Evidence over ideology: Alex Edmans challenges EDI assumptions in Parliament

Held in the Houses of Parliament, Alex Edmans, Professor of Finance at London Business School, was invited to provide evidence to the House of Commons Women and Equalities Committee (25 March), on the effectiveness of equality, diversity and inclusion initiatives.

Professor Edmans was one of four other witnesses that included: Dr Louise Ashley (Queen Mary University London), Peter Cheese (Chief Executive of CIPD), Iain Mansfield (Director of Research at Policy Exchange) and Dr Zoe Young (Founder and Director at Half the Sky).

David Burton-Sampson MP opened the session by asking the panel what the drivers are that have caused a change in public attitudes towards EDI initiatives and how best to regain public support. Professor Edmans stated, “we need to take an evidence-based approach. Some widely circulated studies on demographic diversity have been shown to be flawed. However, cognitive diversity is correlated with performance, as is equity and inclusion.”

The Professor also touched on the importance of a holistic approach to EDI, along two key grounds. The first being to extend from demographic diversity to cognitive diversity, which is the range of experiences, expertise and thinking styles people bring to a team environment. Demographics are one source, but there are many others to consider. This is showcased in a special report written by Professor Edmans for Inclusion in Finance, formerly the Diversity Project, that launched in the House of Lords last June.

The second point is to expand from diversity to equity and inclusion, to create a psychologically safe corporate culture where people can express different viewpoints and challenge senior colleagues without fear of repercussions. An academic study co-authored by Edmans showed that equity and inclusion are correlated with financial performance, but demographic diversity is not.

Dame Nia Griffith MP pressed the panel to define diversity and inclusive cultures in the workplace. Professor Edmans provided these definitions succinctly but stressed that inclusion should not be misapplied to mean inclusion of all viewpoints, regardless of expertise and relevance. She then asked a follow-up question on the consequences of focusing on only visible and protected EDI characteristics. Edmans responded that this could lead to companies focusing on the quantitative at the expense of the qualitative, similar to prioritising short-term earnings over long-term growth.

In addition, Kim Leadbeater MP asked about evidence for what works and does not work in this space. Alex Edmans explained that there are many interaction effects and one cannot simply pull a single lever or "add diversity and stir". He concluded by correcting an earlier claim, that gender diversity is not a source of cognitive diversity, by highlighting how men and women offer different perspectives and complement each other.

The session ended prematurely due to a vote taking place in the House of Commons. Please click here to watch the session in full.