Skip to main content
UK - Financial Adviser
Select Region Select User Type
  • Global
    • Home
  • UK Investors
    • Financial Adviser
    • Private Investor
  • International Investors
    • Private Investor
    • Professional Investor
  • Fund Centre
    • Our Funds
      • Equities
        • Rathbone Global Opportunities Fund
        • Rathbone Greenbank Global Sustainability Fund
        • Rathbone Income Fund Fund
        • Rathbone UK Opportunities Fund
      • Fixed Income
        • Rathbone Ethical bond Fund
        • Rathbone High Quality Bond Fund
        • Rathbone Strategic Bond Fund
        • Rathbone Greenbank Global Sustainable Bond Fund
      • Multi-Asset
        • Rathbone Greenbank Multi-Asset Portfolios
        • Rathbone MULTI-ASSET PORTFOLIOS
      • Sustainable
        • Rathbone Greenbank Global Sustainable Bond Fund
        • Rathbone Greenbank Global Sustainability Fund
        • Rathbone Greenbank Multi-Asset Portfolios
    • Literature Library
    • Consumer Duty
    • Prices and Performance
    • Glossary of Terms and FAQs
  • Strategies
    • Equities
    • Fixed Income
    • Multi-Asset
    • Sustainable
  • Our Clients
    • Private Investor
    • Financial Adviser
    • International Private Investor
    • International Financial Adviser
  • Rathbones
  • Global Home
  • Insights
    • Fund Insights
    • In the know blog
    • Review of the week
    • The Sharpe End podcast
  • About us
    • About us
    • Our People
    • Awards
    • Media centre
    • Responsible Investing at Rathbones
  • Contact
Home Home

Search

  • Fund Centre
    • Our Funds
      • Equities
        • Rathbone Global Opportunities Fund
        • Rathbone Greenbank Global Sustainability Fund
        • Rathbone Income Fund Fund
        • Rathbone UK Opportunities Fund
      • Fixed Income
        • Rathbone Ethical bond Fund
        • Rathbone High Quality Bond Fund
        • Rathbone Strategic Bond Fund
        • Rathbone Greenbank Global Sustainable Bond Fund
      • Multi-Asset
        • Rathbone Greenbank Multi-Asset Portfolios
        • Rathbone MULTI-ASSET PORTFOLIOS
      • Sustainable
        • Rathbone Greenbank Global Sustainable Bond Fund
        • Rathbone Greenbank Global Sustainability Fund
        • Rathbone Greenbank Multi-Asset Portfolios
    • Literature Library
    • Consumer Duty
    • Prices and Performance
    • Glossary of Terms and FAQs
  • Strategies
    • Equities
    • Fixed Income
    • Multi-Asset
    • Sustainable
  • Our Clients
    • Private Investor
    • Financial Adviser
    • International Private Investor
    • International Financial Adviser
  • Rathbones
  • Global Home
  • Insights
    • Fund Insights
    • In the know blog
    • Review of the week
    • The Sharpe End podcast
  • About us
    • About us
    • Our People
    • Awards
    • Media centre
    • Responsible Investing at Rathbones
  • Contact
Home

Search

The risk in doing good

Diversity, equity and inclusion is important to ensure businesses get the best skills, avoid group-think and better understand their customers, argues our Multi-Asset Portfolios lead fund manager, David Coombs. But – as with anything – risks remain.

25 September 2023

Despite being Welsh, I love watching test cricket. The Ashes tests over the summer were unbelievable. England (overseen by the England and Wales Cricket Board) played skilful, high-risk cricket and almost won back the Ashes. They won millions of admirers around the world and even grudging respect from the Aussie greats of the game.

The England team included Ben Stokes, Moeen Ali, James Anderson and Harry Brook. England have clearly benefited from a wider selection of players, from different walks of life. Despite the team’s success, the nation’s cricket still has much to do to foster a more inclusive and tolerant approach, given the events over the past year or so. Just imagine how good they could be if all children in England had access to the sport.

So far so obvious. As with sports, we believe in businesses that fully embrace diversity, equity and inclusion (DE&I) so they can benefit from a wider pool of talent and experience. A global business that authentically represents its target customers is likely to achieve improved results and profitability in the long-term. Bear with me on this.

Let me be clear, we believe a diverse business is more likely to be successful, bringing in the talents of minority groups who can then offer a different perspective, resulting in more innovation and, crucially, less group-think. I head up the Rathbones Socio-Economic Background Network, for example, which aims to broaden our own talent pool and participation. Welsh fund managers are rarer than hens’ teeth, so I have skin in this game!

The key is in doing and not signalling. Company leaders must fundamentally believe in diversity and inclusion, ingrain it in the culture of the business, make managers accountable and be transparent in their corporate strategy so shareholders know what they are investing in. We have seen this executed in some of the most successful global businesses, from Microsoft to Nvidia (both of which we hold in our core multi-asset range) and they don’t seem short in the innovation race.

The problem, however, is that DE&I has become an unchallenged, simplistic catch-all acronym like ESG (environmental, social and governance). It’s worth remembering that not all ESG initiatives work well, and that holds true for DE&I. Poorly executed DE&I strategies can seriously damage your wealth.

