Q&A: Office of New York City Comptroller's Wendy Garcia

Q: When and why was your role created?

A: We are in our seventh year. When the comptroller first ran for office, he decided that he wanted to make diversity and inclusion one of the top priorities for his administration. Prior to that, no comptroller had a chief diversity officer. The vision was for us to look at the fiscal health of the city through the lens of diversity and inclusion. That meant looking at our office and the City of New York to see where there were systemic biases and what the utilization of women and minority-owned businesses was. Systemic racism and biases have played a role in the way institutions have been created across national lines. A lot of the work we do involves looking at ways we can not only create more access but also debunk and undo the biases that have led there.

Q: What does this mean for how the New York City pension funds approach diversity and inclusion in asset allocation?

A: Our pension fund is the fourth largest in our nation. We looked at it with the philosophy of not just creating access to the comptroller’s office, but also creating access and regulations that allow women and minority-owned firms and investment managers to break the mold – to enter and grow the office. One of the first things we did was ask companies that work with us about their board composition. We wanted to understand what these organizations looked like, the gender of the people represented in the c-suite, what the employees looked like. Our thought process is that if you have diversity in your organization you will have diversity of thought. When you have diversity of thought you are going to make better decisions when it comes to the market, and when you do that you are going to give us better returns. We want to make sure the firms working with us are making financially sound decisions, and to do that we need to make sure diversity and inclusion is in the fabric of how they work. We also created a regulation that if you are a consultant you are required to give us recommendations of women and minority-owned firms as part of your contract. 

Q: Do you have quotas?

A: New York City is 80% women and people of color. For our pension fund to do business with the city, it must look like the people that live there. We don’t have formal quotas. Last year, we announced a 12% goal for allocations to minority and women-owned fund managers, across all asset classes. We also announced that we would put an additional $1 billion into our emerging manager program and we upgraded our boardroom accountability project, which calls for companies with the pension fund to include a version of the Rooney Rule [requiring that women and people of color be considered for every open board seat and for CEO appointments]. In addition, we will create a database for ethnicity-based tracking and monitoring and we will ask all companies that work with us – from fund managers to engineering firms to accounting firms – to show us a diversity growth plan. We don’t just want to know that 20% of your work has been with black American businesses or 10% with Asian American businesses; we want to know how you are going to take that 10% or 20% and grow it to 30% and then to 40%. We want to see a commitment to diversity that grows upward. 

Q: How does this requirement influence the way you look at portfolio fund managers?

A: If an outside consultant recommends a minority-owned firm, that’s great, because statistics show that minority-owned firms are 15 times as likely to hire other minorities. If an investment firm has four or five partners or co-owners who are white, we would want to know about diversity within the entire organization. We want to see diversity in composition – and we want to see that reflected in compensation as well. The diversity growth plan is about showing where you are starting from and where you want to be by the end of our contract and beyond. 

Q: At the fund manager level, what is the biggest challenge to making progress on diversity and inclusion?

A: What we’ve heard from fund managers – and managers of color in particular – is that there is straight discrimination. If a manager of color walks into a room they are assumed to know less, they are assumed to have less capacity, they are assumed to not have relative institutional knowledge. A lot of managers tell us they face discrimination when they come into major institutions, and that’s true across the world. They also face challenges when talking to consultants; sometimes consultants won’t take a meeting with them. One of the reasons why we instituted the rule with our consultants about needing to see minority and women-owned managers and included it in our contract language was because women and people of color have highlighted that issue. We’ve had multiple focus groups talking to different organizations and for years they’ve seen a pattern of consultants not making those recommendations – for many reasons, and often not for good reasons. 

Q: And at the institutional level…

A: It’s about having will. You need to be the kind of institution, to have the kind of leader who is willing to take that step, who is willing to think outside the box. If there is an issue with consultants, what can we do outside the box that can really change and reregulate how women and people of color get access in a way that allows them to compete? No one wants to be given a deal, but they want to have the opportunity to compete. What we’ve found in the last seven years is that there are systemic biases we needed to undo to allow for more competition. Part of that is responding to what people say. You have to ask people where they are seeing barriers so you can respond to that and change things from the inside.

Q: What kind of impact has the Black Lives Matter movement in this context?

A: It has made a difference across the world, not only in terms of changing minds and behavior, but in our living time it is one of the very clear spaces where you saw governments held accountable to bring equity and inclusion to the very top. That was not on one issue, but on multiple ends. You saw it with the NYPD [New York Police Department] being held accountable; you saw it in the recent elections with a record-breaking number of women and people of color being elected; you saw it in budgets being passed in different states with many new small legislative items that really help address barriers and regulations that people of color and women have faced for years because they were part of the fabric of the way the US was doing things. I’m very happy Black Lives Matter happened, and I hope we continue to move in that direction. 

Q: Does anything stand out in terms of changing corporate behavior?

A: One of the best statistics I’ve seen is that 75% of large companies, including investment firms, are hiring chief diversity officers. It’s not just words; companies are operationalizing how this needs to get done in the day-to-day. Our comptroller had great foresight about the operationalizing of diversity and inclusion. We started doing this seven years ago, so we have a lot of best practices that we can share with others – things we know worked, things we know didn’t work.

Q: How important are diversity and inclusion pledges, whether they come from industry associations or from companies directly?

A: It all starts with having that will at the very top – the CIO, the president or the head of an institution understanding this is a top priority. When that happens, it happens through the lens of a pledge. And when you see people create pledges, it is to create the movement of having the will to make change. And once you have that you must begin operationalizing it, and that’s how you guarantee the teeth behind it. You give teeth to diversity by putting it in the contract language. If you look at our evaluation processes, our RFP processes, our notice of searches, the language is in there.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• North America
• LPs
• USA
• New York City Employees' Retirement System
• ESG
• diversity & inclusion (D&I)