There are signs that the Treasury’s Women In Finance Charter could be losing momentum. For the first time in six years of operation, the percentage of females at the top of financial institutions has remained flat at just 33% in 2021 compared to 2020. 

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.

The Charter now has more than 400 signatories covering more than a million employees across the financial sector. 

An annual review of Charter firms by New Financial, a think tank and forum, analyses annual updates from 209 signatories that signed the Charter before September 2020. It reveals that progress was mixed in 2021. On the upside more signatories met their targets, raised their ambition on targets and expanded their focus on diversity data, but on the downside year-on-year progress stalled at 33% female representation in senior management.

Reasons for the apparent loss of momentum are not abundantly clear:

Amanda Blanc, Group Chief Executive Officer at Aviva, and Government Women in Finance Champion suggests that, " underlying reason for the lack of progress is down to firms not taking D&I [Diversity & Inclusion] into account when they redesign their organisations".

John Glen MP, Economic Secretary to the Treasury, says that he is, "...keen for signatories to make meaningful progress, with a renewed focus on data and building the talent pipeline to tackle blockers for progress and create sustainable change. I also urge signatories to deliver on commitments made when signing-up to the Charter."

Ten discussion points are raised in the report's findings:

1. Step up in challenging circumstances: The financial services sector has performed well through the Covid-19 pandemic. Now we face the rapidly rising cost of living, which will undoubtedly and disproportionately impact under-represented groups. The industry will require diverse perspectives more than ever, in order to innovate and respond to those in need and to increase productivity of the workforce as a whole.

2. Heed the alarm: This is the first year that the percentage of women in senior management has flatlined. This slowdown needs to be a clarion call for action – to redouble efforts on data, accountability and building a sustainable pipeline – because as this Annual Review shows, once companies fall behind it is difficult to catch up.

3. Prepare for a steep climb: While it has not been easy to shift female representation from the low 20s to 33% today, moving from 33% to parity means taking on the toughest challenges – such as cultural change, misrecognition and misevaluation of merit, and defaulting to like-for-like experience rather than skills when hiring. These areas are complicated, resource intensive and will require sustained effort and leadership.

4. Maintain focus: As the diversity agenda has matured, a broader range of diversity priorities need to be addressed and are vying for attention. Accountable executives have a vital role in ensuring work to increase female representation stays firmly on the agenda and is inclusive of women from all walks of life.

5. Leverage the Charter: Six years on from its launch, the data proves that the four pillars of the Charter work. This year’s review shows how the Charter principles of setting targets, introducing accountability frameworks and monitoring progress can also be applied to the initiatives and programmes that underpin signatories’ senior management targets.

6. Stay on target: A significant number of signatories appear to know and accept that they will miss their target at least one or two years ahead of their deadline. Firms must hold themselves accountable to targets if diversity is to shift from a side-of-desk activity and be treated as any other strategic objective for the business.

7. Data, data, data: Every year, signatories find new ways to use ever more granular diversity data to inform actions and measure their impact. Signatories will need to invest time and resource to expand and refine their capacity to monitor diversity data if they are to meet increasing demands for more complex datapoints.

8. Embrace a public conversation: Publishing a Charter update is one of the four core Charter principles and should be taken seriously, but many signatories still lack the skills, resource and confidence to communicate their Charter commitments effectively, both internally and externally. It’s important to remember why transparency is so valuable.

9. Take the lead: The UK, global and investment banking sectors have the biggest role to play in shifting the numbers for the whole industry, as do the largest employers. If these firms can set a sustainable course towards parity, the face of the entire industry will change.

10. Push past the plateau: Female representation has benefitted from focussed attention (from government and other stakeholders) for the longest period of time, firms have the best quality data monitoring and analysis on gender, and women make up half of society. The financial services industry must now strive beyond 33% to achieve parity.

Background: Charter principles

The four Charter principles In becoming a Charter signatory, firms pledge to promote gender diversity by:

  • Having one member of the senior executive team who is responsible and accountable for gender diversity and inclusion.
  • Setting internal targets for gender diversity in senior management.
  • Publishing progress annually against these targets on a page on the company's website dedicated to their Charter commitment.
  • Having an intention to ensure the pay of the senior executive team is linked to delivery against these internal targets on gender diversity. 

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

New Financial: Women in Finance Annual Review (June 2022)

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