01 October 2020
The Confederation of British Industry (CBI), alongside companies including Aviva, Brunswick, Deloitte and Microsoft, are working to launch Change the Race Ratio – a campaign to increase racial and ethnic participation in British businesses.
The campaign is calling for businesses to set and publish clear targets for greater racial and ethnic diversity at the Board, ExCo and ExCo minus one. Companies are invited to become signatories to Change the Race Ratio, which will launch officially at the end of this month.
As signatories to the campaign, companies make the following four Commitments to Change:
- Increase racial and ethnic diversity among Board members: take action to set targets to achieve
- FTSE 100 – At least one racially and ethnically diverse Board member by end 2021.
- FTSE 250 – At least one racially and ethnically diverse Board member by 2024.
- Increase racial and ethnic diversity in senior leadership
- Take action at ExCo and ExCo minus one to set clear and stretching targets and publish them within 12 months of making this commitment.
- In addition, establish a separate target for black participation at both levels.
- Be transparent on actions
- Publish a clear action plan to achieve the targets and share progress in the Annual Report or on the company website.
- In addition, disclose ethnicity pay gaps by 2022, at the latest.
- Create an inclusive culture in which talent from all diversities can thrive
- focusing on recruitment and talent development processes to drive a more diverse pipeline
- data collection and analysis
- fostering safe, open and transparent dialogue, with mentoring, support and sponsorship
- And working with a more diverse set of suppliers and partners, including minority owned businesses.
These commitments are in line with the recommendations of the Parker Review into ethnic diversity in UK Boards, published in 2016. Little progress has been made since then: at the beginning of 2020, an update to the Parker Review revealed “slow progress”: 37% of FTSE 100 companies surveyed do not have any ethnic minority representation on their boards. Change the Race Ratio aims to put that right and accelerate progress towards more inclusive and diverse British businesses.
Lord Karan Bilimoria CBE DL, CBI President, said:
“The time has come for a concerted campaign on racial and ethnic participation in business leadership. Progress has been painfully slow. We want to do for racial and ethnic diversity what the 30% Club has done so successfully for gender equality”.
Richard Houston, Senior Partner and Chief Executive of Deloitte UK, said:
“The energy of the Black Lives Matter movement has given a fresh sense of urgency around racial diversity in business. Change the Race Ratio aims to grasp this moment to create real and lasting change.”
Gideon Moore, Linklaters' Firmwide Managing Partner, said:
“There is currently a woeful lack of racial and ethnic diversity across company boards and senior leadership positions in UK businesses. We are proud to be partnering with the CBI and other leading organisations to launch Change the Race Ratio, translating statements of commitment to Diversity and Inclusion into action and accelerating change. Greater racial and ethnic participation at all levels of business is vital if we are to ensure that we have a truly inclusive culture in the world of work.”
Hugh Milward, General Manager, Corporate External and Legal Affairs, Microsoft UK, said:
“We are on a journey to increasing diversity across Microsoft, and in particular at our most senior levels. But when more than a third of leading organisations still don't have any ethnic minority board representation, the pace of chance is too slow. Without commitment, there is no action and that's why Change the Race Ratio is so important to transforming the makeup of the UK's most influential businesses.”
Sir Peter Gregson, Vice-Chancellor of Cranfield University, said:
"Cranfield University's global reputation attracts students from all over the world. We are committed to reflecting this racial and ethnic diversity throughout the university, creating an inclusive culture where everyone can fulfil their potential. I'm delighted that Cranfield University is a founding member of this new initiative, which is hugely important to our university, and to the wider business community."
Neal Wolin, CEO of Brunswick Group, said:
“True board diversity is an important demonstration of an organization’s commitment to equality and inclusion. People want to see businesses going beyond statements of support and take real action.”
Poppy Jaman OBE, CEO of City Mental Health Alliance, said:
“Businesses which sign up to the Race Ratio organisations will help to create a stronger sense of belonging for Black people and people from Ethnic Minority backgrounds. This sense of belonging is a key pillar for building a mentally healthy workplace, which provides psychological safety and supports people to flourish. It is both the right thing to do and it is good for business.”
Sandra Kerr CBE, Race Director at Business in the Community, said:
“We know that the conversations in the boardroom set the tone for the rest of the company and more diverse representation around those top tables is long overdue. The shocking events of 2020 have led to some great-sounding promises from business – serious steps like capturing ethnicity data, publishing their ethnicity pay gap and setting ethnicity targets for improvement for executive level within their organisations show that a company is thinking about more than just jam tomorrow.”
James Roome, Country Manager for the UK at Russell Reynolds Associates, said:
“True diversity, equity and inclusion is vital in improving business performance and in order to create genuine change it’s essential that DE&I is visible at the most senior levels. Leaders must embrace it as being fundamental to organisational culture and effectiveness. For Russell Reynolds Associates, DE&I has been growing in importance for some time and signing up to Change the Race Ratio is a natural progression for us. Our global offices have been opening up the conversation as a priority in recent months and we are committed to working with our employees and clients to ensure every voice is heard.”
About Change the Race Ratio
We are a group of senior leaders committed to taking action to increase racial and ethnic participation in our businesses.
Initiated by the CBI, Founder Business Partners include Aviva, Brunswick, Deloitte, Linklaters, Microsoft and Russell Reynolds. They are supported by Founder Civil Society Partners BITC, City Mental Health Alliance and Cranfield Business School.
We are campaigning to Change the Race Ratio, starting by setting targets for greater racial and ethnic diversity at the Board, ExCo and ExCo minus one. This must be accompanied by our commitment to publish those targets and our progress towards them, and the creation of a culture that enables diversity to thrive.
The Parker Review into ethnic diversity in UK Boards was published in 2016, however, little progress has been made by businesses on implementing its recommendations. At the beginning of 2020, an update to the Parker Review was published, which revealed “slow progress”: 37% of FTSE 100 companies surveyed (31 out of 83 companies) still do not have any ethnic minority representation on their boards. Additionally, 69% of the FTSE 250 companies analysed by the Parker Review (119 out of 173 companies) have no ethnic diversity on their boards.
Evidence shows that more diverse organisations and boards make better business choices, exhibit greater growth and innovation, and carry lower risk. Research from McKinsey highlights that the business case for Inclusion & Diversity remains robust and the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time. Data encompassing 15 countries and more than 1,000 large companies, highlights that in the case of ethnic and cultural diversity, top-quartile companies outperformed those in the fourth one by 36% in profitability, slightly up from 33% in 2017 and 35% in 2014.
The Parker Review highlighted that 75% of FTSE 100 revenues are earned outside of the UK, in markets which will include the nine countries, that will generate half of the world’s population growth between now and 2050 – five of which are in Africa and three in Asia. Lack of diversity may inhibit a company’s ability to engage effectively with global markets.
For these reasons, large investors are increasingly highlighting the greater need for ethnic minority diversity. For example, LGIM will start voting against FTSE chairs in 2022 if their boards haven’t met the Parker ethnic diversity targets.