CBI @10am: Change the race ratio

Speakers:

• Ceri Thomas, Editor and Partner, Tortoise Media (Chair)
• Rain Newton-Smith, Chief Economist, CBI
• Lord Karan Bilimoria CBE, DL, President, CBI
• David Tyler, Co-Chair, Parker Review
• Teresa Owusu-Adjei, Tax Partner, PwC

Overview:

The origins of the Change the Race Ratio campaign

According to Lord Karan Bilimoria, the President of the CBI, increasing ethnic minority participation in business is the highest priority of his presidency. The 2020 edition of the Parker Review report found progress has been made on this issue, but the CBI wanted to take it further – to increase ethnic representation in British boardrooms and senior leadership teams. But, Karan added, it’s also important to create a culture that is transparent and inclusive, as diversity on its own won’t improve things without inclusion.

Each signatory to the campaign makes four commitments: To increase diversity in its boardroom, to increase diversity in its senior leadership, to be transparent about its actions, and to commit to creating an inclusive culture. It’s important to add that the campaign isn’t just for FTSE-listed businesses, and the goal is to improve things across the board. Karan confirms that the CBI is not only doing this because it’s the right thing to do – it is – but there’s a strong business case too. The firms in the top quartile in terms of diversity outperformed those at the bottom by 36%.

The Parker Review then and now: what’s changed?

The Parker Review began in 2014/15, with the first report being published at the end of 2016. At that point, 48% of FTSE 100 firms had no ethnic minority representation on their boards. That figure has now fallen to 37%. So, things are improving – but not as much as those involved would like. FTSE 250 firms are well behind, for example, with 69% having no ethnic minority representation. As David Tyler, Co-Chair of the review pointed out, it did take a while for the gender issue to build up a head of steam, but that made a difference – through targeting, not mandatory requirements.

Have the events of this summer had an impact?

The killing of George Floyd, and the Black Lives Matter protests, have increased focus on this issue over the past few months, and things are now happening much faster. Teresa Owusu-Adjei, a Tax Partner at PwC, used the Race at Work Charter as an example of this increasing pace. Prior to the summer, 180 companies had signed. But over the last four months, that figure has more than doubled.

Teresa added that PwC recently published a survey of 100 companies. When compared to the previous survey, the number who were collecting data on diversity and inclusion in terms of ethnicity climbed from 50% to 67%, and the number who are planning to publish their ethnicity pay gap rose from 6% to 23%. One of the issues with this before, Teresa said, was that when publishing ethnicity data businesses must persuade people to self-identify. In PwC, the number of employees self-declaring their ethnicity has increased from 42% to over 90%. Once you have an inclusive culture, people feel comfortable being themselves.

Creating an inclusive culture

According to Karan, inclusion is the key. And boards are a good place to start, because when people see someone has reached the top, it serves as inspiration. “Inspiration creates aspiration, and aspiration creates achievement”, he said. Karan reflected on his experience in parliament: in 1987, there were four MPs and one Peer from ethnic minority backgrounds – so five parliamentarians. By 2012, that number had increased to 69, and in 2019 it was over 100. But 100 is still nowhere near 15% of parliament. That said, if you look at cabinet, there’s an improving picture, with Rishi Sunak, Priti Patel and Alok Sharma all holding senior cabinet positions.

Teresa, when asked what made her feel more included in the workplace, said that being given access to work on one of PwC’s key global clients was a big moment in terms of her own inclusion. In addition, two weeks after the killing of George Floyd, PwC’s Chairman Kevin Ellis hosted a one-hour live conversation around race, with the whole firm of 22,000 employees. Teresa said she felt like that was a really big moment. David added that one of the most important things when looking at inclusion is to challenge microaggressions.

Should we be using positive discrimination?

Rain Newton-Smith, the CBI’s Chief Economist, doesn’t think enshrining these issues in law is a good idea yet, adding that “we want to see this happen from within, rather than being imposed from the outside.” But of course, if we don’t see progress, maybe more stringent measures are necessary. Teresa added that she thinks people have more of an emotional response to the idea of positive discrimination, as they tend to confuse targets with quotas. In her view, it’s best to focus on building an inclusive culture.