Launching a new Denominator Report: Diversity, Equity, & Inclusion in ESG & Sustainability US funds


In recent years, the concept of sustainability has rightfully earned its place in corporate strategy and in the investment world, yet a crucial pillar has historically often been overlooked: People or Diversity, Equity, & Inclusion (DEI).

Investors scrutinize the credit exposures of funds, their carbon footprint, water usage, and biodiversity impact, yet many still struggle to understand the DEI exposure. Despite PRI making DEI an explicit factor to consider last year (2022) by saying “Our position is that investors across all major asset classes can, and should, integrate DEI considerations into investment and ownership decisions. This position is anchored in the UN Guiding Principles on Business and Human Rights”, many investors are not able to do so or stop at gender in boards.

Denominator recognizes that sustainability is a sum of its parts, i.e., the Planet and the People. While the Planet aspect has been extensively analyzed, often due to more readily available data, we now have the tools and the data to understand the people aspect of sustainability. Therefore, we believe it is time for People to become a central part of any ESG discussion.

The increased skepticism against ESG investing underscores the need for clarity and transparency in all the 3 letters and not just E. Much of the skepticism has rightfully been driven by the confusion and mislabeling of funds that aggregation of the multiple factors causes.

As we move forward, regulations, such as SFDR, have started to address the challenges facing the industry, but the regulatory efforts are focusing predominantly on the environmental side of the equation. Without better inclusion of the social factors, investors will still question funds labelled sustainable or ESG. Rightfully so, is a fund for example truly sustainable if it shows large underperformance in social aspects? Perhaps it would be more accurate to label such funds as environmental until they achieve a holistic approach to sustainability.

Our commitment at Denominator is to bring transparency and accountability to the People aspect of investing, recognizing that a sustainable future should combine both People and Planet.

– Anders Rodenberg, CEO of Denominator

Executive summary

This first report focusing on the Diversity, Equity, & Inclusion (DEI) performance of US funds dedicated to ESG and sustainability marks the initial stride taken by Denominator toward the launch of a comprehensive and consistent DEI benchmark product for funds (both ESG and non-ESG focused) globally.

The analysis used DenominatorGlobal, a global DEI database covering more than 3 million companies, to assess the performance on 15 dimensions of DEI such as Gender, Race/Ethnicity, Age, Disability, etc. across hundreds of ESG/Sustainability funds in the US. The results show a relatively large variance across the funds DEI performance which concludes it does matter which fund is selected for investors who care about DEI in general or a specific dimension such as Gender, Race/Ethnicity, Disability, etc.

Top 5 funds: The total DEI exposure of the top 5 funds is zero or very low, considering both average and bottom quartile thresholds (both adopted in this analysis). This means that these funds allocate their capital in companies with high DEI performance and that consistently outperform their peers.

Bottom 5 funds: A noteworthy disparity exists between the top-ranked funds and those at the bottom of the ranking: the bottom 5 funds have more than 60% of the capital is invested in companies with lower DEI performance and that perform below their peers.

SDG Goal #5 Gender Equality: UN SDG has a specific goal for Gender Equality (Goal #5), but of the hundreds of sustainability funds analyzed, only 4% (~20 billion USD) is invested in companies led by women CEOs, despite ~7% of CEOs in global indexes such as MSCI World and ACWI are women.


This first report focusing on the Diversity, Equity, & Inclusion (DEI) performance of US funds dedicated to ESG and sustainability marks the initial stride taken by Denominator toward the launch of a comprehensive and consistent DEI benchmark product for funds (both ESG and non-ESG focused) globally, that will be available in 2024.

There is a growing focus on DEI within investment management driven by four main factors:

  1. Regulatory developments
  2. Long term Alpha
  3. Fiduciary responsibility
  4. The biggest wealth transfer in history

Download the report