Exhibit 5 How low gender and ethnic diversity correlate to poorer financial performance Likelihood of financial performance1 above national industry median by diversity quartile Percent Executive team N = 589 -29% Gender and ethnic/cultural2 57 Bottom on 40 both vs. rest Profitability 4th 1st–3rd 1 Average economic profit margin 2011–15 and average EBIT margin 2011–15 2 Executive gender diversity analyzed for 991 companies in all regions. For 589 companies with gender and ethnic/cultural diversity data, in all regions except Australia, France, Germany, India, Japan, and Nigeria NOTE: Percentages shown here are rounded to the nearest whole number; however, calculation of the differentials in quartile performance uses actual decimal values SOURCE: Company websites; McKinsey Diversity Matters database 11 Average of bachelor’s and The penalty for not being diverse on both measures persists. Now, as previously, master’s degrees awarded in companies in the fourth quartile on both gender and ethnic diversity are more likely to US from 2000–15. National underperform their industry peers financially. Specifically, they are 29% more likely than Center for Education Statistics, 2000–15. the other three quartiles to underperform on profitability (Exhibit 5). 12 Includes undergraduate and postgraduate students Ethnic/cultural diversity on executive teams is low. We focused on our US and UK of known ethnicity in 2015. UK Higher Education data set to examine ethnically/culturally diverse representation among companies, Statistics Agency. considering the pipeline starting with university graduates. Black Americans comprise 10% of US graduates but hold only 4% of senior executive positions in our sample, Latinos/ Hispanics comprise 8% of graduates versus 4% of executives, and for Asian Americans 11 As expected, white executives the numbers are 7% of graduates versus 5% of executives. are represented to a higher extent on these teams, with nearly 85% of C-suite positions for 68% of US graduates. In the UK, the disparity is even greater: 22% of university 12 yet only 8% of UK executives students identify as Black and Minority Ethnic (BAME), in our sample share this identity. Companies with the most ethnically/culturally diverse boards worldwide are 43% more likely to experience higher profits. Delivering through Diversity Diversity and financial performance in 2017 14