A glaring gap

If projects are designed and built to serve communities, shouldn’t those who do the deals reflect the people they are serving, asks Sakshi Sharma

Urban conurbations across the US are centers of diversity and varied demographic, and their infrastructure needs to reflect that too. Whether it is local governments, policymakers, project stakeholders or the end users of an infrastructure asset, diversity is key at every level and continues to gain more importance.

Not enough statistical research data is available on how well different parts of the population are represented in the infrastructure industry, but it is evident that the market as a whole is lacking diversity.

Industry observers say a diverse team introduces both creativity and innovation throughout the process of procuring a project, be it stakeholder or community engagement or the bidding process alongside the public sector partner. Aspects of design and technical innovations are all more enhanced at the hands of a diverse team, according to many experts. “We believe increasing diversity, equity and inclusion (DEI) is simply the right thing to do,” says Dale Bonner, executive chairman of Plenary Concessions. “But yes, it also helps us succeed in P3 procurements. After all, our business succeeds only when our technical and financial solutions align with the social and economic objectives of our public sector clients and diverse communities they serve.

“Much of our work is in urban centers and other regions that are increasingly multicultural and have growing demands for infrastructure. As a P3 investor and developer, our project teams include a broad spectrum of designers, builders and operators, in addition to the many technical, legal and financial advisors who support the team’s efforts,” Bonner adds.

He says that diversity and inclusion are now imperatives driven by demographic trends that are rapidly changing the face and attitudes of government clients and the many stakeholders who influence the trajectory of public infrastructure projects. “This calls for more cultural awareness to effectively work with increasingly diverse stakeholders who influence whether, when and how projects come to market, and with what degree of political risk.”

According to a 2018 report on social and demographic trends in the US by the Pew Research Center, urban and suburban counties are becoming more racially and ethnically diverse at a much faster pace than rural counties.

The report states that, overall, the US population remains majority white, but not so in urban areas as a group. Among urban residents, 44% are white, compared with 68% in suburban and small metro counties and 79% in rural counties. Since 2000, 53% of urban counties are majority non-white; whereas only about one-inten suburban (10%) and rural (11%) counties are majority non-white.

“Greater diversity not only helps us to better understand problems, but also to empathize and forge culturally relevant solutions. This is particularly important with public buildings and other projects delivered at the local level where we see the highest levels of gender, ethnic and cultural diversity,” says Bonner.

So while diversity and inclusion encourage creativity and innovation, as well as position companies to outperform their peers, the industry continues to suffer a definite deficit.

Close the gap

A 2019 report by Toronto-based thinktank The Institute on Municipal Finance and Governance (IMFG), is one of the few that probes the diversity gap in the infrastructure industry.

According to the Closing the Diversity Gap in the Infrastructure Industry report, the infrastructure industry has not received the same level of scrutiny for its lack of diversity as other sectors such as technology, entertainment, business, and academia. “Yet the infrastructure industry is a major source of employment, and the projects have a profound impact on the economic prosperity, equity, and environmental sustainability of the places in which they are built.”

The report adds: “It is imperative that the leading decision-makers in the industry are representative of the wider communities in which major infrastructure projects are planned, built, and operated.”

 According to data collected by the World Economic Forum (WEF) in 2016, as quoted in the IMFG report, compared with other industries such as healthcare, financial services and media, the infrastructure sector has the lowest share of women in the overall workforce (16%). More firms report having a gender wage gap in the infrastructure sector (35%) compared with the average for firms across all sectors of the economy (32%), according to WEF data.

IMFG’s report also states that the infrastructure industry has an “especially thick glass ceiling” for women reaching senior leadership positions.

It has the smallest share of female CEOs (2%) after the energy sector, as well as the lowest share of women in senior (9%) and mid-level positions (13%) compared with other economic sectors studied by the WEF. The low share of women in the infrastructure industry stands in contrast to recent World Bank figures showing that women make up 39% of the global labor force, the report states.

Promoting diversity

So what are firms doing to make a difference and turn around this rather poor state of affairs?

Dino Barajas, partner and co-chair of US projects and infrastructure at DLA Piper, says there are programs in place at the firm to encourage and boost diversity. “We have created what we call ‘affinity groups’ that are selfidentified groups representing different types of diversity such as Latinx, African-American, et cetera. Through such groups, members are more approachable and can engage in meaningful conversations.

“It also makes business sense for the organization,” he adds. “The Hispanic and Latinx affinity groups for instance can help us find other Hispanic, Latinx lawyers within the firm across the US and help build bilingual teams to assist on projects across the LatAm region. So it builds a nurturing environment and professional progression within the firm.”

Establishing such groups also provides employees with a sense of inclusion at the firm, Barajas says. “Seeing people who are just like them on the same platform makes one feel less alienated. From the business perspective, one is aware where the resources are when you want a multilingual, multicultural team.”

Nina Yoo, managing director for infrastructure asset management at Canadian infrastructure investor Fengate, agrees.

“Diversity is becoming more important to our investors alongside ESG principles,” says Yoo. “We have set up a diversity committee which drives executive attention towards solutions. We promote diversity in our leadership teams. Although the firm used to have predominately men in leadership roles, it has become far more diverse over the years.”

