March 2019 • Topic: Driving diversity • by Olivia Seddon-Daines, Jennifer Barrow and Yasmine Chinwala
Three years since the UK Government launched the HM Treasury Women in Finance Charter, it is having the desired impact – signatories are taking action to improve gender diversity and beginning to see positive results, according to New Financial’s latest research.
New Financial’s second Annual Review monitors the progress of signatories against their Charter commitments and holds them to account against the four Charter principles. The Charter encourages the financial services industry to improve female representation in senior management by setting targets, publishing them, having an executive accountable for diversity and linking diversity to pay. The Charter now has more than 330 signatories covering 800,000 employees across the sector.
New Financial is HM Treasury’s data partner for the Charter. This review includes data from 123 signatories that signed the Charter before September 2017 and provided an annual update to HM Treasury in September 2018. This review also aims to offer the broadest possible insight into actions signatories are taking to drive progress towards their targets.
The highlights of the second Annual Review are:
1) Meeting targets: 45% of the 123 signatories analysed in this review have met or exceeded their targets for female representation in senior management. A further 42% that have targets with future deadlines said they are on track to meet them .
2) Moving in the right direction: Female representation in senior management at signatory firms is rising – 86% of signatories either increased or maintained the proportion of women in senior management during the reporting period.
3) The challenge ahead: For signatories that still have a target to reach, average female representation in senior management is 31%. If they can maintain their current rate of increase, these signatories are on track to meet their 38% average target in three years.
4) Stretching targets: The majority of signatories have set ambitious targets for increasing their proportion of senior women. A quarter (25%) have a goal of parity. Two-thirds have set targets at 33% or above and HM Treasury would like to see all targets move to this level in order to align Charter targets with the Hampton Alexander review.
5) Defining senior management: There is growing consensus around signatories’ definitions of the senior management population to which the Charter applies – for half of signatories senior management accounts for up to 10% of the total workforce. However, there is a wide variety of definitions, even amongst firms of a similar size, with the spectrum ranging from 0.3% to 100% of total workforce.
6) Top actions driving change: The most common actions signatories reported are ensuring they have female candidates on longlists and/or shortlists for senior roles; providing unconscious bias training; and promoting flexible working. These actions are similar to those reported last year, but there is evidence that actions are developing, they are becoming embedded within organisations and are available to more staff.
7) Accountable at the top table: Accountability is sitting in the right kinds of roles, at the highest levels of seniority. Almost all (96%) accountable executives sit on executive committees, nearly half (44%) of AEs are CEOs, and about 70% have revenue generating responsibilities.
8) Linking to pay: Nearly a third (29%) of signatories believe the link has been effective, while half said it is too early to tell. More than a quarter (28%) have extended the link beyond executive committee members.
9) Publishing updates: Signatories are still getting to grips with their transparency obligations around the Charter. Nearly half (46%) had not published an online update on their progress against their targets by the required deadline and less than a third (29%) met all reporting criteria.
10) An achievable number: About 2,500 women will need to join senior management across the 123 signatories in order for them all to meet their targets, equivalent to an increase of 12% based on the number of senior female managers today. The largest firms have an important role to play here, as they account for 95% of the 2,500, particularly the UK and global/investment banking sectors.
Research methodology: This review presents annual update information reported* to HM Treasury by 123 signatories† in September and October 2018. The data was shared with New Financial on a confidential basis. All data has been anonymised and aggregated, and no data has been attributed without consent from the relevant signatory.
For more information on the Annual Review or on New Financial’s diversity programme, please contact Yasmine Chinwala on email@example.com
About New Financial: New Financial is a think tank and forum that makes the positive case for bigger and better capital markets in Europe. We think there is a huge opportunity for the industry and its customers to embrace change and reform, and to rethink how capital markets work. Diversity is one of our core areas of coverage.