Financial services campaign group Reboot has called on asset managers to become a “strong catalyst” for the adoption of ethnicity pay gap reporting.
At a roundtable hosted by Reboot, LGIM, State Street, Nest, Invesco, Schroders, Newton Investment Management and Chartered Institute of Personnel and Development (CIPD) said transparency of company employee data is key to tackle racial inequalities within the workplace.
Although there is no mandatory requirement to report ethnicity pay gaps, Reboot noted that engagement from asset managers on behalf of their clients can spark change and boost adoption.
The group, however, highlighted the financial services industry itself also has to deal with issues on diversity.
According to its latest Race to Equality in UK Financial Services report, 68% of ethnic minority professionals had experienced bias at work in the last year.
Additionally, half of ethnic minorities believed they were not offered as many career opportunities as their white colleagues.
The panel recommended six steps the industry should take to address racial inequality.
Top of the list was shareholder engagement as asset managers can influence portfolio companies on diversity issues, including data reporting.
This was followed by consistency in data and metrics as well as having company boards embrace the challenges.
Reboot cited the Asset Owner Diversity Charter as an example of asset owners, consultants and other fund selectors working together in a coordinated way to improve the quality and consistency of disclosures from asset managers.
It said this could offer a valuable blueprint for investment managers to agree upon a consistent approach to receiving data from portfolio companies removing fragmentation and the burden of companies having to collect data in multiple ways.
The panel also found education and engagement with employees on data collection to be key. This highlights how companies should ensure they create a culture that allows employees to self-identify comfortably.
The last two steps reiterated the issues of data and leadership, as the asset managers said maximisation of data can help identify any gaps, but also being proactive in talking about and addressing diversity issues will need to be paramount for the progress of the industry.
Noreen Biddle Shah, founder of Reboot and head of corporate communications at Numis, said: “By leveraging the considerable influence large investors have through shareholder engagement, they can play an important role in improving standards within companies.”
However, she noted that 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 own workforce.
She said, “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 – that we will start seeing sustainable and tangible change.”
Justin Onuekwusi, co-founder of #TalkAboutBlack and Reboot ambassador, added, “There is not one solution to this challenge, it is complex. #TalkAboutBlack has identified the kinks in the hosepipe.
He said, “If you are going to help unkink the hose, you need to know what the kinks look like. Over the years, the kinks have a cumulative effect: those children who have no role model, who do not 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 is not enough. The central premise is that every single one of those kinks needs to be addressed or, still, no water will flow.”
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