INSIGHT by ShareAction
Major UK investors, co-ordinated by responsible investment charity ShareAction, have written to the Financial Conduct Authority (FCA) urging the regulator to act on racial equality by introducing mandatory ethnicity pay gap reporting for financial institutions.
The group, which includes NEST (the UK’s largest pension provider), Brunel Pension Fund and Church of England Pensions Board, say that transparently reporting racial pay disparities would catalyse further action to create the more equitable workplaces that shareholders and employees are demanding. The ethnicity pay gap shows the difference in average and bonus pay between ethnic minority and White colleagues across an organisation.
The ten investors, who together manage $118.78bn in assets, were writing in response to the FCA’s consultation on improving diversity and inclusion in the financial sector. They highlight that Black, Asian or other ethnic minority staff currently hold only one in ten management roles in the UK’s financial institutions – a number that should be doubled if it is to reflect the FCA’s own targets and the UK’s ethnic make-up.
“We are pleased to see the FCA taking action to improve diversity and inclusion in the financial sector. This is not just about fair pay, it is also about ensuring that our financial institutions adequately reflect the British society they are supposed to serve. The FCA should heed investors’ call for ethnicity pay gap reporting to be mandatory, as a crucial first step to raising workforce standards across the sector.”
-Kohinoor Choudhury, Senior Campaigns Officer at ShareAction
Despite a commitment made in 2018 to mandate ethnicity pay gap reporting, earlier this year the Government rowed back, saying it would prefer a voluntary code. However, there is significant support across the business community for clarity and statutory guidance. Research by Baroness McGregor-Smith indicates that improved racial equality could boost the UK economy by £24 billion per annum, equivalent to 1.3% of GDP.
ShareAction strongly endorses the FCA’s diversity agenda and is calling for the FCA to fulfil its ambition on working towards equality at financial institutions by implementing mandatory ethnicity pay gap reporting measures which will serve to elevate and strengthen diversity in the sector.
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