 Another aspect that helps boost diversity is flexible working, Yoo continues. “We are keenly looking at a work-flex arrangements at the firm. An accelerated adoption of new technology and comfort with it, especially in a post-pandemic world, is important and is something we are evaluating. A flexible work environment is a key driver and helps facilitate diversity.”

Bonner says Plenary Americas has found it important to start with a broad vision backed by ongoing efforts to increase DEI. “We try to communicate and reinforce the vision at all levels of the company, so we can build and sustain a culture that normalizes conversations about DEI and puts into practice new ideas, policies, and behaviors that promote it.”

 He adds: “This includes looking for and addressing any real or perceived inequities in our hiring, promotion and compensation practices. In addition, we try to include our employees in the development and implementation of DEI strategies and use surveys or other tools to track and communicate our progress within the company.”

Stakeholder diversity

Having a diverse organization also has positive bearings on stakeholder engagement. A homogenous group may not always be perceived as the most welcoming or forthcoming during stakeholder or community engagement.

Barajas says that just within their US practice experience, he and his colleagues observe that “the more diverse the group and its background, the more diverse is the problem-solving capacity.Monolithic cultures, where the same shared experiences approach a problem with the same tools, doesn’t give birth to new solutions.”

Barajas recalls the benefits of having a diverse team during the financial closing of the Canadian Solar/Aguascalientes solar project with Bancomext (Mexico’s state-owned infrastructure and export credit agency) in April 2019.

“Our bilingual financing team at DLA Piper was able to parachute in, roll up its sleeves and stay in country until the deal was successfully closed. Being bilingual and bicultural allows one to effectively and efficiently interface with all stakeholders in their native language and work within cultural contexts. Diversity in international transactions is a ‘must have’.

“Language skills and cultural sensitives are essential in fast-paced transactions where time is of the essence.”

Diversity often helps approach the same issue with varied and more creative solutions. Barajas cites examples of a schools P3 or a transportation hub. In either it is beneficial to have a diverse team to work on the design aspects and execution of the project to better serve the respective community.

For a transportation hub project, it is also valuable to have economic diversity, he adds. “This would help to understand how various modes of transport or inter-modal assets interact at a hub.”

 At Fengate, Yoo says they also have a diverse set of stakeholders by way of the various assets they manage. “We manage over 40 assets across the world. We have a lot of diverse stakeholders and operate in different types of communities. We try to hire professionals who are involved in the local communities and understand the culture.”

She adds: “For instance, having women on a team provides a different approach to matters. Client relations are everything especially on long-duration projects.”

The public sector is playing its part in forcing change, too, as Yoo points out. “[Sometimes] there are government procurements that have contractual conditions requiring local representation or local hiring, so we are needed to meet certain inclusivity requirements.” Yoo highlights certain federally procured projects in Canada that require indigenous communities to be represented. In the US, the Los Angeles International Airport’s (LAX) ConRac P3 had an inclusivity requirement in the contract that the private sector partner had to fulfil. “California is at the forefront in promoting diversity and inclusivity compared to other states.”

Better partnering

Even without specific requirements, experts say diverse groups help create a more appealing team for the public sector to choose to partner with. “We are in a highly competitive environment, anything that brings on innovation and creativity helps,” says Yoo.

“Elected officials and the public agencies they oversee are beginning to view diversity through a much wider lens,” adds Bonner. “Particularly in large urban centers, they increasingly seek partners that reflect the communities they serve. They want to see diversity not only in construction, but also among the designers, operators, technical, legal and financial advisors, and others who in some way contribute to P3 projects.”

Plenary’s Long Beach Civic Center P3 project, which reached financial close in 2016, is a case in point says Bonner. “There we formed a highly diverse team of individuals and professionals from the firm, many with long histories of working with diverse communities throughout the city. We convened or participated in over 100 community and stakeholder meetings in which the diversity of people and ideas helped us develop a winning proposal that incorporated the most culturally relevant design features.”

Bonner is convinced that having a diverse team helped the firm devise outreach and inclusion plans that proved to be an important factor in the city’s decision to choose Plenary. “Moreover, having a rich diversity of people participating in the planning, design and construction phases helped us deliver the project on-time and on-budget.”

Barajas says in some ways the public sector has done a much better job with diversity than the private sector. “Minorities, women and LGBTQ are better represented across the public sector, the private sector is now trying to catch up.”

 He adds that, when meeting with government agencies on a P3, “if you walk in with a team that is as diverse as the team you’re looking to work with, you’ve opened up opportunity for stronger relationships and much more common ground.

“Ultimately, this leads to good business when you are representative of the communities that will be served by the infrastructure project – be it schools, power generation, transportation or wastewater.”

To attract, retain, and promote women and minority candidates in the infrastructure sector, organizations must implement policies and initiatives to overcome the structural barriers that prevent change, the IMGF report says.

Barajas says now more than ever corporate culture is putting a premium on organizations with an environment that makes diverse groups and minorities more successful.

“It requires placing minorities in positions of authority and power. There is no downside to diversity.”