As fund managers, we find ourselves increasingly drawn into these areas, as political activists attempt to gain influence on companies through shareholder voting and lobbying. To be blunt, treading this line can be difficult and sensitive, as our investors pay us to manage their savings first and foremost, not to use their money to express our political views. This is a distinction we take very seriously, even if on a human level it can feel irksome at times.

Generally, we prefer the companies we invest in to be apolitical (if that is not too utopian). But we make exceptions if it’s part of their corporate DNA and it is factored clearly into their business strategy. Nike, which we own in our core multi-asset portfolios, is one example. Whether a fund manager agrees or disagrees with the initiatives they take, this is part of their strategy and their customers seem to accept this. We would argue being ‘controversial’ is part of Nike’s brand.

There have been many other instances recently that we would argue have been naïve. Costa (owned by Coca-Cola), Adidas, Bud Light (AB InBev) and Coutts (NatWest) have created controversy by aligning their corporate values to their messaging rather than vice versa. Out of these four we own Coca-Cola in our multi-asset funds.

“Republicans buy Coke”

Coca-Cola upset Republicans in the US when it spoke out in 2021 against a proposed law in its home state of Georgia that required voter ID. Some activists argued the law would prevent people from poorer backgrounds voting. Arguably, in today’s world, politics has become so binary that to take any side risks alienating a significant proportion of your customers. Coke, when challenged, said it had been a mistake to comment, that lessons had been learned and it would no longer take sides in political arguments.

It was therefore somewhat surprising to see Costa – a subsidiary of Coke– and its cartoon mural depicting a transgender person with mastectomy scars. The campaign upset many Costa customers and appeared at odds with the apolitical stance that the parent company told investors it was adopting.

What we need to understand as investors is whether Coke’s head office knew what Costa was planning. It’s quite feasible that it didn’t. After all, a campaign in the UK for a small subsidiary might not have been on the radar of the C-suite. But here is the risk many companies now face in a febrile political world fuelled by social media and fear of not reacting: a seemingly disjointed, confused approach which could harm the brand.

So, DE&I for us as fund managers is a two-way street. We believe companies that embrace it fully are more likely to be successful and effect long-term changes in society; however, those that stumble into it as a perceived quick-win marketing opportunity or in a knee-jerk reaction to activists (from either side of any dispute) should be met with caution. These companies will most likely not have the right checks and balances within their decision-making processes, which can result in real short-term share price pain.

Tune in to The Sharpe End — a multi-asset investing podcast from Rathbones. You can listen here or wherever you get your podcasts. New episodes monthly.

Most popular blogs

29 February 2024

Nvidia: from pastime to new paradigm

A business created to make computer game graphics more beautiful stumbled into driving AI, one of the most important technologies of the 21st century. Rathbone Greenbank Global Sustainability Fund manager David Harrison explains what all the fuss is about.

Find out more

5 mins

4 December 2024

Why active management has a place in 2025 and beyond

The rise of passive investment is storing up risks that many investors may not realise they are taking. James Crossley, our head of Rathbones Asset Management distribution, makes the case for active managers.

Find out more

3 mins

9 January 2024

2024: The Year. Maybe?

Our head of multi-asset investments David Coombs starts the new year making a three-point turn with a dump truck of salt. Behold, we have his predictions.

Find out more

3 mins

18 January 2024

Ceasing to worship at the altar of stock-pickers

Back in secondary school, our head of multi-asset investments David Coombs was a champion stock-picker. Although, he had help from his teacher’s direct line to the market – which taught him markets tend to be unfair.

Find out more

4 mins

In The KNOW blog

Read the latest news and views from our fund managers

Blog posts

Subscribe to the In The KNOW blog

You can unsubscribe at any time. For details on how we handle your data, visit our Privacy policy.

CAPTCHA

Let's Talk

Ready to start a conversation? Please complete our enquiry form, we look forward to speaking with you

Enquire
  • Important Information
    • Brexit Statement
    • Important information
    • UK Modern Slavery Act
    • Accessibility
    • Privacy
    • Cookies
    • Cookie preferences
    • Complaints
  • Important Information
    • Consumer Duty
    • Voting disclosure
    • Assessment of value reports
    • TCFD Reports
    • SDR Consumer-Facing Disclosures
    • Financial Ombudsman Service
    • Financial Services Compensation Scheme
    • Glossary of terms and FAQs
    • MIFIDPRU8
Address

Rathbones Asset Management
30 Gresham Street
London
EC2V 7QN

Rathbones Asset Management Limited is authorised and regulated by the Financial Conduct Authority and a member of the Investment Association. A member of the Rathbone Group. Registered Office 30 Gresham Street, London EC2V 7QN. Registered in England No 02376568.

© 2025 Rathbones Group Plc
Incorporated and registered in England and Wales. Registered number 01000403

Follow us
LinkedIn
City Hive Logo
ACT Logo

Rathbones Asset Management is delighted to be an early signatory of the ACT Framework created by City Hive

Diversity Project Logo

Rathbones Asset Management is a member of The Diversity Project

The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.