Finance firms urged to sign pledge to tackle gender gap
The government has backed the recommendations of a new report detailing measures to improve gender equality in financial service firms.
Last year the Treasury announced it had invited Virgin Money Chief Executive Jayne-Anne Ghadia to lead a review into fairness, equality and diversity in financial institutions.
Virgin Money is the first to sign up to the charter and will be followed by Lloyds Banking Group, Barclays, HSBC and the Royal Bank of Scotland. Asset Management firm Columbia Threadneedle, and the mutual Capital Credit Union, will also add their names to the list of signatories.
'Empowering Productivity - Harnessing the Talents of Women in Financial Services' found that out of 200 firms in the UK's financial services sector, there was an average of 23% female representation on Boards, but only 14% on Executive Committees.
In the wake of the report's publication, the government has launched a new 'Women in finance charter'. Firms who sign up to the charter will be required to link the bonuses of their chief executives to whether they meet internal gender balance targets or not.
Firms who sign the pledge must set internal targets for gender diversity in their senior management team. A member of the firm's executive team must also be responsible and accountable for gender diversity.
The charter also requires signatories to publish their progress on their website.
"The objective of the review was to understand what more could be done to get more women into senior leadership positions," said Jayne-Anne Gadhia.
She went on to say that not enough women make it to the top because the "culture isn't right" , and that the charter will address the issue "in a way the City recognises".
Charter 'could end up backfiring'
However, Newton Investment Management chief executive Helena Morrissey has warned that such actions may end up backfiring. In an interview for City A.M. Helena said that firms “don’t want to alienate men or have women feeling men are going to resent [them]” and that the bonus requirements of the charter may be "confrontational".
Helena is the founder of the '30% Club', which focuses on increasing the number of women on FTSE 100 boards. Last year she delivered the ICAS Aileen Beattie Memorial Lecture where she shared her belief that we are now seeing “the breakdown of a very long-established patriarchal paradigm of hierarchy, and command-and-control structures”.
The Equality and Human Rights Commission (EHRC) released a similar report today which found that 45% (45) of FTSE 100 companies and 61% (213) of individual FTSE 350 companies have not reached the 25% target for women board members.
"Unfortunately the recruitment practices of too many businesses still remain trapped in permafrost and that's holding back women and ultimately the companies themselves," said Laura Carstensen, Equality and Human Rights Commissioner.
She went on to say that the " recruitment process to the boards of Britain's top companies remains shadowy and opaque" which is "acting as a barrier to unleashing female talent".