Transparency and data collection have emerged as key factors in addressing racial inequalities within the workplace, according to a panel of senior financial services professionals in the UK.
In a recent roundtable discussion hosted by Reboot, a campaign group focused on race and ethnicity in the workplace, leaders from prominent investment and lobbying groups, including LGIM, Nest, State Street, Invesco, and Newton IM, came together to explore how the industry can collaboratively support race equity.
One crucial aspect highlighted during the roundtable was the need for transparency among UK businesses, particularly regarding ethnicity pay gap reporting. Unlike the gender pay gap, reporting on ethnicity pay gaps is currently not mandatory. Therefore, engagement from asset managers becomes vital in driving the adoption of this reporting practice on behalf of their clients.
The roundtable participants recognised the industry’s diversity issues and outlined six critical steps that asset managers can take to address racial inequality:
- Actively engage with portfolio companies on their diversity, equity, and inclusion (DEI) data, including ethnicity pay gaps, using their role as shareholders to drive performance and address inequalities.
- Ensure consistency in the data and metrics requested, aligning with initiatives like the Asset Owner Diversity Charter to establish a coordinated approach for data collection.
- Make ethnicity challenges a board-level priority, treating them with the same importance as gender pay gap reporting.
- Engage and educate employees on the importance of data collection and self-identification, creating an environment where individuals feel comfortable sharing their information.
- Maximise the available data to identify and address gaps, emphasising the need for accompanying action plans alongside the reporting.
- Lead from the top and openly discuss race and ethnicity, promoting a culture of allyship and concrete action.
The roundtable participants highlighted that tackling racial inequality requires a multifaceted approach. Justin Onuekwusi, the co-founder of #TalkAboutBlack and Reboot ambassador, emphasised the cumulative effect of multiple barriers and the need to address each individually to effect meaningful change. Progress can be made by un-kinking each “kink in the hosepipe,” such as the lack of role models, mentoring opportunities, and representation.
“Over the years, the kinks have a cumulative effect: those children who have no role model, who don’t get the mentoring they need and who never make it onto the corporation’s radar or wish list, do not get hired or promoted. Unkinking one kink isn’t enough. The central premise is that every single one of those kinks needs to be addressed or, still, no water will flow.”
Stephanie Butcher, Senior Managing Director & Co–Head of Investments at Invesco, emphasised the importance of diversity and inclusion in the asset management industry, stating that a more diverse and inclusive sector would be better positioned to serve clients and deliver improved outcomes. Ethnicity pay gap reporting, she noted, could play a vital role in identifying and addressing potential gaps, fostering a more equitable industry.
Noreen Biddle Shah, Founder of Reboot, highlighted the significance of shareholders and the industry working to improve diversity and inclusion. “By leveraging the considerable influence large investors have through shareholder engagement, they can play an important role in improving standards within companies. However, the industry also needs to look at its own DE&I practices in tandem with this and show it is equally as committed within its workforce.
“Ethnicity pay gap reporting will bring to light the discrepancies on a wider scale, but it is how we respond to it – through tone from the top, quotas, practical actions, better integration/understanding between minorities and the majority etc. – that we will start seeing sustainable and tangible change.”
The roundtable also featured insights from other influential participants, including Mitesh Sheth from Newton Investment Management, Rick Lacaille from State Street, and Sachin Bhatia from Invesco. All echoed the need for collaboration, consistent reporting, and a focus on cultural and behavioural issues within the financial services industry.
The industry’s attention to data collection, reporting, and internal practices is crucial amid ongoing discussions and legislative developments surrounding racial inequalities. By collectively addressing these issues, the financial services sector can foster diversity, promote equity, enhance corporate performance, and reinforce the industry’s credibility in the UK.
For the full report on the roundtable discussion, visit: https://rebootequality.org/wp-content/uploads/2023/06/Reboot-UK-investment-industry-roundtable_4.pdf