Financial firms looking to help manage the city’s $8.5 billion portfolio are now required to demonstrate commitment to diversity hiring and social responsibility under a newly launched scorecard system.

That scorecard resulted in 40% of the asset management firms that contracted with the City Treasurer’s office last year being dropped.

The mandate comes as a new report by the Knight Foundation calls for greater diversity in the $69 trillion U.S. asset management industry.

The study released last week found women-and minority-owned firms manage just 1.3% of the nation’s asset portfolios — representing just 8.6 percent of contracted firms — despite performance that statistically matches the industry as a whole.

“It’s important when we’re talking about investing taxpayers’ money, that these firms are being held accountable,” said City Treasurer Melissa Conyears-Ervin, who on Tuesday will announce the 33 firms on the city’s 2020 Broker Dealer List, unveiling the new scorecard.

There were 54 firms on the 2019 list, 37 percent of them MWVD firms — owned by minorities, women, veterans and the disabled. This year, 42% are MWVD firms.

“At the end of the day, it’s important to taxpayers that firms we do business with care about diversity and inclusion, as well as corporate social responsibility,” Conyears-Ervin said.

“We need to make certain that we are doing business with organizations that reflect all of Chicago. That’s what this new scorecard is about.”

The firms sell bonds to the city, doing more than $20 billion of trading volume annually.

MWVD firms on the list last year ranged from the woman-owned Alamo Capital to the veteran-owned Drexel Hamilton; the African American-owned Loop Capital Markets to the Hispanic-owned Penserra Securities. All the MWVD firms will stay on this year’s list.

Larger entities such as BMO Harris, JP Morgan Securities, Mesirow Financial, Northern Trust Securities and Wells Fargo Securities will for the first time have to divulge numbers of minority staff and leadership, women in leadership, and investments in programs benefiting disadvantaged Chicago communities.

All that accounts for 25% of their scorecard grade. The remaining 75% covers company profile, execution, research and compliance.

“For me, someone who was born in Englewood, raised on the West Side, has seen disparity and knows what it means, this is personal,” said Conyears-Ervin, elected last year in the first contested treasurer race since 1999, and the first in years not initially appointed by the mayor.

“I’m beholden only to the people, and the treasurers’ office is doing its part to ensure we are valuing the diversity of Chicago,” she said.

The Knight report, Diversifying Investments: A Study of Ownership Diversity and Performance in the Asset Management Industry, found no difference in performance across asset classes at women-and minority-owned firms. It found funds managed by them were overrepresented in the top-performing quartile of mutual funds, hedge funds and private equity.

“This is about leveraging taxpayer dollars for greater impact,” said Conyers-Ervin. “This is a new day for Chicago, a new day for the City Treasurer’s office. I tell my office all the time, ‘Shame on us if all we have done is made money and have not changed lives.’ So this scorecard is just the beginning.”