June 2020 • Topic: Driving diversity • by Yasmine Chinwala, Manuel Haymoz and Jenny Barrow
This third Annual Review analyses the largest cohort yet, with data from 187 signatories. Progress is steady – four out of five have met or are on track to meet their targets for female representation in senior management.
The UK government launched the HM Treasury Women in Finance Charter in March 2016 to encourage the financial services industry to improve gender balance in senior management. The Charter now has over 370 signatories covering 900,000 employees across the sector.
This third annual review monitors the progress of signatories against their Charter commitments and holds them to account against the four Charter principles. This year’s analysis is bigger and deeper as the number of signatories has grown – here we include data from 187 signatories, of which 90 are reporting for the first time, 43 for the second and 54 for the third time.
This review also aims to offer the broadest possible insight into actions signatories are taking to drive progress towards their targets. The data provides important benchmarking for signatories, both against their peers and to our view of working life before the Covid crisis.
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The highlights of the third Annual Review are:
1.The power of the Charter: The Charter provides uniquely rich insight into gender diversity in financial services. Now with three years of signatories’ annual updates, we have an even greater understanding into how companies are executing the Charter principles and where they will need to maintain focus as they face the consequences of the Covid crisis.
2. Meeting targets: A third (33%) of the 187 signatories analysed in this review have met or exceeded their targets for female representation in senior management. A further 48% that have targets with future deadlines said they are on track to meet them (Fig.1).
3. Moving in the right direction: Female representation in senior management at signatory firms is rising – three out of four (76%) signatories either increased or maintained the proportion of women in senior management during the reporting period (fig.2).
4. Slow pace of change: On average across the group as a whole, female representation has edged up by one percentage point each year since the first cohort reported in 2017, and is on the brink of the critical 33% level on average – but far short of parity (Fig.3).
5. Stretching targets: The majority of signatories have set ambitious targets for increasing their proportion of senior women, with 26 firms (14%) setting a goal of parity (Fig.9). Nearly 60% have set targets at 33% or above and HMTreasury would like to see all targets move to at least this level in order to align the Charter with the Hampton Alexander review.
6. Defining senior management: There is an established 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 (Fig.12). However, there is a wide variety of definitions, even among firms of a similar size and sector.
7. Top actions driving change: The most common actions signatories reported are focusing on diverse shortlists, providing diversity-related training and promoting flexible working. These actions are similar to those reported in previous years, but there is a notable shift in how signatories are using data to embed diversity into the business, drive accountability and quantify the impact of actions.
8. Accountable at the top table: Accountability is sitting in the right kinds of roles and at the highest levels of seniority. Almost all (96%) accountable executives sit on executive committees, nearly half (46%) are CEOs, and around three-quarters (72%) are in revenue-generating roles (Fig.13).
9. Linking to pay: A third (34%) of signatories believe the link between pay and diversity targets has been effective, while more than half said it is too early to tell (Fig.14). There are encouraging signs that firms are using the link to pay to drive accountability more widely, with 29% extending the link beyond exco members.
10. Publishing updates: Signatories are improving their compliance with their transparency obligations around the Charter. Two thirds (68%) published an online update on their progress by the required deadline (Fig.15), but the quality and format of reporting in published updates varied significantly.
This review analyses annual updates from 187 signatories that signed the Charter before September 2018, provided an annual update to HM Treasury in September 2019 and have at least 50 staff .
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. The data was analysed by Manuel Haymoz and Jennifer Barrow under the supervision of Yasmine Chinwala.
For more information on the Annual Review or on New Financial’s diversity programme, please contact Yasmine Chinwala on firstname.lastname@example.org
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.
Acknowledgements: New Financial would like to thank all our institutional members for their support, and particularly Virgin Money, Refinitiv and City of London Corporation for funding our work on the HM Treasury Women in Finance Charter.