January 2025 Asset Management report reviews sector-level transmission pathways between human capital metrics (e.g. turnover, training, engagement) and financial outcomes. Using backtest analyses, the authors show that portfolios sorted on high human capital metrics delivered consistent excess returns and resilience even during volatility. The paper includes regional case examples (U.S./Europe/Asia), illustrating how structured disclosure frameworks improve ESG analysis and stewardship practices.

Published in mid‑2023, this AllianceBernstein analysis argues that the 'Social' pillar—covering workforce diversity, labor standards, and human rights—is under-valued and under-examined in ESG frameworks. Through case study and portfolio-level synthesis, AB shows how social risks translate to financial risks, advocating for deeper data integration, investor engagement, and social metric analysis to unlock investment value.

Cognitive diversity – the range of expertise, experiences, information, perspectives, preferences, and ways of thinking within a team – has the potential to unleash significant value in any organisation. However, cognitive diversity alone is not enough. Without psychological safety, cognitive diversity can lead to employees generating different opinions but being too afraid to share them. Without inclusion, colleagues believe that the organisation does not treat them fairly, discouraging interpersonal risktaking. Moreover, cognitive diversity has challenges as well as benefits. It can lead to coordination difficulties as employees “speak different languages” or do not fully understand or appreciate the perspectives of different colleagues, and the loss of affinity and camaraderie that arises when colleagues share common backgrounds. The scientific evidence of the link between cognitive diversity and performance is decidedly mixed. There is modest evidence that skills diversity has a generally positive relationship, but even this evidence is not unambiguous and the benefits vary according to the setting. However, the mixed evidence does not mean that cognitive diversity is irrelevant; rather, that cognitive diversity is difficult to manage and thus highly relevant because those that can do so effectively will have a significant competitive edge.

This study examines the relationship between gender diversity and financial performance at different organizational levels including; Board of Directors (BoD), Executive Management Teams (EMT), Senior Management Teams (SMT), and Staff Levels (SL). It further examines if there is an optimal gender diversity ratio throughout organizations to increase financial performance with the starting point in the research by Ferrary & Déo (2023). The study builds on panel data including 405 observations over four years consisting of merged financial and gender diversity data. EBITDA Margin is used to measure financial performance. We conduct simple OLS regressions of each independent variable and then combine them in models. The results show that gender diversity has an overall positive impact on financial performance. However, we do not find one optimal ratio of gender diversity for all hierarchy levels in an organization. We find the optimal ratio of gender diversity to be 40-60% for BoD and EMT, and 30-70% for SL and SMT.

The study examines how professional investors assess firm risk when presented with human capital (HC) disclosures. Using an experimental design, it shows that disclosures focusing on employee development, training, and workforce stability lead investors to perceive firms as less risky compared to when such information is absent or limited. However, the effect depends on how disclosures are framed: more strategic, future-oriented HC information reduces perceived risk more than generic or compliance-driven reporting. The findings highlight that HC transparency shapes risk judgments and influences investment decision-making.

From June 2024 to January 2025, ISSB engaged over 300 professionals from 158 global investment organizations across diverse asset classes and geographies. Investors consistently emphasized interest on risks and opportunities related to working conditions and exploitation; health, safety and wellbeing; diversity and inclusion; pay and benefits; recruitment and retention; and workforce composition. The literature review supported these insights, highlighting investors’ demand for standardised, comparable human capital data and identifying disclosure gaps—especially on cross-sector comparability.

The aim of this study was to determine the role of employee age heterogeneity in building a sense of belonging to the organization and to recognize the impact of human resource management activities and an inclusive climate on this relationship. While age diversity alone was not directly related to organizational identification, HR activities supportive of all age groups and a welcoming organizational environment significantly mediated this relationship. The findings highlight the importance of applying human resource policies inclusive of different age groups and cultivating a welcoming organizational environment to enhance organizational identification. Future research should further explore the mechanisms and contexts in which age diversity impacts organizational identification, considering industry and cultural differences

This study explores the influence of age diversity within teams on civil servants’ perceptions of organizational change. Age diversity is examined through two dimensions: age variety, which refers to the range of different ages within a team, and age polarization, which denotes the extent to which age groups are segregated or clustered within a team. Individual perceptions of change are based on how civil servants evaluated a recent merger. While age polarization shows a significant effect—with less polarized teams exhibiting more positive perceptions of the merger—age variety does not demonstrate a notable impact. These results highlight that while age diversity is important, its impact is nuanced: simply having a range of ages is not sufficient, but reducing age polarization is crucial.

