Women in Finance Charter - PwC comments on diversity in financial services
11 July 2016
Today HM Treasury published its first list of 72 signatories to the Women in Finance Charter ("the Charter") alongside comments from 56 signatory firms. The Charter was published just over three months ago on 22 March with a focus on driving change in the number of women in leadership within financial services, through an enhanced focus on accountability.
It is encouraging that so many firms have signed the Charter across all areas of financial services (and a few from outside the industry). I am of course particularly proud that PwC is one of these signatories. Looking beyond the list of signatories, I'm also confident, from the many conversations that I have had, that many more firms will be signing in the future, once they have worked through the internal challenges and are confident that they are well prepared to meet the provisions in a timely manner. The Charter has prompted some serious and focused conversations at many firms on the business imperatives of diversity, each firm's individual goals and aspirations on diversity inclusion and, most importantly, the practical action to meet these goals. But it is important that we see this publication as the start of a challenging journey rather than an achievement in itself.
Why the start of a journey? Well, although to the external eye the four provisions of the Charter may seem quite simple, in reality, many firms are far from being currently compliant. The journey to become fully compliant will inevitably, for many, be a difficult and challenging one, with both practical and strategic difficulties emerging along the way. For each company, the nature of these challenges will be different - dependent on the detail and quality of their existing diversity and inclusion strategy and policy and the availability and quality of data.
Having talked to many firms as they have been thinking through the decision to the sign the Charter, it is clear that almost every firm will face challenges, but what these are and how they are handled will vary. For most, the biggest questions will be around the process for setting targets, the data and systems to measure progress and the mechanism for aligning executive pay to targets. But for others additional complications may emerge on areas such as the treatment of international businesses and the interaction with stakeholders in headquarters outside of the UK. As such, the next step for all those who have signed (and indeed for those planning to sign) is to begin the detailed work of understanding exactly what they need to do in order to comply (including the systems and stakeholder engagement needed to get there) and begin work immediately on the changes needed to achieve compliance.
These challenges for firms may have just been magnified by an unexpected announcement today. Alongside publication of the first Charter signatories, HM Treasury has confirmed it will be updating this signatory list in October 2016 to include links to firms' targets as published on their websites. The original Charter pledge referred to firms publishing progress annually against internal targets for gender diversity. However, within the Charter there was no mention of timeframes. Bringing in an October 2016 deadline means that signatory firms will now want to reflect on their target-setting and make plans for disclosure within the next few months. A large proportion of signatories are likely to have a 31 December year end and so may have otherwise been planning to align any new gender diversity targets to their financial and performance year.
HM Treasury have also confirmed today that following this initial disclosure of targets in October 2016, firms will need to report progress against these targets in October 2017. By the end of 2017 an annual review will then be published assessing how signatory firms have progressed in delivering against their internal targets for gender diversity.
Regardless of whether your firm has signed, not signed or you are in a different industry, my final thoughts on this are the same. The Women in Finance Charter is a great catalyst to get firms in financial services thinking seriously about diversity and inclusion and committing to real change in the area of women in senior roles. But for true and lasting change, companies need to think beyond accountability, targets and disclosure. All are important, but for sustainable and lasting change, there needs to be a real focus on understanding, identifying and eliminating the unconscious bias that all of us have when making key decisions impacting our people, including around pay decisions, recruitment, promotion, access to training and opportunities.
For more details of the Women in Finance Charter, its main provision and the challenges and considerations for firms, please visit this link where a copy of our update is available, along with a video in which I discuss this important topic with Katy Bennett