Several major UK banks including HSBC, Barclays, Royal Bank of Scotland and Lloyds Banking Group along with the Lloyd’s of London insurance market have signed up to a new voluntary charter aimed at getting more women into senior roles in the finance industry.
Harriett Baldwin, the economic secretary to the Treasury, hailed the charter as evidence that the voluntary approach was working, and said if this momentum continued it would rule out the need for more prescriptive measures from the government.
The insurer Legal & General, Virgin Money, fund manager Columbia Threadneedle Investments and Capital Credit Union also signed up to the Treasury-backed employer charter on the day of its launch.
The charter contains a set of voluntary proposals designed to improve companies’ gender balance following recommendations by Jayne-Anne Gadhia, the chief executive of Virgin Money. Gadhia launched her government-sponsored review to a room packed with female City executives at the Bank of England on Tuesday.
The four pledges are that companies:
• Appoint an executive responsible for gender, diversity and inclusion.
• Set internal targets for gender diversity in senior management.
• Publish gender statistics annually on their website.
• Link the pay of senior executives to delivery against these targets.
Gadhia rejected the idea of quotas, arguing that a one-size-fits-all approach would not work well in financial services, and left it up to individual firms to work out the practicalities of linking bonuses to progress on gender equality, and to whom this should apply.
One of the Bank of England’s deputy governors, Andrew Bailey, who has been appointed chief executive of the Financial Conduct Authority, said at the report’s launch: “There is some virtue in winning them [companies] over rather than forcing them.”
Jane Amphlett, a partner at employment law firm Howard Kennedy, said: “Since the banks will be setting their own targets, it seems likely that they will set achievable targets, and that board bonuses will not be substantially affected. The real value in the package of measures proposed will be that it focuses attention in an organisation on improving gender balance by, for example, making an individual executive responsible for this and by the required public reporting.”
Baldwin said financial services was the most highly paid sector, but also had the highest gender pay gap, at 39.5%, compared with 19.2% across the economy. This means that for every pound earned by a man in the Square Mile, a woman earns just over 60p.
Aside from the moral case, a compelling economic and business case could be made for closing the gender gap in the finance industry, she and Gadhia argued. Gadhia quoted findings from Credit Suisse that the average return on equity of companies with at least one woman on the board between 2006-12 was 16% compared with 12% for firms without female board representation.
Her report quoted figures from the Government Equalities Office (pdf), which suggest that harnessing women’s productivity and employment could add £600bn to the UK economy, while equalising participation rates could add 10% to the size of the UK economy by 2030.
The Bank of England governor applauded the review: “For too long the financial sector has suffered the economic consequences of this inequality while society has borne the broader costs.” Mark Carney said the Bank had itself taken action to improve its gender balance, and was aiming for 35% of its senior management to be female by 2020, up two thirds from 2013.
Separate research from Glassdoor Economic Research found that even when certain factors such as gender imbalance in some industries, age, experience and location are stripped out, there is still a 5.5% pay gap between men and women in the UK.
Sarah Henchoz, partner at law firm Allen & Overy, said: “This kind of open debate is to be encouraged but the real question is, what next? How do we keep up momentum? Positive action – as opposed to discrimination – is required to ensure intentions are translated into actions, whether that be through increasing talent pools by encouraging employees to refer those from underrepresented classes and offering a higher referral fee for doing so or by increasing female sponsorship, firms need to really think about how to take action.”
This article was written by Julia Kollewe, for theguardian.com on Tuesday 22nd March 2016 17.28 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010