We investigate the impact of diversity and inclusion (D&I) on firm performance for the period 2017–2021. While the existing literature examines the relationship between diversity and firm performance, little is known about the combined effects of D&I on firm performance. This study aims to utilize the most widely used data source, the Global Diversity and Inclusion (D&I) Index, provided by the LSEG workspace. Using 8089 firm-year observations from a sample of globally listed firms and an OLS regression model, we find that firms with a higher D&I score have better firm performance, as measured by Tobin’s Q. Our moderating analysis shows that the impact of D&I on firm performance is more pronounced for firms with higher institutional ownership. We also split institutional ownership into domestic and foreign institutional ownership and show that the influence of D&I on firm performance differs between domestic and foreign institutional ownership. Our result is robust when we use an alternative proxy for firm performance and consider the findings without US firms in the sample. The overall findings indicate that considering a diverse and inclusive workforce is worthwhile for key stakeholders when making policy decision

Based on S&P Global’s 2024 CSA data from roughly 2,700 companies worldwide, fewer than 3 % of organizations include structured survey metrics on employee well-being, such as stress, happiness, or life purpose. Companies that do measure these aspects report markedly lower voluntary turnover, higher engagement scores, and stronger innovation performance. Considering the immense costs of replacing staff, especially managers, for whom replacement can cost up to twice their annual salary, these findings underscore the clear financial incentive for integrating well-being metrics into employee assessments.

A Moody’s Ratings report, using Denominator data on 3,100 rated companies, explores the link between board gender diversity and credit quality in advanced economies. Findings show investment-grade companies have more women on boards, averaging 29%. Across Europe and North America, board gender diversity has modestly improved, with service and consumer sectors—such as insurance, retail, healthcare, pharmaceuticals, utilities, and consumer products—showing the highest representation. Companies with positive governance issuer profile scores (G-1) increased women’s board representation from 31% to 34%. Additionally, North American investment-grade companies exhibit greater racial and ethnic diversity on boards, highlighting a broader trend toward diversity in higher-rated firms.

This study investigates the impact of boardroom diversity (BD) on firms’ financial performance (FP), drawing on economic and resource dependency theory. The study further explores the influence of strategic change (SC) on this nexus, using a six-dimensional index to measurse BD and SC. A dataset of 240 non-financial firms listed on four stock exchanges (Moscow, Shanghai, Bombay, and Pakistan) over a 13-year period (2008–2020) is analyzed employing the generalized method of moments to address the common endogeneity problem in econometrics specification. The empirical results indicate that BD has a positive impact on FP, however, the impact is weakened by SC. The robustness of the findings is confirmed through alternative estimators. The study provides useful policy implications for managers and practitioners, suggesting that increasing BD can lead to improved FP, but careful consideration must be given to how SC may influence this connection

This research examines how diversity relates to firm performance in two contrasting sectors: people-dependent Professional Services and product-dependent Energy Services. Motivated by observed gender diversity inequalities, the study uses regression analysis to test relationships between diversity metrics—such as women’s representation in board and executive roles—and financial performance indicators like Return-on-Assets and Return-on-Sales. The findings reject the hypothesis of a positive diversity–performance relationship in Professional Services and the hypothesis of no relationship in Energy Services. Insights from Management Studies and Organisational Behaviour helped identify the drivers and barriers behind these patterns, leading to sector-specific implications. The study concludes that Professional Services, with fewer capital and physical asset dependencies, shows limited benefits from gender diversity, while Energy Services, with high capital requirements, similarly gains little from diversity efforts. Nevertheless, the analysis suggests that Professional Services firms are better positioned to harness diversity for short-term growth and long-term sustainability compared to Energy Services firms.

