A five-year review of the Women in Finance Charter estimates that it is still going to take until 2033 before financial services achieve gender parity at the board and executive level. Based on current appointment rates there is little hope of ever seeing any women on the boards of hedge funds in this lifetime.

The Women in Finance Charter was launched by the UK government in March 2016 as an HM Treasury initiative to encourage the financial services industry to improve gender balance at a senior management level.

Over 400 companies have signed up to the Charter which covers 950,000 employees across the sector. The five-year report considers achievements and impacts so far in three specific areas:

  • Whether there are now more women in the most senior decision-making roles across the financial services industry as a whole.
  • How the Charter has influenced signatories’ approaches to improving female representation, particularly against the four Charter principles.
  • How the Charter has informed and inspired the wider diversity and inclusion agenda.

Back in 2016 research was undertaken into the make-up of 100 executive boards sampled from 200 businesses across the financial services industry. These businesses have been surveyed again in 2021.

The five-year review reveals the impact of the Charter since 2016 as follows:

(Note that the report uses 'Excos', which refers to 'executive committees'.)

1. There has been a significant step forward in the proportion of women on both boards and executive committees over the past five years across all financial services sectors. Excos have increased from 14% in 2016 to 22% on average today, while boards have increased from 23% to 32%. The increase for excos is nearly 60% and for board-level appointments, it is nearly 40%.

2. For the 100 Charter signatories in the sample, average representation on both boards and excos is much higher than the average for non-signatories, more than 50% higher for excos and 40% for boards

3. Of the respondents to the 2021 Signatories’ Survey, 56% said the Charter had driven permanent sustainable change in their organisations and 63% said the same for the industry. Of those that said it was too early to tell, most anticipated change would become sustainable in the next five years.

4. Nearly all signatories surveyed (97%) said their agenda to improve female representation had advanced over the past five years and only a fifth (21%) believed they would have advanced to the same degree without being a Charter signatory.

5. Diversity targets have been the most impactful of the four Charter principles and have overhauled how companies approach improving diversity. Despite having the flexibility to choose their own targets, more than 60% of signatories have a target of at least 33% women in senior management, and nearly 40% have a target of at least 40%.

6. Although signatories have found linking diversity targets to pay the most challenging of the four Charter principles and it has taken time to get to grips with the mechanisms, half (49%) are now finding the link to pay effective in driving change.

7. The role of the accountable executive has evolved from awareness-raising and speaker engagements in the early days to actively hold leadership and managers to account for delivering improvements. Two-thirds of signatories (64%) have appointed accountable executives to other diversity areas, particularly ethnicity.

8. Making a public annual update against targets is the only one of the four Charter principles that has not shown clear improvement over the five year period. In the most recent round of reporting, a third of signatories failed to publish an update at all.

9. The Charter has made a huge impact far beyond its original remit. 70% of signatories are applying the principles to other diversity areas and the Charter has been emulated in other sectors, in other countries and across multiple diversity strands.

10. The big wins for the Charter have been building a wide signatory base and ensuring gender diversity is a top-level agenda item. At the current rate of increase, our sample would on average reach a target of parity on excos in 2033 and boards in 2029. The Charter has an important role to play in maintaining signatories’ focus in the years to come.

Observations made in the report:

You are still, in 2021, most likely to find that a woman is head of HR rather than CEO or in any of the chief operating roles of larger companies. The exos data in the report clearly shows the entrenched sex segregation of roles; women dominate support functions and men lead the business. One 'solution' for the charter signatories to better their statistics in appointing women to their excos has been to move the so-called 'softer' jobs to the executive level. A more worthy goal may be to target the development of female talent in the valued (and valuable) revenue-generating functions.

Another problem in creating a diversified board or exco is the problem that top-level posts do not come up for grabs that often. Once someone lands a board-level role they will tend to stay there. Recruitment is an issue, there is a lack of women in senior roles.

It is still going to take, on average until 2033 before financial services achieve gender parity at board and executive level, based on current appointment rates. Timeframes across the different sectors range from five years for banking and insurance to a staggering 88 years for hedge funds.

The report ends with 10 suggestions for debate and a call to tougher action. If the industry wishes to sustain its pace of change in the next half-decade, it will have to take on cultural change, the misrecognition and misevaluation of merit and defaulting to transferable skills rather than like-for-like when hiring.

Amanda Blanc, Group Chief Executive Officer at Aviva, and Government Women in Finance Champion said, "Over the next five years, we need to move from talk to action, from working in isolation to working together and move from a narrow perception of gender diversity to encompass women from every walk of life and every part of society."

10 suggestions for debate

1. Stay ahead of the curve: There are many moving parts in the diversity discussion and the stakeholder context has changed (and continues to change) rapidly. One thing is for certain, the demand to not only be aware of but also deliver on diversity is not going away and the finance sector will need to adapt to remain attractive and competitive.

2. Push towards parity: The data shows that signatories lose momentum as they approach their target and the target becomes a ceiling. Targets will need to be increasingly ambitious to achieve the ultimate Charter aim of gender balance.

3. Build a pipeline: Permanent, sustainable change for firms and for the industry as a whole requires a shift in focus from recruitment activity to ensuring more women progress through the organisation to the most senior levels. This work is more targeted, with granular interventions and rigorous monitoring, and it will take time, but it will yield results.

4. Cascade tone from the top: The Charter has ensured that discussion of improving female representation is a regular feature of board and executive committee agendas. Now, that tone from the top needs to be cascaded down throughout the organisation, embedding accountability with every hiring manager, decision-maker and team leader.

5. Reap the rewards on pay: It has taken several years and it has not been easy, but finally there is a critical mass of signatories that have developed the effectiveness of the link to pay and are seeing the benefits of their actions. Those that are still struggling with the link to pay will need to catch up or risk falling further behind.

6. Tackle segregated roles: The executive committee data clearly shows the entrenched sex segregation of roles, women dominate support functions and men lead the business. Encouraging signatories to target the development of female talent in the valued (and valuable) revenue-generating functions will be an important marker of the Charter’s future success.

7. Overcome disclosure-phobia: While publishing progress against targets may be a sore point for some signatories, transparency is an important pillar of the Charter. Financial services firms are accustomed to handling disclosure of sensitive information, and this capacity will increasingly need to be applied to diversity as demands for data increase.

8. Expand diversity priorities: As the diversity and inclusion agenda has matured and widened, a broader range of diversity priorities will need to be addressed. Accountable executives have a vital role to play in ensuring work to increase female representation stays on the agenda and is inclusive of women from all walks of life.

9. Learn from the Charter: The framework of the four Charter principles has emerged from the proof of concept phase and shown that it works. There is an opportunity for companies to learn from the Charter to accelerate progress in other areas of diversity and inclusion and to avoid the pitfalls that have slowed the progress of women in finance.

10. A call to tougher action: The low hanging fruit has all been picked over the past five years. If the industry is to maintain the pace of change in the next half-decade, it will have to take on the tougher challenges, such as cultural change, the misrecognition and misevaluation of merit and defaulting to transferable skills rather than like-for-like when hiring. We all know what needs to be done, now we all need to get on with doing it.

Useful links

HM Treasury initiatives support female entrepreneurs
HM Treasury has launched an 'Investing in Women' code to promote female entrepreneurship among organisations that offer finance. 

External links

The full report is available Women in Finance Five Year review 


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