More than 70 banks and other City firms have agreed to link their bosses’ bonuses to the appointment of women to senior jobs in a push to break with male-dominated executive teams.
Britain’s big four retail banks, including Lloyds and Barclays, and insurers such as Legal & General and Prudential have signed up to the government’s women in finance charter. Others among the 72 backers include Lloyd’s of London, the US investment bank Morgan Stanley and fund managers Fidelity and Schroders.
Gadhia found that women made up 23% of boards at City firms but only 14% of executive committees. The Davies review of women on boards has increased the number of female directors at UK companies, but most of the rise has been in non-executives rather than in top management jobs.
Companies subject to the charter will seek to promote women to senior management jobs and to work on getting more women into middle management so they can progress through the ranks.
The charter commits companies to:
- Link pay packages for their top executives to gender diversity targets.
- Set internal targets for female representation in senior management.
- Publish annual progress reports against the targets.
- Make a senior executive responsible for gender diversity and inclusion.
Companies signed up to the charter must publish targets online by the end of September. They will have a year to report on the targets to the Treasury and will do so annually after that. They will also have to explain the link between executive pay and progress against targets to the Treasury, though they can choose not to make this information public.
Gadhia said the charter marked a turning point for the financial industry, whose long hours and uncompromising culture make it one of the most male-dominated industries.
She said: “A growing number of chief executives and boards within the sector are taking the issue seriously and recognise the strong link between greater gender balance and improved productivity and performance.”
When Gadhia unveiled the proposed charter in March she argued there was an economic and business case for promoting women in the finance industry as well as a moral one. She quoted findings from Credit Suisse that the average return on equity of companies with at least one woman on the board between 2006 and 2012 was 16% compared with 12% for firms without female board representation.
The financial crisis also raised concerns about groupthink among the mainly male leadership teams of banks whose risky behaviour caused a near-meltdown of the financial system.
Harriett Baldwin, economic secretary to the Treasury, said: “By signing the charter, firms are committing to driving change at the senior levels of the male-dominated financial services industry. Such widespread commitment will make a genuine difference to gender diversity in financial services.”
Gadhia decided against recommending quotas for companies, arguing firms had different starting points and should be left to work out the details of internal targets and how to link pay to diversity.
This article was written by Sean Farrell, for theguardian.com on Monday 11th July 2016 11.35 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010