Gender inequality is persistent in the private sector both in entrepreneurship and corporate leadership, according to a report from the UK All Party Parliamentary Group on ESG, which calls for ESG to be deployed more actively to remedy this.
Significant strides have been made, notably 40% female board membership across the FTSE 350, but there are “significant gaps” among executives and in business loans – both in terms of volume and size – between men and women, the report found.
Female entrepreneurs account for less than one in eight loan applications compared to their male counterparts, the latter on average applying for loans that are three times bigger, according to the report.
Despite progress, the FTSE 100 index features only nine female CEOs. At the current rate, the FTSE 100 will not reach gender parity until 2076.
The report, Transparency, coordination and ambition, delivering gender equality through ESG, identifies New Zealand and the UK’s coordinated action in entrepreneurship as best in class, and the latter should be transferred over to the corporate side to support the FTSE Women Leaders Review, in the APPG’s view.
Coordination should be met with strong signals from the top of government and disclosure frameworks to support benchmarking and board management of internal talent pipelines to ensure more women travel up to leadership positions, it added.
The report recognises there are trade-offs: disclosure regimes providing disaggregated data are essential, but can also be burdensome. However, the report said there needs to be “recognition of the material benefit of having equal companies”, in terms of performance and also access to investment.
The report calls for ESG, alongside conventional policy levers like childcare and education, to be deployed more actively to accelerate progress towards achieving and maintaining gender equality across entrepreneurship and the corporate sector.
The application of ESG practices and principles, such as building an ecosystem of disclosure schemes, reviews and taskforces, supported by visible government leadership and more direct regulation will, in the APPG’s view, create the right framework conditions for more gender-related data to “flow” between companies and investors and other stakeholders.
Combined with stronger corporate governance and regulatory oversight the APPG is of the view this will bring about much-needed shifts in boardrooms and senior committees.
The APPG report makes a number of recommendations to speed up this process, including a so-called ‘levelling up’ of the 40% boardroom target for women.
Under the recommendation, the target would only be met if women held at least 40% of executive board positions. In addition, at least 40% of non-executive directorships should be held by women, in line with the FTSE Women Leaders Review’s existing recommendation.
The scope would also be increased to the 500 largest publicly listed companies and the 100 largest private companies.
At the same time the APPG is calling on the government to launch a consultation on corporate gender disclosures to identify the optimum balance between data volume/granularity, and reporting burden.
Public companies are also being required to publish post-maternity retention rates, including retention after six months and after a year.
The APPG also calls for guidance on how to prevent gender washing, whereby companies make false or exaggerated claims about the gender balance of their workforce.
In addition companies should be guided towards appropriate frameworks and metrics to help them attract sustainable investment with respect to their gender balance.
Overall the APPG calls on the UK government to make clear statements calling for progress towards gender equality in entrepreneurship, and for progress to rapidly accelerate in the corporate world, using a largely voluntary approach, but ensuring that various initiatives function in coordination with one another.
It also wants progress towards greater female entrepreneurship and corporate equality coordinated.
Alexander Stafford MP, chair of the APPG on ESG, said: “The APPG’s findings exemplify the value ESG brings to UK businesses, investors and the wider economy. There is a robust case to be made for gender equality along purely business lines.
“Quite simply, businesses with an even balance of female and male leaders thrive. And in ESG we have an immensely useful tool to make UK businesses more resilient and more profitable while meeting a major public policy objective, one that is so obvious in my view I fear we all too easily forget about it.”
Stafford backed the APPG’s call for more disclosures of “real data that’s materially significant to businesses”, raising performance and driving investment. The corporate governance regime also needs to go a step further in recognising gender equality as the “huge priority” that it is and asking businesses to do the right thing, he said.
“Some stakeholders may baulk at the idea of more reporting to regulators, I would advise the sceptics to consider carefully how we will enable businesses to progress without these provisions,” Stafford added.