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A review finds that most City firms have failed to meet their targets for female representation in executive roles, but that many are making progress.
Only 35% of the 209 signatories to the Women in Finance Charter met their targets for female representation in senior management in 2020, according to a new report from the New Financial think tank.
The fourth annual review of the HM Treasury Women in Finance Charter, set up five years ago to drive greater gender diversity, found that 36% of the City companies that have targets with future deadlines said they are on track to meet them and three out of five (62%) either increased or maintained their proportion of women in senior management during the reporting period.
Nevertheless, only 37 of the 81 companies which had target deadlines for females in senior management in 2020 met them while 44 did not, although 35 came close, that is, they were within five percentage points or 10 female appointments of hitting their target. The most common reasons they gave include setting deliberately ambitious targets in the first place and recruitment or promotion freezes due to Covid.
Two-thirds of signatories are seeking to quantify and qualify the impacts of Covid on women in their workforce. Just over half (53%) of signatories capture data on additional diversity strands within the female senior management population. The most commonly collected areas are ethnicity, sexual orientation, and disability.
The review found that signatories still place the greatest emphasis on changes to recruitment practices to push towards their targets, but they are also increasing their focus on building internal talent pipelines. Firms are using data to improve accountability and quantify the impact of actions.
Accountability is sitting at the highest levels of seniority, with almost all (98%) accountable executives being executive committee members. Nearly half (49%) said linking progress on diversity to pay has been effective, while 47% said it is too early to tell. The report says there is an increasingly granular approach to implementing the link to pay, and greater expectation that senior leaders will deliver.
The report also observed that there is growing consensus on best practice. Nearly two-thirds (62%) of signatories have set targets of at least 33%, in line with HM Treasury’s desire for alignment with the Hampton Alexander review.
Five years since the UK Government launched the HM Treasury Women in Finance Charter, signatories faced their biggest test yet as the pandemic struck in 2020. This fourth Annual Review analyses the largest cohort yet, with data from 209 signatories.
Commenting on the review, Nikhil Rathi, chief executive of the Financial Conduct Authority, said the FCA is considering further action on diversity. He cited the example of forcing leading financial firms to appoint a minimum number of diverse board members or face regulatory scrutiny. Noting that listing rules for New York’s Nasdaq require all companies to have at least two “diverse” directors – or explain why they do not, he said: “As part of our regulatory work on diversity and inclusion and the listings framework, we will be exploring whether we should make similar requirements part of our premium listing rules.”
Meanwhile, the Government has appointed Aviva chief executive Amanda Blanc as its new Women in Finance champion, a role which involves promoting the Treasury’s Women in Finance Charter. She said that a “successful, inclusive, financial services industry is critical to a revitalised UK economy.” John Glen, economic secretary to the Treasury added: “The Women in Finance Charter isn’t a box ticking exercise – it requires real change to help talented women to reach their potential and drive forward one of our most important and innovative sectors.”