CFA Institute Senior Director Matt Orsagh, CFA, CIPM, spoke with Deborah Gilshan, founder of the 100% Club and lead author of the “Ethics of Diversity,” a recent report from the UK Institute of Business Ethics about diversity at companies and management.
The issue of diversity is well illustrated by the World Economic Forum’s “2020 Gender Gap Report,” which estimates that it will take 257 years to achieve global economic gender parity. To put that estimate into perspective, consider that the United States has only been a country for 245 years. Although great progress has been made in improving diversity in the workplace, some organizations still view putting women and minority groups into board positions as merely a compliance exercise. This is one of the key areas Deborah Gilshan explores in her paper “The Ethics of Diversity,” a report from the UK Institute of Business Ethics.
Gilshan’s research found that progress in diversity has not led to sufficient representation of people of color on UK boards. There is also not enough female leadership in the board chair role or on committee chair roles. And that is where shareholder engagement and holding companies to account becomes absolutely critical, Gilshan says.
She notes that in promoting gender diversity in the United Kingdom, the role of investors and investment stewardship is vital. She also notes the importance of moving outside of a singular focus on gender and giving attention to all dimensions of diversity. “The Ethics of Diversity” report provides a series of practical recommendations for how boards can embrace cognitive and experiential diversity and unlock the sustainable business benefits by making systemic rather than merely cosmetic changes.
Gilshan adds that the power of investor engagement is absolutely transformational in the form of investment stewardship and beta activism, which are now coming into the mainstream. She believes that inequalities and racism represent significant systemic risks and that a system-level change is needed if we are to realize the opportunity of creating a fairer and more equitable society.