Welcome to the first quarterly edition of D&I View. We will keep you updated with the most recent and relevant developments on the topic of diversity and inclusion.
1. Inclusive Britain: government’s response to the Commission on Race and Ethnic Disparities
In a response entitled “Inclusive Britain”, the government addressed the report by the Commission on Race and Ethnic Disparities (published in March 2022). Employers should pay particular attention to the following points:
The government has confirmed that it will not introduce mandatory ethnicity pay gap reporting. BEIS will publish guidance on ethnicity pay gap reporting in Summer 2022 to support employers who choose to report voluntarily.
The government has stopped using the term ‘BAME’ in its communications. The report explains that avoiding the use of a term that refers to different ethnic minority groups can enable more effective communication on racial issues.
There is an emphasis on increasing the number of young people from ethnic minority backgrounds in apprenticeships.
By Spring 2023, the Equality Hub will create an ‘Inclusion at Work Panel’. The panel will consist of academics and practitioners in business and will focus on developing and disseminating effective resources to help employers drive fairness across organisations. The panel will focus more broadly on fairness in the workplace.
To help employers navigate the distinction between positive action (which is lawful) and positive discrimination (which is unlawful), the Government and Equalities Office will produce new guidance on positive action by December 2022.
The Office for AI will develop the national position on governing and regulating AI and will set this out in a white paper in 2022. This paper will include how to address potential racial bias in algorithmic decision-making. The EHRC will issue guidance on how to apply the Equality Act to algorithmic decision-making.
2. Improving the Ethnic Diversity of UK Boards - an update report from the Parker Review
Five years after its first publication, the Parker Review has published an update report on improving the ethnic diversity of UK boards. At the end of 2021, 89 FTSE 100 companies had at least one person from a minority ethnic background on their board.
The updated report emphasises that boards should not think of the Parker Review targets as ‘one and done’. The key next steps for meeting the challenges ahead are to increase the ethnic diversity of UK boards; develop candidates for the pipeline and plan for succession; and enhance transparency and disclosure.
3. Market view
Some recent trends/areas of focus we are seeing in the market include:
Focus on social mobility programmes and creating more access to opportunities for students
Focus on collection and use of data
Increasing stakeholder and investor challenge on D&I issues
4. FCA’s final policy decision on “Diversity and inclusion on company boards and executive committees”.
Last month the FCA published a final policy decision for proposals set out in its previous consultation paper “Diversity and inclusion on company boards and executive committees” CP21/24. The new rules set positive diversity targets for listed companies (PS22/3).
This includes a requirement that in scope firms must disclose annually, in their annual financial report (on a ‘comply or explain’ basis) whether they have met specific board diversity targets. Please see here for further information.
5. PRA Business Plan 2022/23
On 20 April 2022 the PRA published its Business Plan 2022/23. The PRA makes clear that it “considers diversity and inclusion to be an important part of corporate culture, and the way a firm manages its risk”. In Autumn 2022, the PRA will consult on proposals to support diversity and inclusion in the financial services sector (building on the joint Bank of England, PRA, and FCA D&I discussion paper DP21/2). The final policy will be published during 2023.
6. FCA Business Plan 2022/23
Similarly, the FCA’s Business Plan 2022/23 indicates a commitment to diversity and inclusion. The Business Plan sets out an intention to:
Build on the regulatory framework by driving improvements in outcomes through D&I transparency, and consulting on this in Summer 2022.
Embed consideration of ESG issues in how the FCA authorises firms and individuals, considering factors such as D&I, the nature of the firm and the products/services it wants to offer.
7. TUC updates
The TUC has reported some disappointing D&I figures regarding salaries and employment rates.
ONS figures show disabled workers now earn on average £1.93 per hour less than non-disabled employees (a gap of over £3,500 per year based on a 35-hour week). You can see more here.
The unemployment rate for workers from an ethnic minority background is now at 7.7%, compared to 3.5% for white workers. This gap has widened significantly since the start of the pandemic. You can see more here.
We would love to hear your feedback on this newsletter, how useful it is in staying on top of developments and any additional areas you would like us to cover. For more information on any of the points covered please contact Fiona Bolton, Lauren Dickinson, or Jayshree Patel.
