‘Increased inclusion at board level has moral and economic benefits’

Change the Race Ratio group praises rise in ethnicity pay gap reporting among signatories

• Sarwar Alam
• 13 September, 2024

By: Sarwar Alam

BUSINESS leaders have spoken of the importance of publishing data on ethnicity pay gaps ahead of the government’s consultation on a new race and disability equality legislation, focusing on equal pay.

Change the Race Ratio (CtRR), a campaign group of 120 UK businesses, said its annual survey showed an increase in companies reporting on ethnicity pay gaps, with 79 per cent of CtRR members now publishing relevant data.

Labour promised in its election manifesto, and in the King’s speech in July, to introduce mandatory disability and ethnicity pay gap reporting.

Syreeta Brown, CtRR vice-chair and chief people and communications officer at Virgin Money, said she hoped the newest data could help shape policies and improve pay for ethnic minorities.

“It’s hugely encouraging to see the progress our signatories have made on ethnicity pay gap reporting over the past three years,” she said.

“There is definitely an opportunity for more firms in the UK to join our signatories to use data as the bedrock for their decision-making in making sure we continue to create equity in pay outcomes.

“With the government set to mandate ethnicity pay gap reporting, we stand ready to share our insights to ensure the policy works for business and see positive change for under-represented communities.”

Set up to lead corporate action on ethnic minority data collection and reporting, CtRR aims to help increase racial and ethnic minority representation in leadership roles. The group supports businesses to take action to remove and reduce barriers to progression.

Members who report ethnicity pay data show, on average, a 10 per cent difference between white and non-white staff with white staff paid more, though it is lower than the 12 per cent reported in 2022.

This year’s report shows 91.2 per cent of all respondents now have at least one racial or ethnic minority board director, up from 83 per cent the previous year.

Board representation stood on average at 15.32 per cent – up from 14 per cent the year before. Almost half of respondents reported having two or more ethnic minority directors on their board, with the average board comprising 10 members.

Fiona Vines, group chief inclusion Officer at BT, said organisations should be committed to building inclusive working cultures. “Having a workforce that reflects our customers is mission critical for the BT Group to ensure our products and services are accessible and inclusive by design. That’s why we are committed to building an equitable and inclusive culture across our business,” she said.

“Ethnicity pay gap reporting is very important because it shines a light on the systemic causes of inequality. Only by asking the question about what is driving the pay gap, can we see the changes we need to make, both inside and also beyond our organisation.”

Sir Trevor Phillips, chair at CtRR, added: “Our signatories have focused on the needs of their stakeholders, customers, employees and investors, and have doubled down on increasing representation to ensure better business outcomes.

“CtRR members are demonstrating that acting on the data and evidence they see in their business, they are making rapid progress towards our four commitments to change, and towards fulfilling the expectations of both their staff and their customers.”

Other key findings from this year’s report include a 25 per cent increase in racial and ethnic minority representation in senior management for FTSE350 respondents. Further, 91 per cent of FTSE350 signatories have set a target to increase representation, compared to 37 per cent of the whole FTSE350 as reported by the Parker Review.

David Tyler and Soumen Das, from the Parker Review, said: “At the Parker Review, we set out the moral and economic case for greater ethnic diversity at board and senior management level. The CtRR signatories clearly understand the opportunity that comes with working with the widest possible talent pool, and we commend them on the excellent progress towards CtRR’s commitments.

“Looking ahead, we firmly believe that the commitment both to better data and to the sharing of best practice will enable more UK companies to provide wider opportunities for ethnic minority talent.

“It will also help those companies to be more competitive and more profitable.”

CtRR is made up of 30 FTSE350, 39 large private businesses and 49 SMEs, representing over 600,000 employees and covering 30 sectors, which include professional services, technology, manufacturers, energy, FMCGs and non-profit.

Organisations are required to publish a race action plan and ethnicity pay gap report within two years of joining CtRR.

They are also required to increase racial and ethnic minority representation among board members; set targets and increase racial and ethnic minority representation in senior leadership; and create an inclusive culture for all talent to thrive.

In 2024, the campaign entered a new phase of development, while Autotrader, BP, BT, Diageo, Lloyds Banking Group, Sage, Shell and the Spirax Group joined the campaign steering committee.

Amanda Cusdin, chief people officer, Sage plc, said: “Creating a workplace that reflects the community we live in is a strategic priority for Sage.

“We’ve always maintained that increased diversity and inclusion is not just the right thing to do, it’s also demonstrably good for business.

“I’m pleased to see the progress outlined within this report, which also reflects much of the hard work we’ve been putting in at Sage, but there is a long way to go for business as a whole.

“I look forward to continued partnership with Change the Race Ratio to maintain momentum in the coming months and years.”

The Auto Trader CEO, Nathan Coe, believed an inclusive worforce led to greater productivity. “At Auto Trader we have a strategic commitment to create a representative workforce across all levels of our organisation,” he said.

“We pursue our aim both authentically and systemically, expecting to see improvements in metrics, but not being driven solely by the pursuit of metrics. We believe it is important to remain accountable and transparent, which is why we publish our ethnicity pay gap.”