ShareAction targets financial sector to fully disclose Ethnicity Pay Gap data

by | Jul 20, 2022

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Photo of Catherine Howarth, CEO of ShareAction

ShareAction, the responsible investment NGO, has launched a campaign to lift the standard for Ethnicity Pay Gap reporting in the FTSE 100. The first year of the campaign will target financial services companies, before expanding to other sectors, to raise awareness of and help address racial inequality across workforces.

Currently, none of the financial sector companies in the FTSE 100 report ethnicity pay gap data in accordance with the ONS recommendation.

The campaign calls on:

  1. Companies with no procedures in place for Ethnicity Pay Gap reporting to begin making disclosures.
  2. Those presently reporting are encouraged to improve the standard of their disclosures and undertake analysis of disparities to identify their causes, and solutions to address them.

To date, ShareAction has asked 16 questions at company AGMs over proxy season on this issue. All companies have welcomed the questions, with three – Abrdn, Hiscox and Schroders – committing to publish their ethnicity pay data once their disclosure rate has increased. All but one has agreed to follow-up meetings.

Recent reports show a vast discrepancy in pay between ethnic minorities and White British workers. For instance, in the UK, BME (Black Minority and Ethnic) young adults are 47 per cent more likely to be employed on a zero-hour contract than White young adults. Covid-19 has worsened existing inequalities; the unemployment rate for BME workers is over twice as high than that of white workers, with the gap widening. Whilst gender pay gap reporting – a metric designed to reflect gender inequality across the workforce – has been mandatory for companies with over 250 employees since 2017, no such condition exists to monitor pay disparity for workers of different ethnicities.

ShareAction has partnered with several minority-led groups, including the Runnymede Trust, #Ethnicitypaygapcampaign, Project Speak Up, reboot, CIPD, the professional body for HR and people development, the Living Wage Foundation and 30% Club – Race Equality Group to steer the campaign.

The organisation will also be bringing together investors from its Good Work investor coalition with £3.8 trillion assets under management and advisory to support this campaign. 

Catherine Howarth (pictured), CEO of ShareAction said: “Companies across the economy have begun reporting their ethnicity pay data as they understand both the moral and economic imperative to do so. However, so far, this is still a tiny fraction of FTSE 100 companies. We want to change that, and fast. Ethnicity pay gap disclosures are a critical step towards tackling inequality in the workplace. We recognise that capturing and reporting ethnicity pay gap data is a more complex exercise than for gender. We also know that solutions are available so long as employers are committed to action and change.”

Noreen Biddle Shah, Founder of reboot said: “Before we can start reporting on the ethnicity pay gap in a meaningful way, companies need to ensure they are supporting an inclusive culture where self ID is not met with scepticism and employees understand the benefits of supplying this information.  Sentiment towards data disclosure among employee bases remains split, with our recent Multicultural Britain Survey of almost 4,000 UK adults showing that only two in five (43%) of White Britons believe firms should publish data on ethnic diversity in their workforce, compared to 69% among ethnic minority respondents. This is despite the belief among ethnic minority workers that their ethnicity impedes their career and there is a lack of role models that look like them in senior positions.  More transparency on ethnicity data reporting will therefore mean companies will have to become more accountable – and this will help build a sustainable roadmap and keep race inequity high on the agenda.”

Dr Shabna Begum Head of Research at the Runnymede Trust commented: “Our research speaks to the persistent and damaging ways that discrimination in the workplace impacts on Black and minoritised ethnic communities. The talent and skill of so many is wasted by systems of discrimination that too often map every part of an employee’s experience. The damage is to individuals, to communities and to the organisations themselves who fail to benefit from the full potential of their workforce.  The Runnymede Trust advocates for mandatory Ethnicity Pay Gap reporting as one critical measure towards achieving greater equality in the workplace, as a way to assess the magnitude of the problem, develop action plans and targets for improvement, and provide some measure of accountability towards those important goals.”

Charles Cotton, CIPD Senior Performance & Reward Adviser, concluded: “We encourage all large employers to collect and analyse reward data by ethnicity to ensure that decisions about how people are recruited, managed, developed and rewarded are fair. Organisations that can show that they are fair will be more attractive to employees, customers, and investors.”

Colin Baines, Investment Engagement Manager at Friends Provident Foundation said: “The current lack of data and reporting means company and investor attention on diversity, equity, and inclusion has been limited in scope to issues such as Board representation. Key DEI goals such as greater management representation and in work progression are going to require ongoing management and data collection. Ethnicity pay gap reporting and the data which underpins it will be key to progressing DEI in the workplace and we are pleased to be joining collective shareholder engagement to help bring it about.”

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