With growing focus on corporate sustainability and social impact, many companies have introduced measures to improve diversity and responsibility. However, questions remain about whether these efforts reflect genuine change or simply impression management. This paper examines corporate board diversity and whether rising minority representation may involve “diversity washing.” We studied S&P500 boards, analyzing whether minority individuals hold multiple board seats disproportionately—a phenomenon we call “recycling.” Results show some minority groups, especially those of African ethnicity, are appointed to multiple boards significantly more than average, while Asian ethnicities are less affected. Comparing board diversity to top management, we found boards were more diverse, but ethnic minorities remain underrepresented overall, with representation far below the “critical mass” threshold of three seats. Women also often fail to reach this threshold on boards. Although our findings reveal recycling and underrepresentation patterns, limitations arise from not being able to determine companies’ true intentions. The lack of prior research on recycling and diversity washing further constrains interpretation.

The current research is a systematic review of 54 empirical papers from 1996 to 2022 which aim to investigate whether board member age diversity influences a firm’s financial and non-financial outcomes. Analysis of the extant research reveals board member age diversity to be an inconsistent predictor of both the financial and non-financial performance of a firm. Apart from CSR performance, which was found to more consistently be positively associated with age diversity, most studies included in the review failed to identify age diversity as a significant predictor of firm outcomes, however several positive, negative and curvilinear relationships were found by some studies. The lack of a consistent trend of significant associations may indicate that age diverse boards perform no better or worse than non-diverse boards or, more likely, given the inconsistent pattern of results, this research highlights that there may be other factors, such as team processes or task characteristics, which differentially impact whether age diversity has a positive, negative, curvilinear or no effect on outcomes. The current work is the first to systematically evaluate the available data on board age diversity and provides a clear account of what is known and what is not known about the relationship between board member age diversity and financial and non-financial outcomes. This study offers important insights and practical recommendations to researchers, HRM practitioners and policy makers interested in understanding how board composition factors influence the performance of corporate boards.

Focusing on intrinsic human capital drivers, like purpose, appreciation, relationships, and psychological safety, firms build Good Will and Utility Alignment, motivating employees to perform at their best. This intrinsic focus, rather than extrinsic incentives, has proven predictive of financial outperformance via the Human Capital Factor (HCF). J.P. Morgan’s independent validation reports that portfolios with high HCF scores have delivered ~4% annual alpha, with lower risk, higher Sharpe ratios, and reduced drawdowns. This materiality supports integration of employee sentiment metrics into investment strategy.

Diversity Wins is the third McKinsey report on the business case for diversity, following Why Diversity Matters (2015) and Delivering through Diversity (2018). Using data from 15 countries and over 1,000 companies, it finds an even stronger link between diversity on executive teams and financial outperformance than in previous years. The study shows companies in the top quartile for gender diversity were 25% more likely to achieve above-average profitability than those in the bottom quartile—up from 21% in 2017 and 15% in 2014. Firms with over 30% women executives outperform those with 10–30%, who in turn outperform those with few or none, creating a 48% performance gap between the most and least diverse companies. However, progress is uneven. While some companies are achieving impressive diversity gains through business-led, systematic approaches focusing on inclusion, many have stalled or regressed. McKinsey stresses that inclusion—not just representation—is essential for lasting change and urges companies to take bolder action to build inclusive cultures that drive both diversity and performance.

This article presents a meta-analysis of 74 empirical studies on the relationship between age diversity (AD) and key team outcomes, including performance quality, financial results, innovation/creativity, team effectiveness, satisfaction, and turnover. Contextual moderators (task complexity, performance evaluation type, study setting, team size, age cohort) are also analyzed. Results show no significant overall associations between age diversity and most team outcomes, except for turnover (r = 0.11, p < .05). Moderator analyses reveal weak but significant differences across task complexity, team size, and age cohort. The study contributes by challenging assumptions about the positive impact of age diversity and highlighting key contextual boundary conditions