Diversity in Finance: Hope over Action? | Chief Investment Officer

Despite their rhetoric, few European financial services institutions are implementing programmes to improve diversity in their organisations—and even fewer are recording results, research on the sector has found.

“Disclosure shows a company is serious about diversity and indicates the direction of travel.” —New FinancialBased on the latest available data, think tank New Financial found just 10% of organisations operating in the European financial sector did not report the diversity of their workforce. This diversity could include data on gender, disability, ethnicity, sexuality, social mobility, and faith, amongst others. The institutions included banks, asset managers, legal firms, central banks, and regulators.

“Diversity disclosure is important, because it is indicative of diversity outcomes—for example, as levels of disclosure increase so does female board representation,” New Financial said. “Disclosure shows a company is serious about diversity and indicates the direction of travel. What companies disclose is our only insight into how they approach diversity, what they are tracking, what they want to improve, what goals they are setting, and what they are doing to achieve those goals.”

Diversity NewF1 Source: New FinancialEven if the numbers did not show a perfect balance, New Financial said, disclosure would allow companies to acknowledge their starting point and to feed an open discussion on important and often controversial issues.

However, from a promising starting point, the think tank found there to be a significant drop when disclosing how—or if—these companies encouraged diversity.

Starting with recruitment, some 67% of companies said they factored diversity into recruitment. However, just 40% said they had programmes to increase diversity through recruitment, while just over half (52%) said they provided diversity data on new hires.

“If an organisation is serious about improving the diversity of its workforce, it needs to think carefully about recruitment,” New Financial said. “Hiring presents an opportunity to refresh the mix of people coming through the door every morning.”

Only 12% of the companies studied disclosed gender ratios of graduate hires. This number was lower for hires to other levels within an organisation and for other diversity categories.

Next, despite 90% of organisations stating that diversity was a priority, only two-thirds disclosed initiatives to tackle it. Additionally, only 42% of institutions disclosed having diversity networks.

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“Initiatives to support women were most common, including identifying high potential women, management training, mentoring, maternity coaching and company-sponsored events and panel discussions,” the think tank said. “Companies also disclosed similar types of mentoring, training, and events for staff of other diversity characteristics, often sponsored by employee networks within the organisation.”

“In an industry dominated by performance, numbers, data, metrics, and targets, it is inconceivable that the majority… aren’t setting any targets at all.” —New FinancialHowever, a third of the sample offered neither initiatives to improve diversity, nor networks once they were in role.

Finally, the majority of organisations were found to be lacking in reporting on the improvements they had made in the field of diversity.

“Possibly the most powerful signal companies can send to underline their commitment to diversity is how their numbers are changing by disclosing historical data,” New Financial said. “However, only 40% of our sample disclose any diversity data in the context of comparable figures from previous years.”

While nearly two-thirds of organisations in the sample disclosed the percentage of women in their total workforce, less than one-third give an indication of how that has changed since the previous year. The levels of disclosure were similar for women in management.

“If there is no comparable data disclosed year-on-year, either companies aren’t recording this information or they are choosing not to disclose it,” New Financial said. “Without such data, there is no means of monitoring progress to identify where problems may lie or work out which solutions may be working and which aren’t.”

Diversity New F2 Source: New FinancialThe think tank said measuring and disclosing progress could fend off policymakers forcing the hands of these organisations through the implementation of quotas and targets.

“In an industry that is dominated by performance, numbers, data, metrics, and targets, it is inconceivable that the majority of the organisations in our sample aren’t setting any targets at all,” said New Financial. “It is far more likely that they are choosing not to disclose them. Not disclosing that data, even if it paints a depressing picture right now, shuts down a very important discussion about whether the dial is shifting, and if not, why not.”