Canada’s Venture Capital & Private Equity Association (CVCA) has joined a number of other industry organizations worldwide in endorsing an important legal language change that will further promote diversity and inclusion across the sector.
CVCA is backing a pledge – spearheaded by the Institutional Limited Partners Association (ILPA) and global investment firm Cambridge Associates – to employ the term “key person” in all legal references as the new industry standard on a go-forward basis. ILPA says the gender-neutral term will permanently replace “key man” in all Limited Partner Agreements (LPAs), as well as other documents and discussions that refer to executives vital to the operation of a fund.
ILPA is also urging GPs, LPs, advisors, fund-of-funds, law firms and others to share their commitment in a public statement and on social media using the hashtag #keypersonpledge.
When approached by ILPA to support the move, CVCA’s answer was “an automatic yes,” says CVCA chair Mark Usher.
“Supporting ILPA’s pledge truly was a no brainer for CVCA, as we’re committed to making new, actionable changes and progressive steps to overcome diversity hurdles in the industry,” says Usher, who is also Managing Director and North American Market Leader at CIBC Innovation Banking.
Some lawyers representing CVCA’s investing members have already implemented changes like this in legal documents and LPAs. CVCA is now calling on all of its members do their part to help support and improve diversity and inclusion in the venture capital and private equity community.
CVCA is empowering members through its Diversity & Inclusion Committee, which is pursuing a program-level approach to foster greater diversity of though which will, in turn, drive performance in the industry.
CVCA also recently announced its support for the ILPA’s Industry Code of Conduct Guidelines on Harassment, Discrimination and Workplace Violence, which is a resource for all stakeholder organizations within the private equity ecosystem to develop their own policies.
Promoting diversity and inclusion isn’t just the right thing to do, especially in the wake of the #MeToo movement and a growing number of high-profile cases of harassment, discrimination and violence in certain workplaces, including some in the VC and PE ecosystem. There’s also a growing body of research showing a more diverse and inclusive workplace fosters greater innovation which can, in turn, boost a company’s brand and bottom line. A lack of diversity is also now considered a risk for companies, among investors and other stakeholders.
While the #keypersonpledgesignals a small change to promote gender inclusivity, Usher said many more steps can be taken — going beyond gender inclusivity — to empower diversity within the investment ecosystem. Diversity refers to a range of human differences from race and ethnicity to religion, political beliefs and sexual orientation. Diversity also recognizes both visible and invisible human differences in personal and organizational characteristics.
“We’re proud to be among many other organizations committed to diversity and inclusion and look forward to identifying new opportunities to remove diversity barriers and drive positive change in the industry,” says Usher, while also reminding investors and CVCA members to show their support by using the hashtag #keypersonpledge.