Financial services DEI score drops amid ‘lack of real progress’

'Continuous, proactive commitment from CEOs and senior leaders' needed

Longstanding employees in the financial services sector say diversity, equity and inclusion (DEI) has deteriorated in the past 12 months, according to a survey.

The average DEI score for financial services firms has declined from 67 to 65, out of a possible 100, over this year.

This is based on the views and experiences of 800 employees across the sector with a minimum of 10 years experience in the industry.

The latest results suggest almost no progress has been made over the past three years. The score in 2021 was 65, the same as 2023.

A primary driver in the decline was lower levels of perceived commitment to tackling racism from senior leadership.

Four in ten respondents (40%) said they did not believe that their CEOs or top-level leaders were sufficiently committed to addressing racial discrimination in the workplace. 

Asked why respondents believed this, almost half (48%) suggested senior leaders didn’t fully understand the impact of racism, and 43% suggested leadership feared backlash from either inside or outside of the workplace. 

The research showed that if CEOs and top-level leaders took significant measures to address racism, four fifths (81%) of employees believe it would lead to positive change across the organisation.

The Race to Equality: UK Financial Services report was conducted by Reboot, a campaign group of senior financial services professionals working to advance the dialogue and action on race and ethnicity in the workplace. It began tracking corporate progress on DEI following commitments and increased scrutiny in the wake of the George Floyd murder in May 2020. 

Proposals to boost diversity and inclusion in financial services to support healthy work cultures, reduce groupthink and unlock talent have been included in a consultation paper released by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) in September.

Jörg Ambrosius, executive vice president and chief commercial officer at State Street, said: “The research makes it clear that the need for proactive and intentional measures with well-defined outcomes and expectations is what is needed from leadership.

“While each of our organisations can individually try to address these issues, it will take the collective effort and influence of our industry overall to create lasting and visible change. We must do better.”

Driving inclusive cultures

However the past year has not been without some progress in driving inclusive cultures in the City.

Three quarters (75%) of employees surveyed said their company leadership teams were committed to promoting diversity and inclusion-related initiatives in the workplace, and 78% said their organisation actively promotes an ethnic and racially inclusive culture

Among the areas that would help drive further progress, more than half of respondents said improving representation and mentorship. 

When asked about barriers to ethnic minority career progression, 56% noted a lack of networks that can assist with career progression, and 59% a lack of role models with a similar identity or background.

Reboot’s surveys show year-on-year improvements of ethnic minority representation at senior levels, but progress is slow, rising from 29% in 2021, to 30% in 2022 and 32% in 2023. The report’s authors want a faster advance to create a diversity of role models junior and mid-level employees need.

Other barriers persist. For example, ethnicity pay gap (EPG) reporting has been identified by Reboot and ShareAction as a key way to improve transparency of ethnic minority employee representation and experiences. But employees are reluctant to share pay data.

A third of employees (33%) expressed that they would be unwilling to provide personal information to their employer for the purposes of creating an EPG report, while 63% said they would be willing, and 45 were unsure.

As of April 2023, ShareAction’s Toolkit found only 18 companies out of the FTSE 100 voluntarily disclosed their EPG, with campaigners saying companies must do more to make employees aware of the benefits of EPG reporting.

Justin Onuekwusi, chief investment officer at St James’s Place, co-founder of #TalkAboutBlack and Reboot Ambassador, said: “If more financial services firms willingly publish data on pay gaps, we can begin to build momentum and demonstrate the feasibility of reporting. 

“In doing so, the sector could showcase the value of reporting for all industry sectors and potentially help pave the way to a fairer society, better businesses and a more successful economy.”

Helena Morrissey, chair of the Diversity Project UK and Reboot advisory board member, said: “Real lasting change within organisations can only happen if there is continuous, proactive  commitment from CEOs and senior leaders to actively address and confront racism. This obviously cannot take place overnight, but it is important that senior leaders do not drop the ball amid other socio-economic issues. 

“They must remember that their stance on racism will strongly shape organisation culture. Ultimately, actions speak louder than words.”