Diversity reporting continues to be a hot topic of discussion

The 30% Club UK Investor Group has released its advice for companies on diversity reporting. The Group seeks to use the influence of investors to create greater representation and inclusion of underrepresented ethnic groups and women in businesses across Britain. The 30% Club is pushing for integrated reporting to be treated as a key strategic consideration rather than just a secondary offering to satisfy regulatory reporting.

The 30% Club considers that the reporting should be as follows:

  • Authentic and strategic: reflecting the operation of the company. Where areas for improvement are identified, these should be discussed, indicating how they will be addressed in the future. The more these areas of development are integrated into the strategies, the better. Accountability must come from the top down, as the board and CEOs are the key forces in promoting diversity.
  • Quality over quantity: more reports does not mean better reports. Investors seek to quickly and easily understand potential investment companies. Creating long or multiple reports means that investors will have difficulty accessing the information. Some of the most helpful reports the 30% Club has seen are concise, easy to understand, and meaningful. This can be achieved by producing a summary document outlining diversity and inclusion activities or by integrating strategies and activities into broader company reporting documents.
  • Driven by action: rather than containing generic statements of intent. Companies should seek to create individual goals and should be able to show tangible evidence of what is being done. Progress must be reported at least once a year.
  • Explanatory and informative: data should be accompanied by a useful narrative. Numbers alone do not paint a complete picture. For example, investors want to know about ethnicity or gender representation on a board, but they’re also interested in the underlying explanations and what the company is doing to improve current stats ( if necessary), such as how the board culture has changed or benefited from recent actions taken to increase diversity.
  • Flexible but comparable: companies should develop a reporting framework using common characteristics to allow investors to easily make comparisons. By giving companies the freedom to report, investors will be able to identify and recognize those that are leading the way in the area of ​​diversity and inclusion. As part of a company’s reporting framework, it is suggested that they consider the use of a balanced scorecard (a strategic planning and management system that organizations use to focus on strategy and improve performances).

The guide also includes examples that show innovative or useful approaches taken by companies.

These boards continue the narrative of diversity reporting, which we recently covered in our article on the FCA’s Board Diversity Policy Statement (here) and in our article on how to improving diversity and inclusion (here).

Companies are increasingly aware of the need to become more diverse and inclusive. The economic disruption caused by COVID-19 has disproportionately impacted ethnic minorities and women and exacerbated inequality, so there is arguably now even more of a need to balance that inequality. A renewed focus on diversity and inclusion in the workplace should benefit all stakeholders and these latest guidelines suggest that potential investors recognize that this is best achieved through clarity and integrity in the reporting process. .

Jessica C. Bell