client Advisor
CNBC
Carla Harris, Morgan Stanley’s vice chair of Global Wealth Management, said Wednesday that the acceleration of the Black Lives Matter movement has come in tandem with an uptick in investing interest in diverse and female-led companies.
Harris, who spoke via video call at the annual Delivering Alpha conference presented by CNBC and Institutional Investor, added that investors in the modern era no longer have an excuse for being unable to find investments that prioritize a diverse c-suite and workforce.
“Especially since the Black Lives Matter movement has accelerated, more of the [venture capitalists] that that we talked to last year are now saying that they are actively looking for investment opportunities with multicultural and female entrepreneurs,” Harris said.
The Morgan Stanley executive added that it’s also important for an investor considering a stake in a diverse company to themselves have multicultural colleagues.
“I’ll tell you some of the suggestions that we made in our last white paper that they actually have embraced,” she continued. “They’re things like making sure that you give feedback when you have an entrepreneur who comes to you and you decide not to invest: Give them the feedback on what they can do to enhance and maybe come back and get another bite at the apple.”
“Expanding your network, showing up at the conferences and the convenings where these entrepreneurs are trafficking,” Harris said. “More importantly, make sure that you have a multicultural partner at the table because that obviously gives you an opportunity to access to a network that you may not have.”
Harris, one of Wall Street’s most powerful women, was joined on the panel by Kewsong Lee, the chief executive of The Carlyle Group.
As one of the globe’s largest and most-recognized private equity firms, Carlyle has for years stressed diversity among the companies it works with, Lee said.
“Companies that are more diverse in our portfolio grow 12% faster than companies that are less diverse,” Lee told CNBC’s Sharon Epperson. “That’s just proof that it shows up in better performance if we can drive better performance.”
“It absolutely helps drive performance,” he added.
The comments from Harris and Lee come amid what many consider a fundamental change in the way investors analyze and invest in companies toward one that factors a firm’s impact on the environment, society at large and how it conducts its own governance.
Shortened to the acronym ESG, Morgan Stanley wrote last month that the new focus is “likely to dominate financial markets during the 2020s” due to societal trends driving change across consumer, corporate and investor behavior.
Companies with more diversity, for example, tend to score better all else equal when an investor is evaluating a prospective stake.
But firms like Morgan Stanley and Carlyle stress that their focus on ESG isn’t purely altruistic, but rather critical to to understanding a company’s growth potential as well as possible risks, among other things.
“The Covid-19 crisis has brought social and governance elements to the fore, and these have gained a lot of traction with investors,” the firm said in a note to clients. “In particular, there has been an added focus on how companies treat their employees, suppliers, customers and society as a whole, as investors incorporate the treatment of stakeholders into their investment process.”
