Corporates Not Backing Diversity Pledges with Evidence – WDI

Ethnic and racial diversity reporting lags data on gender equity, new report finds.

A lack of evidential data means investors can’t be certain corporates are following through on their workforce policy commitments by implementing meaningful change, particularly when trying to improve ethnic and racial diversity.

Almost all firms (98%) assessed in the World Disclosure Initiative (WDI) 2020 report, said action on diversity and inclusion is a priority, but many failed to provide data to demonstrate progress in key areas.

WDI is an initiative set up by NGO ShareAction and part-funded by the UK government. The annual survey is supported by an investor coalition managing US$7 trillion in AUM and is designed to increase public corporate disclosures on social issues. The number of global companies taking part in the survey increased by 20% since 2019 to 141 companies, including Legal & General, Nike and Vodafone.

This year’s findings highlighted “a stark difference between companies being able to explain their plans, and providing the data needed to actually implement them”.

Without accurate data and metrics on workforce composition and employment conditions, firms may struggle to achieve plans and initiatives to improve diversity and inclusion.

“It means that organisations may be taking a shot in the dark, implementing practices without knowing who is in their workforce, and what it is they need,” said Charlotte Lush, WDI Research Manager.

Corporates reporting on diversity and inclusion are prioritising gender equity, the WDI noted. More than twice as many provided data on the gender breakdown of their workforce (75%) compared to ethnic composition (36%).

Similarly, more than 10 times as many companies provided data on the gender pay gap (57%) compared to the ethnicity pay gap (4%).

“It is important to flag that, as this figure only includes companies that operate in contexts where they are not prohibited from collecting ethnicity data, even when legal restrictions are accounted for, corporate data collection on ethnicity is in its infancy compared to gender,” the report said.

Data on the lowest-paid and contingent workers also lags data on diversity and inclusion in leadership positions. For example, 86% of companies publicly report the number of women in leadership positions but only 36% were able to disclose how many female workers have a basic salary equal to or just above the legal minimum wage.

This is despite the fact they are a much larger proportion of the workforce and therefore more likely to feel the negative consequences of failing to improve diversity and inclusion, the report said.

“It is essential companies prioritise diversity data collection for these workers and are using this data to ensure their diversity and inclusion efforts include and consider all workers, not just those at the very top of the organisation,” WDI added.

The 2020 survey also showed that firms typically increase the amount of publicly available information on social issues the longer they participate in the initiative. A fourth-time responder to the survey averages a 70% response to public questions, compared to 68% for third-time responders, 59% for second-time responders and 50% for first-time responders.

On average, a company responding to the survey completed 61% in 2020, compared to 40% in 2019.

While transparency on pay and other employment-related data is slowly improving, there is also increasing evidence of financial and reputational risks. Deliveroo’s IPO has been damaged by the controversy surrounding its dual share structure and employee conditions, whereas Denise Coates, joint CEO of online betting platform Bet365, came under fire for received a £421 million pay-out last year.

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