What Just Happened?
It was in February 2021 that Green Park, a recruitment and consultancy agency, published the findings from the Green Park Business Leaders 2021 index, with one of the headline statements concluding that only “10 of the 297 people in the top three roles of FTSE 100 companies have ethnic minority backgrounds.” [1] More specifically, the report stated that for the first time in seven years, there are no black executives in the role of Chair, Chief Executive, or Chief Financial Officer at FTSE 100 companies. [2] This data is subsequently indicative of a plateau or even a regression in diversity and inclusion (D&I) practices in the largest workplaces in the UK.
What Does This Mean?
With increasing societal consciousness in recent years, D&I practices are appropriately evolving from a colour-blind and blanket culture of equality to acknowledging diversity and differences and implementing initiatives of inclusion and wellbeing. The Black Lives Matter movement, protesting systemic racism, in the wake of George Floyd’s murder at the hands of police brutality has also catalysed a bare and brutal dialogue regarding race across all sectors of society.
Subsequently, reports such as the Green Park index have served to amplify a business and corporate dialogue in relation to racial D&I, with many financial executives highlighting the importance of D&I for business prosperity. D&I in the workplace can improve a company’s market competitiveness, due to a collective diversity of voices informing new products, services, and opportunities. [3]
Additionally, a diverse workforce advantages a company’s corporate reputation and responsibility to their community; those minorities on the margins of society, that are often more vulnerable, become represented and thus their unique needs understood and met. This ultimately mitigates conduct risk and enhances customer due diligence because a diverse workforce can respond through suitable “product design, and flexible consumer service and communications.” [4] In this way, D&I and regulatory compliance are inextricably linked.
A way in which companies have proactively attempted to advance their own D&I practices is by becoming signatories to government-endorsed charters, such as the Race at Work Charter [5] and HM Treasury Women in Finance Charter [6], with company progress being annually reviewed, reported, and published. In becoming signatories, companies also become increasingly accountable for D&I in the workplace, and so failure to meet the charter’s criteria and the standards of the charter’s principles may have reputational repercussion for a firm.
How Does This Impact the Legal Sector?
At a minimum, companies have a legal responsibility to adhere to the Equality Act 2010 which sets the standards of treatment of all employees and details anti-discrimination policies to be enforced in the workplace. Additionally, the Equality and Human Rights Commission, whilst not legally binding, details guidance and codes of practice to abide by.
D&I in the legal industry itself has been stringently monitored by the Solicitors Regulation Authority (SRA). The SRA requires “law firms to collect and publish data on diversity in the workplace bi-annually” [7] which allows regulatory changes to be enacted, making a beneficial impact on the sector’s diversity. A multitude of firms has signed the Race Fairness Commitment, welcoming opportunity for diversity within firms by monitoring BAME applicants, promotion, and payroll data and propagating a zero-tolerance policy of racism. [8]
It is apparent that awareness and proactivity regarding D&I is continually on the rise as demonstrated by the Financial Conduct Authority. As a regulatory institution, they are considering the addition of a sixth conduct question, to the existing 5 Conduct Question regime, “which will interrogate firms on diversity and inclusion” [9], and therefore embed a culture of D&I into commercial conduct.
Law firms also are making themselves increasingly accountable for workplace diversity by setting themselves diversity targets, committing their success to D&I. This commitment appears to be necessary since there is comparatively less diversity in the legal sector; only “19% of lawyers” [10] are from an ethnic minority background, with only 3% of lawyers identifying as LGBTQ+ and 3% reporting as disabled. [11] Whilst the data clearly evidences a lack in statistical D&I, the awareness and commitment many law firms are making provides a positive outlook for the future of D&I in the workplace.
Written by Jasneet Bansal
Assessing Firms:
#Ashurst #CliffordChance #HerbertSmithFreehills #HoganLovells #Holland&Knight #SlaughterandMay, #TraversSmith.
References
[1] Vickey McKeever, ‘No Black executives in top three roles of UK’s FTSE 100 firms for first time since 2014, report shows’ (CNBC, 3 February 2021) <https://www.cnbc.com/2021/02/03/no-black-executives-in-top-three-roles-of-ftse-100-firms-report-shows.html> accessed 19 April 2021.
[2] IBID.
[3] CIPD, ‘Diversity and inclusion in the workplace’ (CIPD, 11 May 2020) <https://www.cipd.co.uk/knowledge/fundamentals/relations/diversity/factsheet#gref> accessed 19 April 2021.
[4] FCA, ‘Why diversity and inclusion are regulatory issues’ (FCA, 17 March 2021) <https://www.fca.org.uk/news/speeches/why-diversity-and-inclusion-are-regulatory-issues> accessed 19 April 2021.
[5] Business in the Community, ‘Race’ (Business in the Community, 2021) <https://www.bitc.org.uk/race/> accessed 20 April 2021.
[6] HM Treasury, ‘New Financial: Women in Finance Annual Review (March 2021)’ (Gov.uk, 17 March 2021) <https://www.gov.uk/government/publications/new-financial-women-in-finance-annual-review-march-2021> accessed 20 April 2021.
[7] Sophia Gonella, ‘Diversity and Inclusion in the Legal Industry’ (The Student Lawyer, November 16 2020) <https://thestudentlawyer.com/2020/11/16/diversity-and-inclusion-in-the-legal-industry/> accessed 29 April 2021.
[8] rare, ‘Race Fairness Commitment’ (rare) <https://racefairnesscommitment.com/> accessed 29 April 2021.
[9] FCA, ‘Compliance, Culture and Evolving Regulatory Expectations’ (FCA, 26 April 2021) <https://www.fca.org.uk/news/speeches/compliance-culture-and-evolving-regulatory-expectations-mark-steward> accessed 27 April 2021.
[10] Hasna Haidar, ‘Diversity and Inclusion: How Law Firms Stack Up’ (Lawyer Monthly, 8 December 2020) <https://www.lawyer-monthly.com/2020/12/diversity-and-inclusion-how-law-firms-stack-up/> accessed 29 April 2021.
[11] IBID.
Disclaimer: This article (and any information accessed through links in this article) is provided for information purposes only and does not constitute legal advice.